Question 1

Reasonable listing requirements allow investors to know the quality of the listing broker.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

___________________ are comprised of direct costs, the spread, and underpricing.

Accepted Answer

A)  Commission costs 
B)  Flotation costs 
C)  Brokerage commissions 
D)  Registration costs 
A)  Commission costs 
B)  Flotation costs 
C)  Brokerage commissions 
D)  Registration costs

Question 4

Floor brokers:

Accepted Answer

A)  act as agents to execute customers' orders for securities purchases and sales 
B)  assist specialists in executing orders 
C)  trade for their own accounts 
D)  are employed by the exchanges 
A)  act as agents to execute customers' orders for securities purchases and sales 
B)  assist specialists in executing orders 
C)  trade for their own accounts 
D)  are employed by the exchanges

Question 5

Under a ______________, if any additional shares of common stock, or any security that may be converted into common stock, are to be issued, the securities must be offered for sale first to the existing common stockholders.

Accepted Answer

A)  red herring 
B)  rights offering 
C)  seasoned offering 
D)  shelf registration 
A)  red herring 
B)  rights offering 
C)  seasoned offering 
D)  shelf registration

Question 6

All firms can use shelf registration which saves issuers both time and money.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is most correct?

Accepted Answer

A)  Because global depository receipts are listed on the London Stock Exchange, U.S. investors cannot buy GDRs through a broker in the United States. 
B)  Foreign stocks can be traded in the United States if they are registered with the Securities and Exchange Commission. 
C)  The fourth market is a market for large blocks of listed stocks that operates outside the confines of the organized exchanges. 
D)  Foreign stocks cannot be traded in the U.S. by U.S. citizens. 
A)  Because global depository receipts are listed on the London Stock Exchange, U.S. investors cannot buy GDRs through a broker in the United States. 
B)  Foreign stocks can be traded in the United States if they are registered with the Securities and Exchange Commission. 
C)  The fourth market is a market for large blocks of listed stocks that operates outside the confines of the organized exchanges. 
D)  Foreign stocks cannot be traded in the U.S. by U.S. citizens.

Question 8

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

Accepted Answer

A)  A prospectus 
B)  An underwriting agreement 
C)  A best-effort agreement 
D)  A shelf registration 
A)  A prospectus 
B)  An underwriting agreement 
C)  A best-effort agreement 
D)  A shelf registration

Question 9

A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

Accepted Answer

A)  primary market 
B)  secondary market 
C)  third market 
D)  fourth market 
A)  primary market 
B)  secondary market 
C)  third market 
D)  fourth market

Question 10

The term "Big Board" is another name for the NASDAQ market.

Accepted Answer

A) True 
 B)False

Question 11

A prospectus is highly specific to each company. Only minimal general information is required.

Accepted Answer

A) True 
 B)False

Question 12

A person who facilitates market transactions by selling (buying) when other investors wish to buy (sell) is called a:

Accepted Answer

A)  registered trader 
B)  floor broker 
C)  market maker 
D)  commission broker 
A)  registered trader 
B)  floor broker 
C)  market maker 
D)  commission broker

Question 13

Underpricing represents the difference between the aftermarket price and the offering price.

Accepted Answer

A) True 
 B)False

Question 14

If you buy stock certificates and keep them at the brokerage firm rather than taking personal possession of them, your stock is in:

Accepted Answer

A)  street name 
B)  a short sale 
C)  a limit order 
D)  listed name 
A)  street name 
B)  a short sale 
C)  a limit order 
D)  listed name

Question 15

The purpose of pre-emptive rights is to allow shareholders to:

Accepted Answer

A)  buy enough of a new securities offering to maintain their present proportional share of ownership 
B)  buy an unlimited amount of the new issue at a discount 
C)  pre-empt other stockholders from selling securities in a company 
D)  require the issuing company to also sell them bonds 
A)  buy enough of a new securities offering to maintain their present proportional share of ownership 
B)  buy an unlimited amount of the new issue at a discount 
C)  pre-empt other stockholders from selling securities in a company 
D)  require the issuing company to also sell them bonds

Question 16

Which of the following statements is most correct?

Accepted Answer

A)  The Dow Jones Industrial Average is market-value weighted. 
B)  The Dow Jones Industrial Average is a good benchmark by which to measure the performance of investment managers. 
C)  The 500 stocks comprising the S&P 500 are the largest 500 firms. 
D)  Indexes exist for the bond market. 
A)  The Dow Jones Industrial Average is market-value weighted. 
B)  The Dow Jones Industrial Average is a good benchmark by which to measure the performance of investment managers. 
C)  The 500 stocks comprising the S&P 500 are the largest 500 firms. 
D)  Indexes exist for the bond market.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Over-the-counter (OTC) trades take place:

Accepted Answer

A)  on the floor of the New York Stock Exchange 
B)  on the floor of the American Stock Exchange 
C)  on the floor of the NASDAQ Stock Exchange 
D)  between brokerage firms 
A)  on the floor of the New York Stock Exchange 
B)  on the floor of the American Stock Exchange 
C)  on the floor of the NASDAQ Stock Exchange 
D)  between brokerage firms

Question 19

Index arbitrage refers to:

Accepted Answer

A)  selling securities you don't own 
B)  buying and selling stocks with offsetting trades to lock in profits from price differences between different markets 
C)  buying IPO's 
D)  borrowing to purchase securities 
A)  selling securities you don't own 
B)  buying and selling stocks with offsetting trades to lock in profits from price differences between different markets 
C)  buying IPO's 
D)  borrowing to purchase securities

Question 20

An odd lot is a trade involving 100 shares or multiples of 100 shares.

Accepted Answer

A) True 
 B)False

Reasonable listing requirements allow investors to know the quality of the listing broker.

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

___________________ are comprised of direct costs, the spread, and underpricing.

Floor brokers:

Under a ______________, if any additional shares of common stock, or any security that may be converted into common stock, are to be issued, the securities must be offered for sale first to the existing common stockholders.

All firms can use shelf registration which saves issuers both time and money.

Which of the following statements is most correct?

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

The term "Big Board" is another name for the NASDAQ market.

A prospectus is highly specific to each company. Only minimal general information is required.

A person who facilitates market transactions by selling (buying) when other investors wish to buy (sell) is called a:

Underpricing represents the difference between the aftermarket price and the offering price.

If you buy stock certificates and keep them at the brokerage firm rather than taking personal possession of them, your stock is in:

The purpose of pre-emptive rights is to allow shareholders to:

Which of the following statements is most correct?

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

Over-the-counter (OTC) trades take place:

Index arbitrage refers to:

An odd lot is a trade involving 100 shares or multiples of 100 shares.

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

Reasonable listing requirements allow investors to know the quality of the listing broker.

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

___________________ are comprised of direct costs, the spread, and underpricing.

Floor brokers:

Under a ______________, if any additional shares of common stock, or any security that may be converted into common stock, are to be issued, the securities must be offered for sale first to the existing common stockholders.

All firms can use shelf registration which saves issuers both time and money.

Which of the following statements is most correct?

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

The term "Big Board" is another name for the NASDAQ market.

A prospectus is highly specific to each company. Only minimal general information is required.

A person who facilitates market transactions by selling (buying) when other investors wish to buy (sell) is called a:

Underpricing represents the difference between the aftermarket price and the offering price.

If you buy stock certificates and keep them at the brokerage firm rather than taking personal possession of them, your stock is in:

The purpose of pre-emptive rights is to allow shareholders to:

Which of the following statements is most correct?

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

Over-the-counter (OTC) trades take place:

Index arbitrage refers to:

An odd lot is a trade involving 100 shares or multiples of 100 shares.

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