Question 1

The advantage of buying on margin is:

Accepted Answer

A)  larger potential profit 
B)  using more of your own money 
C)  deductible loss 
D)  non-taxable capital gain 
A)  larger potential profit 
B)  using more of your own money 
C)  deductible loss 
D)  non-taxable capital gain

Question 2

A commission broker and an independent broker are the same thing.

Accepted Answer

A) True 
 B)False

Question 3

The lead investment banker:

Accepted Answer

A)  is elected by members of the syndicate 
B)  is appointed by the SEC 
C)  originates and handles a flotation 
D)  cannot participate in future offerings by the issuing company 
A)  is elected by members of the syndicate 
B)  is appointed by the SEC 
C)  originates and handles a flotation 
D)  cannot participate in future offerings by the issuing company

Question 4

Market stabilization is:

Accepted Answer

A)  disallowed under the Securities Act of 1934 
B)  permitted for underwriters if the market price falls below the offering price 
C)  prohibited by the Securities Exchange Commission 
D)  required by the Securities Act of 1948 
A)  disallowed under the Securities Act of 1934 
B)  permitted for underwriters if the market price falls below the offering price 
C)  prohibited by the Securities Exchange Commission 
D)  required by the Securities Act of 1948

Question 5

The process whereby an underwriting syndicate steps in to buy back securities to prevent a larger price drop than that which has already occurred is called:

Accepted Answer

A)  market stabilization 
B)  price normalization 
C)  dollar cost averaging 
D)  best efforts 
A)  market stabilization 
B)  price normalization 
C)  dollar cost averaging 
D)  best efforts

Question 6

An order to sell stock at the market price when the price of the stock falls to a specified level is called a:

Accepted Answer

A)  limit order 
B)  market order 
C)  short sale 
D)  stop-loss order 
A)  limit order 
B)  market order 
C)  short sale 
D)  stop-loss order

Question 7

Which of the following is not a reason to sell securities in a private placement?

Accepted Answer

A)  to keep current shareholders from suspecting "sweetheart deals" 
B)  to forestall a hostile takeover 
C)  to fulfill a need for an emergency infusion of equity 
D)  to reduce dividend payouts to shareholders 
A)  to keep current shareholders from suspecting "sweetheart deals" 
B)  to forestall a hostile takeover 
C)  to fulfill a need for an emergency infusion of equity 
D)  to reduce dividend payouts to shareholders

Question 8

Exchange-traded options are liquid because they are standardized in terms of:

Accepted Answer

A)  expiration dates 
B)  exercise prices 
C)  documentation 
D)  quality of the underlying asset 
A)  expiration dates 
B)  exercise prices 
C)  documentation 
D)  quality of the underlying asset

Question 9

Which of the following is not an advantage of shelf registration?

Accepted Answer

A)  saving time on issuing securities 
B)  allows issuer to determine which investment bank offers the best service 
C)  eliminates filing fees 
D)  allows issuing new securities multiple times 
A)  saving time on issuing securities 
B)  allows issuer to determine which investment bank offers the best service 
C)  eliminates filing fees 
D)  allows issuing new securities multiple times

Question 10

A pre-emptive right refers to the right of existing shareholders to sue management in order to head off potential actions by management that would adversely affect the price of the stock.

Accepted Answer

A) True 
 B)False

Question 11

The Dow-Jones Industrial Average is made up of 30 large blue-chip stocks.

Accepted Answer

A) True 
 B)False

Question 12

A dealer is one who assists the trading process by buying or selling securities in the market for an investor.

Accepted Answer

A) True 
 B)False

Question 13

If a General Electric January 20 call option with a strike price of $45 were about to expire and the market price of the underlying GE stock was $51.17, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

Accepted Answer

A)  $11.17 
B)  $33.83 
C)  $45.00 
D)  $51.17 
A)  $11.17 
B)  $33.83 
C)  $45.00 
D)  $51.17

Question 14

An order for immediate purchase or sale at the best possible price is called a:

Accepted Answer

A)  market order 
B)  limit order 
C)  stop loss order 
D)  margin order 
A)  market order 
B)  limit order 
C)  stop loss order 
D)  margin order

Question 15

Existing securities are traded in the primary market.

