Question 1

Which one of the following statements about stockbrokers is correct?

Accepted Answer

A) Stockbrokers act as dealers in the securities they trade. 
B) Stockbrokers must be licensed by the Securities and Exchange Commission. 
C) Stockbrokers are regulated by financial consultants. 
D) Stockbrokers execute trades on the floor of the New York Stock Exchange on behalf of account executives. 
A) Stockbrokers act as dealers in the securities they trade. 
B) Stockbrokers must be licensed by the Securities and Exchange Commission. 
C) Stockbrokers are regulated by financial consultants. 
D) Stockbrokers execute trades on the floor of the New York Stock Exchange on behalf of account executives. B

Question 2

The Securities Investor Protection Corporation insures individual investors against

Accepted Answer

A) the loss of up to $500,000 in securities or $100,000 in cash held by a broker. 
B) market losses of $500,000 total or $100,000 per transaction. 
C) losses of up to $100,000 incurred due to innocent online trading errors. 
D) losses incurred up to $500,000 due to churning by a broker. 
A) the loss of up to $500,000 in securities or $100,000 in cash held by a broker. 
B) market losses of $500,000 total or $100,000 per transaction. 
C) losses of up to $100,000 incurred due to innocent online trading errors. 
D) losses incurred up to $500,000 due to churning by a broker. A

Question 3

Descriptive information might include the company's lines of business, a list of major competitors, and recent changes in management.

Accepted Answer

A) True 
 B)False  True

Question 4

A stop-loss order is activated once the stock reaches the specified price.

Accepted Answer

A) True 
 B)False

Question 5

Describe several appropriate uses of stop-loss orders.

Accepted Answer

Stop loss orders are appropriate when an

Question 6

Investment clubs are legal partnerships.

Accepted Answer

A) True 
 B)False

Question 7

A margin account

Accepted Answer

A) can be opened by any investor who wants to purchase securities by charging them to his/her credit card. 
B) allows an investor to borrow one hundred percent of the cost of the securities purchased. 
C) allows an investor to borrow a portion of the purchase price at a reasonable rate of interest. 
D) is permitted only in wrap accounts. 
A) can be opened by any investor who wants to purchase securities by charging them to his/her credit card. 
B) allows an investor to borrow one hundred percent of the cost of the securities purchased. 
C) allows an investor to borrow a portion of the purchase price at a reasonable rate of interest. 
D) is permitted only in wrap accounts.

Question 8

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Accepted Answer

A) voluntary arbitration. 
B) binding arbitration. 
C) mediation. 
D) litigation. 
A) voluntary arbitration. 
B) binding arbitration. 
C) mediation. 
D) litigation.

Question 9

Which of the following services would not be available through premium discount brokerages?

Accepted Answer

A) fast execution of trades 
B) lower commissions on most trades 
C) phone conversations and advice from a broker 
D) the ability to place limit and stop-loss orders 
A) fast execution of trades 
B) lower commissions on most trades 
C) phone conversations and advice from a broker 
D) the ability to place limit and stop-loss orders

Question 10

Both the Dow Jones Industrial Average and the Standard & Poor's 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Accepted Answer

A) True 
 B)False

Question 11

Mike bought 200 shares of EG stock two years ago at $16 per share.The stock has traded in a range of $21 to $44 a share over the past year.EG is now selling for $43.60 a share.EG announces its earnings today and Mike feels the stock could go to $60 on good news or fall to $30 on bad.To protect his profits, the most appropriate order for him to place is

Accepted Answer

A) market order to sell immediately. 
B) a limit sell order at $60.00. 
C) a stop loss order at $42. 
D) a stop-limit order to sell at $45. 
A) market order to sell immediately. 
B) a limit sell order at $60.00. 
C) a stop loss order at $42. 
D) a stop-limit order to sell at $45.

Question 12

Chemical Week and the Oil and Gas Journal are considered to be general business periodicals.

Accepted Answer

A) True 
 B)False

Question 13

Averages and indexes differ from one another in that an index

Accepted Answer

A) is the arithmetic average price behavior of a group of stocks at a given point in time. 
B) measures the current price behavior of a group of stocks in relation to a base value set at an earlier point in time. 
C) is of value in-and-of itself, whereas an average must be compared to a historical figure to have any meaning. 
D) always moves up before a corresponding average moves up, and always moves down before a corresponding average moves down. 
A) is the arithmetic average price behavior of a group of stocks at a given point in time. 
B) measures the current price behavior of a group of stocks in relation to a base value set at an earlier point in time. 
C) is of value in-and-of itself, whereas an average must be compared to a historical figure to have any meaning. 
D) always moves up before a corresponding average moves up, and always moves down before a corresponding average moves down.

Question 14

An order to sell 300 shares of ABC stock at the best available price is called a

Accepted Answer

A) limit order. 
B) market order. 
C) stop loss order. 
D) fill-or-kill order. 
A) limit order. 
B) market order. 
C) stop loss order. 
D) fill-or-kill order.

Question 15

Which of the following designations does NOT have formal education and testing requirements?

Accepted Answer

A) Chartered Financial Analyst 
B) Certified Financial Planner 
C) Registered Investment Adviser 
D) Certified Public Accountant 
A) Chartered Financial Analyst 
B) Certified Financial Planner 
C) Registered Investment Adviser 
D) Certified Public Accountant

Question 16

The basic function of stockbrokers is to execute client orders at the best possible price.

Accepted Answer

A) True 
 B)False

Question 17

Both General Electric and Goldman Sachs are part of the Dow-Jones Industrial Average.If on a given day Goldman Sachs closes at $175 and General Electric at $25

Accepted Answer

A) the difference in price will not affect the Average. 
B) the Average will include 7 shares of General Electric for each share of Goldman Sachs. 
C) the effect of each stock on the Average cannot be determined without knowing the number of shares outstanding for each company. 
D) the effect of changes in the price of Goldman Sachs shares will have 7 times the effect on the Average as changes in the price of General Electric. 
A) the difference in price will not affect the Average. 
B) the Average will include 7 shares of General Electric for each share of Goldman Sachs. 
C) the effect of each stock on the Average cannot be determined without knowing the number of shares outstanding for each company. 
D) the effect of changes in the price of Goldman Sachs shares will have 7 times the effect on the Average as changes in the price of General Electric.

Question 18

In which of the following cases might an investor receive help from The Securities Investor Protection Corporation?

Accepted Answer

A) The investor purchased a stock at $40 per share because his broker recommended it.Over the next six months, it fell to $20 per share. 
B) The investor purchases stock in a company that shortly later was forced into bankruptcy because of accounting fraud. 
C) The investor holds $100,000 worth of stock in certificate form.The certificates are destroyed in a fire. 
D) A broker took money sent by investors to cover stock purchases, but never invested it and sent falsified statements to cover the fraud. 
A) The investor purchased a stock at $40 per share because his broker recommended it.Over the next six months, it fell to $20 per share. 
B) The investor purchases stock in a company that shortly later was forced into bankruptcy because of accounting fraud. 
C) The investor holds $100,000 worth of stock in certificate form.The certificates are destroyed in a fire. 
D) A broker took money sent by investors to cover stock purchases, but never invested it and sent falsified statements to cover the fraud.

Question 19

Which of the following types of information will NOT be found in major urban newspapers?

Accepted Answer

A) price quotations for stocks of local interest 
B) stories concerning local business leaders 
C) interest rates offered by local and national banks 
D) real time price quotes for widely held stocks and exchange traded funds 
A) price quotations for stocks of local interest 
B) stories concerning local business leaders 
C) interest rates offered by local and national banks 
D) real time price quotes for widely held stocks and exchange traded funds

Question 20

Assume you wanted to find the most current price for Home Depot's stock.Your most likely source would be

Accepted Answer

A) Yahoo Finance. 
B) Investor's Business Daily. 
C) The Granville Market Letter. 
D) The Wall Street Journal. 
A) Yahoo Finance. 
B) Investor's Business Daily. 
C) The Granville Market Letter. 
D) The Wall Street Journal.

Which one of the following statements about stockbrokers is correct?

The Securities Investor Protection Corporation insures individual investors against

Descriptive information might include the company's lines of business, a list of major competitors, and recent changes in management.

A stop-loss order is activated once the stock reaches the specified price.

Describe several appropriate uses of stop-loss orders.

Investment clubs are legal partnerships.

A margin account

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Which of the following services would not be available through premium discount brokerages?

Both the Dow Jones Industrial Average and the Standard & Poor's 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Chemical Week and the Oil and Gas Journal are considered to be general business periodicals.

Averages and indexes differ from one another in that an index

An order to sell 300 shares of ABC stock at the best available price is called a

Which of the following designations does NOT have formal education and testing requirements?

The basic function of stockbrokers is to execute client orders at the best possible price.

Both General Electric and Goldman Sachs are part of the Dow-Jones Industrial Average.If on a given day Goldman Sachs closes at $175 and General Electric at $25

In which of the following cases might an investor receive help from The Securities Investor Protection Corporation?

Which of the following types of information will NOT be found in major urban newspapers?

Assume you wanted to find the most current price for Home Depot's stock.Your most likely source would be

The Investment Environment

Securities Markets and Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 3: Investment Information and Securities Transactions

Which one of the following statements about stockbrokers is correct?

The Securities Investor Protection Corporation insures individual investors against

Descriptive information might include the company's lines of business, a list of major competitors, and recent changes in management.

A stop-loss order is activated once the stock reaches the specified price.

Describe several appropriate uses of stop-loss orders.

Investment clubs are legal partnerships.

A margin account

An informal, voluntary agreement to solve disputes between an investor and his/her broker by utilizing a person to facilitate negotiations between the two parties is called

Which of the following services would not be available through premium discount brokerages?

Both the Dow Jones Industrial Average and the Standard & Poor's 500 Index are constructed to reflect the value of shares in large, mid-size and smaller companies.

Chemical Week and the Oil and Gas Journal are considered to be general business periodicals.

Averages and indexes differ from one another in that an index

An order to sell 300 shares of ABC stock at the best available price is called a

Which of the following designations does NOT have formal education and testing requirements?

The basic function of stockbrokers is to execute client orders at the best possible price.

Both General Electric and Goldman Sachs are part of the Dow-Jones Industrial Average.If on a given day Goldman Sachs closes at $175 and General Electric at $25

In which of the following cases might an investor receive help from The Securities Investor Protection Corporation?

Which of the following types of information will NOT be found in major urban newspapers?

Assume you wanted to find the most current price for Home Depot's stock.Your most likely source would be

The Investment Environment

Securities Markets and Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Analyzing Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters