Exam 5: How Securities Are Traded

Algorithmic trading:

Which of the following statements regarding discount brokers is true?

An order that must be filled immediately in its entirety, or otherwise must be canceled, is known as:

DMMs trading on the NYSE now accounts for the majority of share volume.

Fixed brokerage commissions were eliminated by the Securities Act Amendments of 1975.

What is insider trading? Does it only affect large investors?

Sammy purchased 800 shares of Winn-Dixie at $4.40 per share. Sammy financed 35% of the purchase with a call loan that had a 9% rate and required annual interest payments. Sammy sold the shares two years later at $6.25 per share and repaid the loan. Sammy paid his broker $80 per transaction. What annual return did Sammy earn?

The independent, quasi-judicial agency of the U.S. government that administers laws in the securities field and protects investors and the public in securities transactions is:

For an investor holding individual securities, which of the following generally requires a relatively large minimum investment, usually $100,000 or higher?

Joe Edwards purchased 150 shares of XYZ at $100 per share. Currently, the stock is selling at $120. If he wants to be assured of a profit of at least $4,050, what type of order should he place and at what price per share?

Gabe purchased 300 shares of LifeLock stock at $22.50 per share. Gabe used a call loan from his broker to finance 40% of the purchase. If the maintenance margin was 25%, to what price could the stock go before Gabe would get a margin call? Report the price at which Gabe would first get a margin call.

"Circuit breakers" are program traders that attempt to bypass the exchange regulations.

Regulation FD created the Financial Depository agency.

A sell stop loss order is placed above the current market price.

Mr. King has researched a small company whose stock is selling at $7.50. He wants to buy 1,000 shares but thinks that he might get the stock at $7.25. To try to buy the stock at the lower price, he should place a:

An investor short sells 100 shares of stock short at $40. a. Ignoring commissions, at what price will the investor earn $700? b. Ignoring commissions, what is the gain or loss if the stock price goes to $53 and the investor closes out the position?

What are some of the functions of the NASD?

A sell stop order is placed:

Stanley has $60,000 in cash that he plans to invest in Corning stock, which is currently selling at $50 per share. He plans to buy the stock on margin by borrowing 40% of the total investment from his broker. How many shares of Corning will Stanley purchase?

Since 1974, the initial minimum margin requirement for stocks has been: