Question 1

Investors who sell short are expecting the price of the security to fall.

Accepted Answer

A) True 
 B)False

Question 2

"Street names" are the nicknames used for commonly-held securities, such as "IBM" for International Business Machines.

Accepted Answer

A) True 
 B)False

Question 3

A margin call occurs anytime the equity position of the margin account falls below the initial margin.

Accepted Answer

A) True 
 B)False

Question 4

Direct stock purchase programs (DSPs) are an outgrowth of:

Accepted Answer

A)  electronic trading. 
B)  dividend reinvestment plans. 
C)  increased Nasdaq trading. 
D)  decreased regulation. 
A)  electronic trading. 
B)  dividend reinvestment plans. 
C)  increased Nasdaq trading. 
D)  decreased regulation.

Question 5

The use of stock certificates, compared to book-entry systems, is on the rise due, in part, to increased computer fraud.

Accepted Answer

A) True 
 B)False

Question 6

The NYSE maintains circuit breakers to protect investors from unusual market activity. One of these circuit breakers is:

Accepted Answer

A)  a trading halt. 
B)  a price adjustment at market opening to correct order imbalances. 
C)  a price adjustment at market closing to correct order imbalances. 
D)  a mid-day price adjustment to correct order imbalances. 
A)  a trading halt. 
B)  a price adjustment at market opening to correct order imbalances. 
C)  a price adjustment at market closing to correct order imbalances. 
D)  a mid-day price adjustment to correct order imbalances.

Question 7

The interest rate charged on margin accounts is determined by:

Accepted Answer

A)  adding a percentage to the broker call rate. 
B)  adding a percentage to the margin interest rate. 
C)  subtracting a percentage from the broker call rate. 
D)  subtracting a percentage from the margin interest rate. 
A)  adding a percentage to the broker call rate. 
B)  adding a percentage to the margin interest rate. 
C)  subtracting a percentage from the broker call rate. 
D)  subtracting a percentage from the margin interest rate.

Question 8

The Treasury Direct Program eliminates all fees for investors.

Accepted Answer

A) True 
 B)False

Question 9

Designated market makers (DMMs) are required to:

Accepted Answer

A)  maintain a bid-ask spread no greater than 1 cent per share. 
B)  maintain a fair and orderly market. 
C)  buy when most others are selling, and vice versa. 
D)  sell excess inventory to maintain a strictly neutral position. 
A)  maintain a bid-ask spread no greater than 1 cent per share. 
B)  maintain a fair and orderly market. 
C)  buy when most others are selling, and vice versa. 
D)  sell excess inventory to maintain a strictly neutral position.

Question 10

The NYSE minimum deposit for margin accounts is:

Accepted Answer

A)  $2,000. 
B)  $10,000. 
C)  $50,000. 
D)  $100,000. 
A)  $2,000. 
B)  $10,000. 
C)  $50,000. 
D)  $100,000.

Question 11

If maintenance margin is not maintained, the broker will:

Accepted Answer

A)  sell sufficient securities to ensure the portfolio is compliant with maintenance margin requirements. 
B)  sell sufficient securities to ensure the portfolio is compliant with initial margin requirements. 
C)  contact the investor with a margin put. 
D)  contact the investor with a margin call. 
A)  sell sufficient securities to ensure the portfolio is compliant with maintenance margin requirements. 
B)  sell sufficient securities to ensure the portfolio is compliant with initial margin requirements. 
C)  contact the investor with a margin put. 
D)  contact the investor with a margin call.

Investors who sell short are expecting the price of the security to fall.

"Street names" are the nicknames used for commonly-held securities, such as "IBM" for International Business Machines.

A margin call occurs anytime the equity position of the margin account falls below the initial margin.

Direct stock purchase programs (DSPs) are an outgrowth of:

The use of stock certificates, compared to book-entry systems, is on the rise due, in part, to increased computer fraud.

The NYSE maintains circuit breakers to protect investors from unusual market activity. One of these circuit breakers is:

The interest rate charged on margin accounts is determined by:

The Treasury Direct Program eliminates all fees for investors.

Designated market makers (DMMs) are required to:

The NYSE minimum deposit for margin accounts is:

If maintenance margin is not maintained, the broker will:

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Technical Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters

Exam 5: How Securities Are Traded

Investors who sell short are expecting the price of the security to fall.

"Street names" are the nicknames used for commonly-held securities, such as "IBM" for International Business Machines.

A margin call occurs anytime the equity position of the margin account falls below the initial margin.

Direct stock purchase programs (DSPs) are an outgrowth of:

The use of stock certificates, compared to book-entry systems, is on the rise due, in part, to increased computer fraud.

The NYSE maintains circuit breakers to protect investors from unusual market activity. One of these circuit breakers is:

The interest rate charged on margin accounts is determined by:

The Treasury Direct Program eliminates all fees for investors.

Designated market makers (DMMs) are required to:

The NYSE minimum deposit for margin accounts is:

If maintenance margin is not maintained, the broker will:

Understanding Investments

Investment Alternatives

Indirect Investing

Securities Markets and Market Indexes

The Risk and Return From Investing

Portfolio Theory

Portfolio Selection and Asset Allocation

Capital Market Theory and Asset Pricing Models

Common Stock Valuation

Common Stocks: Analysis and Strategy

Market Efficiency

Economymarket Analysis

Sectorindustry Analysis

Company Analysis

Technical Analysis

Bond Yields and Prices

Bonds: Analysis and Strategy

Options

Futures Contracts

Managing Your Financial Assets

Evaluation of Investment Performance

Filters