Exam 11: Investment Planning

A limit order may be used either to buy or to sell.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The [bid | ask] price for a stock sold on the OTC market represents the price you would receive when you sold the stock.

Abe owns 1000 shares of Amazon,which he purchased for $12 per share 3 months ago.Abe just checked the price of Amazon and found that it is selling for $19 per share.He is so excited about his gain that he has booked a $6,000 20-day trip to Hawaii for he and his wife.He wants to be sure that the trip will be paid for entirely from gains in his Amazon shares because his wife has been nagging him about his frequent stock trading habit and he feels that this trip will demonstrate to her once and for all that he has the skills,acumen and instincts to get rich trading stocks.He feels strongly that the price of Amazon stock will go through the roof in the intermediate term but is concerned about short-term volatility.Abe's plan is to sell the shares only if the value of his shares either declines below $18,000 or if the value climbs to $30,000.He would like to submit his stock orders right now,because for the next three weeks it is very important to his marriage that he not trade or even follow the market (maybe just a peek at CNBC while his wife is in the shower).Which of the following set of stock orders would accomplish his pathetic goals?

Assume that the price of ABC common stock fell from in a short period of time from $105 to $84.Which of the following investors probably made the most money,if all of these transactions occurred prior to the drop in price?

Which of the following is not a securities market

Preferred stocks are the common stocks of ultra blue-chip companies.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The Securities Investors Protection Corporation would make payment to you if [the corporation in which you bought stock | the brokerage firm holding your stock] went bankrupt.

Brokers charge a commission on security purchases as well as on security sales.

An essential ingredient of an effective investment strategy is

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Speculating | Investing] is considered to be a long term activity.

The major reason most people invest is to shelter current income from taxes.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Short term securities are traded in the [money | capital] market.

The Internet allows individual investors to legally

The margin required on the purchase of common stock is currently set at

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -A [bull | bear] market is characterized by rising stock prices.

When completed,an investment plan is a way of translating an abstract investment target into a specific investment program.

During a bull market

A round lot consists of multiples of 100 shares of stock.

A corporation's annual stockholders' report provides financial data and other information related to both past and planned activities.

Which of the following is an order to sell a stock when the market price drops to or below a specified level?