Question 1

The NYSE defines ____as the simultaneous buying and selling of a portfolio of at least 15 different stocks that are valued at more than $1 million.

Accepted Answer

A) direct access brokering 
B) electronic communication networking 
C) program trading 
D) regulation of stock trading

Question 2

It is not illegal for investors to take positions in a stock based on inside information that they received from an insider at the company, although it would be illegal for the insider to take a position based on that information.

Accepted Answer

A) True 
 B)False

Question 3

Short-selling a stock refers to

Accepted Answer

A) poor performance from purchasing an overvalued stock. 
B) the new issuance of low-priced stocks by firms. 
C) the new issuance of stocks by financially weak firms. 
D) the borrowing of stock owned by someone else and selling it in the market.

Question 4

Mark would like to purchase a stock priced at $70. Mark thinks he can sell the stock for $100 after one year. If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?

Accepted Answer

A) 30.00 percent 
B) -42.86 percent 
C) -30.00 percent 
D) 42.86 percent 
E) none of the above

Question 5

When investors place a limit order, they can place it for the day only.

Accepted Answer

A) True 
 B)False

Question 6

Trading halts are imposed by

Accepted Answer

A) the SEC. 
B) brokers. 
C) stock exchanges. 
D) the Treasury.

Question 7

The SEC's ____ reviews the registration statement files when a firm goes public, corporate filings for annual and quarterly reports, and proxy statements that involve voting for board members or other corporate issues.

Accepted Answer

A) Division of Corporate Finance 
B) Division of Market Regulation 
C) Division of Enforcement 
D) none of the above

Question 8

Trading halts are intended to ensure that the market has complete information before trading on news.

Accepted Answer

A) True 
 B)False

Question 9

When investors buy stock with borrowed funds, this is sometimes referred to as

Accepted Answer

A) use of proxy. 
B) purchasing stock on margin. 
C) a margin call. 
D) a margin residual claim.

Question 10

The risk of a short sale is that the stock price

Accepted Answer

A) may decrease over time. 
B) will remain the same. 
C) may increase over time. 
D) none of the above

Exam 12: Market Microstructure and Strategies

The NYSE defines ____as the simultaneous buying and selling of a portfolio of at least 15 different stocks that are valued at more than $1 million.

It is not illegal for investors to take positions in a stock based on inside information that they received from an insider at the company, although it would be illegal for the insider to take a position based on that information.

Short-selling a stock refers to

Mark would like to purchase a stock priced at $70. Mark thinks he can sell the stock for $100 after one year. If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?

When investors place a limit order, they can place it for the day only.

Trading halts are imposed by

The SEC's ____ reviews the registration statement files when a firm goes public, corporate filings for annual and quarterly reports, and proxy statements that involve voting for board members or other corporate issues.

Trading halts are intended to ensure that the market has complete information before trading on news.

When investors buy stock with borrowed funds, this is sometimes referred to as

The risk of a short sale is that the stock price