Question 1

Which of the following orders instructs the broker to buy at or below a specified price?

Accepted Answer

A)  Limit-loss order 
B)  Discretionary order 
C)  Limit-buy order 
D)  Stop-buy order 
E)  Market order 
A)  Limit-loss order 
B)  Discretionary order 
C)  Limit-buy order 
D)  Stop-buy order 
E)  Market order

Question 2

Which of the following is not required under the CFA Institute Standards of Professional Conduct?

Accepted Answer

A)  Knowledge of all applicable laws, rules, and regulations 
B)  Disclosure of all personal investments, whether or not they may conflict with a client's investments 
C)  Disclosure of all conflicts to clients and prospects 
D)  Reasonable inquiry into a client's financial situation 
E)  All of the options are required under the CFA Institute standards. 
A)  Knowledge of all applicable laws, rules, and regulations 
B)  Disclosure of all personal investments, whether or not they may conflict with a client's investments 
C)  Disclosure of all conflicts to clients and prospects 
D)  Reasonable inquiry into a client's financial situation 
E)  All of the options are required under the CFA Institute standards.

Question 3

You purchased 100 shares of IBM common stock on margin at $130 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

Accepted Answer

A)  $21.24 
B)  $92.86 
C)  $49.52 
D)  $80.33 
A)  $21.24 
B)  $92.86 
C)  $49.52 
D)  $80.33

Question 4

A purchase of a new issue of stock takes place

Accepted Answer

A)  in the secondary market. 
B)  in the primary market. 
C)  usually with the assistance of an investment banker. 
D)  in the secondary and primary markets. 
E)  in the primary market and usually with the assistance of an investment banker. 
A)  in the secondary market. 
B)  in the primary market. 
C)  usually with the assistance of an investment banker. 
D)  in the secondary and primary markets. 
E)  in the primary market and usually with the assistance of an investment banker.

Question 5

Which of the following statements regarding the specialist are true?

Accepted Answer

A)  Specialists maintain a book listing outstanding, unexecuted limit orders. 
B)  Specialists earn income from commissions and spreads in stock prices. 
C)  Specialists stand ready to trade at quoted bid and ask prices. 
D)  Specialists cannot trade in their own accounts. 
E)  Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices. 
A)  Specialists maintain a book listing outstanding, unexecuted limit orders. 
B)  Specialists earn income from commissions and spreads in stock prices. 
C)  Specialists stand ready to trade at quoted bid and ask prices. 
D)  Specialists cannot trade in their own accounts. 
E)  Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices.

Question 6

Assume you sell short 1,000 shares of common stock at $35 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $25 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

Accepted Answer

A)  20.47% 
B)  25.63% 
C)  57.14% 
D)  77.23% 
A)  20.47% 
B)  25.63% 
C)  57.14% 
D)  77.23%

Question 7

You sold short 100 shares of common stock at $75 per share. The initial margin is 50%. At what stock price would you receive a margin call if the maintenance margin is 30%?

Accepted Answer

A)  $90.23 
B)  $88.52 
C)  $86.54 
D)  $87.12 
A)  $90.23 
B)  $88.52 
C)  $86.54 
D)  $87.12

Question 8

You want to purchase KO stock at $60 from your broker using as little of your own money as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?

Accepted Answer

A)  100 shares 
B)  200 shares 
C)  50 shares 
D)  500 shares 
E)  25 shares 
A)  100 shares 
B)  200 shares 
C)  50 shares 
D)  500 shares 
E)  25 shares

Question 9

Specialists on stock exchanges perform which of the following functions?

Accepted Answer

A)  Act as dealers in their own accounts 
B)  Analyze the securities in which they specialize 
C)  Provide liquidity to the market 
D)  Act as dealers in their own accounts and analyze the securities in which they specialize 
E)  Act as dealers in their own accounts and provide liquidity to the market 
A)  Act as dealers in their own accounts 
B)  Analyze the securities in which they specialize 
C)  Provide liquidity to the market 
D)  Act as dealers in their own accounts and analyze the securities in which they specialize 
E)  Act as dealers in their own accounts and provide liquidity to the market

Question 10

You purchased JNJ stock at $130 per share. The stock is currently selling at $145. Your gains may be protected by placing a

Accepted Answer

A)  stop-buy order. 
B)  limit-buy order. 
C)  market order. 
D)  limit-sell order. 
E)  None of these options are correct. 
A)  stop-buy order. 
B)  limit-buy order. 
C)  market order. 
D)  limit-sell order. 
E)  None of these options are correct.

Which of the following orders instructs the broker to buy at or below a specified price?

Which of the following is not required under the CFA Institute Standards of Professional Conduct?

You purchased 100 shares of IBM common stock on margin at $130 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

A purchase of a new issue of stock takes place

Which of the following statements regarding the specialist are true?

You sold short 100 shares of common stock at $75 per share. The initial margin is 50%. At what stock price would you receive a margin call if the maintenance margin is 30%?

You want to purchase KO stock at $60 from your broker using as little of your own money as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?

Specialists on stock exchanges perform which of the following functions?

You purchased JNJ stock at $130 per share. The stock is currently selling at $145. Your gains may be protected by placing a

The Investment Environment

Asset Classes and Financial Instruments

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

Exam 3: How Securities Are Traded

Which of the following orders instructs the broker to buy at or below a specified price?

Which of the following is not required under the CFA Institute Standards of Professional Conduct?

You purchased 100 shares of IBM common stock on margin at $130 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

A purchase of a new issue of stock takes place

Which of the following statements regarding the specialist are true?

You sold short 100 shares of common stock at $75 per share. The initial margin is 50%. At what stock price would you receive a margin call if the maintenance margin is 30%?

You want to purchase KO stock at $60 from your broker using as little of your own money as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?

Specialists on stock exchanges perform which of the following functions?

You purchased JNJ stock at $130 per share. The stock is currently selling at $145. Your gains may be protected by placing a

The Investment Environment

Asset Classes and Financial Instruments

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters