Question 1

A receipt that represents foreign shares owned and traded by U.S. investors is called a(n):

Accepted Answer

A)  global depository receipt 
B)  American depository receipt 
C)  representative depository receipt 
D)  Exchange traded fund 
A)  global depository receipt 
B)  American depository receipt 
C)  representative depository receipt 
D)  Exchange traded fund

Question 2

The syndicate dissolves:

Accepted Answer

A)  when members elect to do so 
B)  30 days after securities issue 
C)  when the lead investment banker decides 
D)  the syndicate never dissolves 
A)  when members elect to do so 
B)  30 days after securities issue 
C)  when the lead investment banker decides 
D)  the syndicate never dissolves

Question 3

Which of the following is not a basic type of member of the New York Stock Exchange?

Accepted Answer

A)  independent brokers 
B)  floor brokers 
C)  registered traders 
D)  specialists 
E)  security regulators 
A)  independent brokers 
B)  floor brokers 
C)  registered traders 
D)  specialists 
E)  security regulators

Question 4

The flotation costs of an IPO depend on

Accepted Answer

A)  the size of the offering 
B)  current interest rates 
C)  the limits set by the SEC 
D)  the Federal Reserve discount rate 
A)  the size of the offering 
B)  current interest rates 
C)  the limits set by the SEC 
D)  the Federal Reserve discount rate

Question 5

In reality, an option's value will equal its intrinsic value only at expiration. At all other times, the option's premium or price will exceed its intrinsic value. A major reason for this is/are _____________.

Accepted Answer

A)  marketability 
B)  future expectations 
C)  trade restrictions 
D)  brand 
A)  marketability 
B)  future expectations 
C)  trade restrictions 
D)  brand

Question 6

Which of the following statements is false?

Accepted Answer

A)  The Dow Jones Industrial Average is not a price-weighted index. 
B)  An American depository receipt is a receipt which represents foreign shares to U.S. investors. 
C)  Index arbitrage occurs when traders buy and sell stocks with offsetting trades in futures and options in order to lock in profits from price differences between these different markets. 
D)  New shares of stock are sold in the Primary Market. 
A)  The Dow Jones Industrial Average is not a price-weighted index. 
B)  An American depository receipt is a receipt which represents foreign shares to U.S. investors. 
C)  Index arbitrage occurs when traders buy and sell stocks with offsetting trades in futures and options in order to lock in profits from price differences between these different markets. 
D)  New shares of stock are sold in the Primary Market.

Question 7

In most years, about 5 to 10 stocks are replaced in the S&P 500 index.

Accepted Answer

A) True 
 B)False

Question 8

If a Microsoft January 20 put option with a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $18.00, the price of the put option would be _______________.

Accepted Answer

A)  in-the-money 
B)  out-of-the-money 
C)  fairly priced 
D)  flat priced 
A)  in-the-money 
B)  out-of-the-money 
C)  fairly priced 
D)  flat priced

Question 9

A market has ________ if it can absorb large orders without disrupting prices; it has ___________ if it has many trades.

Accepted Answer

A)  depth, breadth 
B)  breadth, depth 
C)  liquidity, quick execution 
D)  quick execution, liquidity 
A)  depth, breadth 
B)  breadth, depth 
C)  liquidity, quick execution 
D)  quick execution, liquidity

Question 10

The American Stock Exchange is also known as Amex.

Accepted Answer

A) True 
 B)False

Question 11

All public offerings are regulated by the Securities and Exchange Commission (SEC).

Accepted Answer

A) True 
 B)False

Question 12

A house broker handle the commission brokers' overflow.

Accepted Answer

A) True 
 B)False

Question 13

A good market will have four characteristics: liquidity, quick and accurate trade execution, reasonable listing requirements, and safety.

Accepted Answer

A) True 
 B)False

Question 14

Federal regulation of investment banking is administered primarily under the provisions of the ___________________.

Accepted Answer

A)  Investment Banking Act of 1977 
B)  The Garn-St. Germain Act of 1997 
C)  The Securities Act of 1933 
D)  FINRA 
A)  Investment Banking Act of 1977 
B)  The Garn-St. Germain Act of 1997 
C)  The Securities Act of 1933 
D)  FINRA

Question 15

Existing securities are traded:

Accepted Answer

A)  in the primary markets 
B)  in the secondary markets 
C)  only on organized exchanges 
D)  only over-the-counter 
A)  in the primary markets 
B)  in the secondary markets 
C)  only on organized exchanges 
D)  only over-the-counter

Question 16

Insider trading regulation is provided for under the Securities Exchange Act of 1934.

Accepted Answer

A) True 
 B)False

Question 17

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

Accepted Answer

A)  25 to 50 dollars 
B)  15 to 20 dollars 
C)  generally more than 10% 
D)  generally less than 10% 
A)  25 to 50 dollars 
B)  15 to 20 dollars 
C)  generally more than 10% 
D)  generally less than 10%

Question 18

An underwriting agreement is a contract in which the investment banker agrees to buy securities at a predetermined price and then resell them to investors.

Accepted Answer

A) True 
 B)False

Question 19

A Dutch auction is an offering process in which investors bid on the price and quantity of securities they wish to purchase.

Accepted Answer

A) True 
 B)False

Question 20

A limit order, if not executed, will expire at the end of

Accepted Answer

A)  the day. 
B)  the week. 
C)  the month. 
D)  all of the above are possibilities as the trader will decide the expiration date. 
A)  the day. 
B)  the week. 
C)  the month. 
D)  all of the above are possibilities as the trader will decide the expiration date.

A receipt that represents foreign shares owned and traded by U.S. investors is called a(n):

The syndicate dissolves:

Which of the following is not a basic type of member of the New York Stock Exchange?

The flotation costs of an IPO depend on

In reality, an option's value will equal its intrinsic value only at expiration. At all other times, the option's premium or price will exceed its intrinsic value. A major reason for this is/are _____________.

Which of the following statements is false?

In most years, about 5 to 10 stocks are replaced in the S&P 500 index.

If a Microsoft January 20 put option with a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $18.00, the price of the put option would be _______________.

A market has if it can absorb large orders without disrupting prices; it has ___ if it has many trades.

The American Stock Exchange is also known as Amex.

All public offerings are regulated by the Securities and Exchange Commission (SEC).

A house broker handle the commission brokers' overflow.

A good market will have four characteristics: liquidity, quick and accurate trade execution, reasonable listing requirements, and safety.

Federal regulation of investment banking is administered primarily under the provisions of the ___________________.

Existing securities are traded:

Insider trading regulation is provided for under the Securities Exchange Act of 1934.

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

An underwriting agreement is a contract in which the investment banker agrees to buy securities at a predetermined price and then resell them to investors.

A Dutch auction is an offering process in which investors bid on the price and quantity of securities they wish to purchase.

A limit order, if not executed, will expire at the end of

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

A receipt that represents foreign shares owned and traded by U.S. investors is called a(n):

The syndicate dissolves:

Which of the following is not a basic type of member of the New York Stock Exchange?

The flotation costs of an IPO depend on

In reality, an option's value will equal its intrinsic value only at expiration. At all other times, the option's premium or price will exceed its intrinsic value. A major reason for this is/are _____________.

Which of the following statements is false?

In most years, about 5 to 10 stocks are replaced in the S&P 500 index.

If a Microsoft January 20 put option with a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $18.00, the price of the put option would be _______________.

A market has ________ if it can absorb large orders without disrupting prices; it has ___________ if it has many trades.

The American Stock Exchange is also known as Amex.

All public offerings are regulated by the Securities and Exchange Commission (SEC).

A house broker handle the commission brokers' overflow.

A good market will have four characteristics: liquidity, quick and accurate trade execution, reasonable listing requirements, and safety.

Federal regulation of investment banking is administered primarily under the provisions of the ___________________.

Existing securities are traded:

Insider trading regulation is provided for under the Securities Exchange Act of 1934.

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

An underwriting agreement is a contract in which the investment banker agrees to buy securities at a predetermined price and then resell them to investors.

A Dutch auction is an offering process in which investors bid on the price and quantity of securities they wish to purchase.

A limit order, if not executed, will expire at the end of

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

A market has if it can absorb large orders without disrupting prices; it has ___ if it has many trades.