Question 1

Prices of stocks traded on the NYSE are determined through supply and demand.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a major difference between the S&P 500 Index and the Dow Jones Industrial Average (DJIA)? Relative to the DJIA, the S&P 500:

Accepted Answer

A)  includes stocks with a much smaller average market capitalization. 
B)  includes more foreign firms. 
C)  is a much broader index. 
D)  is more stable. 
A)  includes stocks with a much smaller average market capitalization. 
B)  includes more foreign firms. 
C)  is a much broader index. 
D)  is more stable.

Question 3

In 2018, Wendell placed a market buy order for 100 shares of AEM stock. Two years later, 2020, Walter placed a market sell order for AEM.
   Assuming Wendell's broker charges $20 per trade/transaction, what annual return did Wendell earn on the stock? (Wendell received no dividends from the stock).

Accepted Answer

Purchase Amount: 100 x 5.40 = 540 + 20 =

Question 4

An issue of common stock of which there are already shares publicly held is known as:

Accepted Answer

A)  an IPO. 
B)  a secondary market issue. 
C)  an EPO. 
D)  a seasoned issue. 
A)  an IPO. 
B)  a secondary market issue. 
C)  an EPO. 
D)  a seasoned issue.

Question 5

Nasdaq stocks:

Accepted Answer

A)  are generally foreign stocks. 
B)  trade via the Blue Sheets. 
C)  are sometimes not listed on organized exchanges. 
D)  represent less than 1,000 companies. 
A)  are generally foreign stocks. 
B)  trade via the Blue Sheets. 
C)  are sometimes not listed on organized exchanges. 
D)  represent less than 1,000 companies.

Question 6

Relative to the yields on corporate bonds issued in the primary market, the yields on comparable corporate bonds trading in the secondary market are:

Accepted Answer

A)  much lower. 
B)  exactly the same. 
C)  slightly higher. 
D)  similar. 
A)  much lower. 
B)  exactly the same. 
C)  slightly higher. 
D)  similar.

Question 7

Which statement regarding the Nasdaq Stock Market is not true?

Accepted Answer

A)  It was less affected by the 2008 financial crisis than the NYSE. 
B)  Nasdaq dealers make a market by posting offers to buy or sell securities. 
C)  Stocks listed on the NYSE may also trade on Nasdaq. 
D)  Nasdaq's electronic trading system provides instantaneous transactions. 
A)  It was less affected by the 2008 financial crisis than the NYSE. 
B)  Nasdaq dealers make a market by posting offers to buy or sell securities. 
C)  Stocks listed on the NYSE may also trade on Nasdaq. 
D)  Nasdaq's electronic trading system provides instantaneous transactions.

Question 8

What is Instinet and what does it offer for investors?

Accepted Answer

It is the original electronic

Question 9

A computerized trading network that matches buy and sell orders electronically entered by customers is a(n):

Accepted Answer

A)  national market system. 
B)  electronic communication network. 
C)  internet investment service. 
D)  global investment network. 
A)  national market system. 
B)  electronic communication network. 
C)  internet investment service. 
D)  global investment network.

Question 10

Which of the following limits the usefulness of the S&P 500 Index as a market benchmark?

Accepted Answer

A)  It is too heavily weighted with NYSE stocks to be representative. 
B)  It is too difficult to calculate for the average investor. 
C)  Its use of a base year in its calculations affects its performance. 
D)  Its performance can be greatly affected by a small number of stocks. 
A)  It is too heavily weighted with NYSE stocks to be representative. 
B)  It is too difficult to calculate for the average investor. 
C)  Its use of a base year in its calculations affects its performance. 
D)  Its performance can be greatly affected by a small number of stocks.

Question 11

The Dow Jones Industrial Average consists of high-quality stocks that are considered to be:

Accepted Answer

A)  OTC stocks. 
B)  cyclical stocks. 
C)  blue-chip stocks. 
D)  defensive stocks. 
A)  OTC stocks. 
B)  cyclical stocks. 
C)  blue-chip stocks. 
D)  defensive stocks.

Question 12

Automatic shelf registration refers to the practice of allowing seasoned issuers to file registration statements with the SEC that become effective immediately upon:

Accepted Answer

A)  the filing of a "base prospectus," enabling efficient stock issue. 
B)  the filing of a "base prospectus," enabling efficient debt issue. 
C)  the filing of a "base prospectus," enabling efficient stock or debt issue. 
D)  the filing of a "red herring prospectus," enabling efficient stock or debt issue. 
A)  the filing of a "base prospectus," enabling efficient stock issue. 
B)  the filing of a "base prospectus," enabling efficient debt issue. 
C)  the filing of a "base prospectus," enabling efficient stock or debt issue. 
D)  the filing of a "red herring prospectus," enabling efficient stock or debt issue.

Question 13

Normal stock exchange hours in the U.S. are 9:30
a.m. to 4 p.m. Eastern Standard Time.

Accepted Answer

A) True 
 B)False

Question 14

What impact does increasing institutional investing have on the markets, and what role do you think institutional investors will play in the future?

Accepted Answer

Institutional investors increase the vol

Question 15

The S&P 500 Index is a:

Accepted Answer

A)  price-weighted index that is adjusted for free float. 
B)  price-weighted index that is not adjusted for free float. 
C)  capitalization-weighted index that is adjusted for free float. 
D)  capitalization-weighted index that is not adjusted for free float. 
A)  price-weighted index that is adjusted for free float. 
B)  price-weighted index that is not adjusted for free float. 
C)  capitalization-weighted index that is adjusted for free float. 
D)  capitalization-weighted index that is not adjusted for free float.

Question 16

The MSCI EAFE index proxies for the performance of:

Accepted Answer

A)  the emerging equity markets. 
B)  the global bond markets. 
C)  the foreign developed equity markets. 
D)  unique assets (antiques, gems, coins, stamps, etc.). 
A)  the emerging equity markets. 
B)  the global bond markets. 
C)  the foreign developed equity markets. 
D)  unique assets (antiques, gems, coins, stamps, etc.).

Question 17

What factors does the NYSE consider important in determining if a company should be listed on the exchange?

Accepted Answer

The exchange pays close attent

Question 18

An NYSE market maker awaits news of a merger involving one of the stocks in which she makes a market. Why does she set the bid-ask spread higher?

Accepted Answer

Insiders who have knowledge ab

Question 19

Sally states that the EAFE is the appropriate benchmark for her investment fund. Which of the following types of funds is Sally managing?

Accepted Answer

A)  A foreign bond fund 
B)  An emerging markets equity fund 
C)  A global equity fund 
D)  An international equity fund 
A)  A foreign bond fund 
B)  An emerging markets equity fund 
C)  A global equity fund 
D)  An international equity fund

Question 20

Orders on Nasdaq come from market makers, ECNs, and on-line brokers.

Accepted Answer

A) True 
 B)False

Exam 4: Securities Markets and Market Indexes

Prices of stocks traded on the NYSE are determined through supply and demand.

Which of the following is a major difference between the S&P 500 Index and the Dow Jones Industrial Average (DJIA)? Relative to the DJIA, the S&P 500:

In 2018, Wendell placed a market buy order for 100 shares of AEM stock. Two years later, 2020, Walter placed a market sell order for AEM. Assuming Wendell's broker charges $20 per trade/transaction, what annual return did Wendell earn on the stock? (Wendell received no dividends from the stock).

An issue of common stock of which there are already shares publicly held is known as:

Nasdaq stocks:

Relative to the yields on corporate bonds issued in the primary market, the yields on comparable corporate bonds trading in the secondary market are:

Which statement regarding the Nasdaq Stock Market is not true?

What is Instinet and what does it offer for investors?

A computerized trading network that matches buy and sell orders electronically entered by customers is a(n):

Which of the following limits the usefulness of the S&P 500 Index as a market benchmark?

The Dow Jones Industrial Average consists of high-quality stocks that are considered to be:

Automatic shelf registration refers to the practice of allowing seasoned issuers to file registration statements with the SEC that become effective immediately upon:

Normal stock exchange hours in the U.S. are 9:30 a.m. to 4 p.m. Eastern Standard Time.

What impact does increasing institutional investing have on the markets, and what role do you think institutional investors will play in the future?

The S&P 500 Index is a:

The MSCI EAFE index proxies for the performance of:

What factors does the NYSE consider important in determining if a company should be listed on the exchange?

An NYSE market maker awaits news of a merger involving one of the stocks in which she makes a market. Why does she set the bid-ask spread higher?

Sally states that the EAFE is the appropriate benchmark for her investment fund. Which of the following types of funds is Sally managing?

Orders on Nasdaq come from market makers, ECNs, and on-line brokers.

Understanding Investments

Investment Alternatives

Indirect Investing

How Securities Are Traded

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

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