Accepted Answer

A) True 
 B)False

Question 16

SLPs are assigned dealers who have the responsibility of making a market in an assigned security.

Accepted Answer

A) True 
 B)False

Question 17

Only brokers can purchase an equity during an IPO.

Accepted Answer

A) True 
 B)False

Question 18

A syndicate is:

Accepted Answer

A)  a firm that assists in specialist transactions 
B)  an organization of market makers 
C)  the largest group of members on the NYSE 
D)  a group of investment banks all working together to place an offering 
A)  a firm that assists in specialist transactions 
B)  an organization of market makers 
C)  the largest group of members on the NYSE 
D)  a group of investment banks all working together to place an offering

Question 19

Insider trading laws regulate the behavior of

Accepted Answer

A)  corporate officers only 
B)  investment bankers only 
C)  anyone with nonpublic information about a firm 
D)  none of the above. 
A)  corporate officers only 
B)  investment bankers only 
C)  anyone with nonpublic information about a firm 
D)  none of the above.

Question 20

An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

Accepted Answer

A)  due diligence agreement 
B)  best-effort agreement 
C)  firm commitment price agreement 
D)  shelf registration agreement 
A)  due diligence agreement 
B)  best-effort agreement 
C)  firm commitment price agreement 
D)  shelf registration agreement

The advantage of buying on margin is:

A commission broker and an independent broker are the same thing.

The lead investment banker:

Market stabilization is:

The process whereby an underwriting syndicate steps in to buy back securities to prevent a larger price drop than that which has already occurred is called:

An order to sell stock at the market price when the price of the stock falls to a specified level is called a:

Which of the following is not a reason to sell securities in a private placement?

Exchange-traded options are liquid because they are standardized in terms of:

Which of the following is not an advantage of shelf registration?

A pre-emptive right refers to the right of existing shareholders to sue management in order to head off potential actions by management that would adversely affect the price of the stock.

The Dow-Jones Industrial Average is made up of 30 large blue-chip stocks.

A dealer is one who assists the trading process by buying or selling securities in the market for an investor.

If a General Electric January 20 call option with a strike price of $45 were about to expire and the market price of the underlying GE stock was $51.17, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

An order for immediate purchase or sale at the best possible price is called a:

Existing securities are traded in the primary market.

SLPs are assigned dealers who have the responsibility of making a market in an assigned security.

Only brokers can purchase an equity during an IPO.

A syndicate is:

Insider trading laws regulate the behavior of

An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 11: Securities and Markets

The advantage of buying on margin is:

A commission broker and an independent broker are the same thing.

The lead investment banker:

Market stabilization is:

The process whereby an underwriting syndicate steps in to buy back securities to prevent a larger price drop than that which has already occurred is called:

An order to sell stock at the market price when the price of the stock falls to a specified level is called a:

Which of the following is not a reason to sell securities in a private placement?

Exchange-traded options are liquid because they are standardized in terms of:

Which of the following is not an advantage of shelf registration?

A pre-emptive right refers to the right of existing shareholders to sue management in order to head off potential actions by management that would adversely affect the price of the stock.

The Dow-Jones Industrial Average is made up of 30 large blue-chip stocks.

A dealer is one who assists the trading process by buying or selling securities in the market for an investor.

If a General Electric January 20 call option with a strike price of $45 were about to expire and the market price of the underlying GE stock was $51.17, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

An order for immediate purchase or sale at the best possible price is called a:

Existing securities are traded in the primary market.

SLPs are assigned dealers who have the responsibility of making a market in an assigned security.

Only brokers can purchase an equity during an IPO.

A syndicate is:

Insider trading laws regulate the behavior of

An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters