Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The secondary markets provides a means to evaluate a firm's management.

Accepted Answer

A) True 
 B)False

Question 3

The document which details the issuer's finances and must be provided to each buyer of the security is called the:

Accepted Answer

A)  indenture 
B)  prospectus 
C)  tombstone 
D)  all the above 
A)  indenture 
B)  prospectus 
C)  tombstone 
D)  all the above

Question 4

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

Accepted Answer

A) True 
 B)False

Question 5

If a Microsoft January 20 call option had a strike price of $20 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.

Accepted Answer

A)  in-the-money 
B)  out-of-the-money 
C)  fairly priced 
D)  called by the Microsoft 
A)  in-the-money 
B)  out-of-the-money 
C)  fairly priced 
D)  called by the Microsoft

Question 6

___________________ is when an investor borrows money and invests t he borrowed funds along with his or her own funds in securities.

Accepted Answer

A)  A short sale 
B)  A stop-loss order 
C)  A limit order 
D)  Buying on margin 
A)  A short sale 
B)  A stop-loss order 
C)  A limit order 
D)  Buying on margin

Question 7

ADRs are created and traded in dollars on U.S. exchanges. They represent a given number of shares of a foreign firm's stock.

Accepted Answer

A) True 
 B)False

Question 8

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $4.00 
D)  $5.00 
A)  $1.00 
B)  $2.00 
C)  $4.00 
D)  $5.00

Question 9

Ask - Bid = Spread.

Accepted Answer

A) True 
 B)False

Question 10

The issuer has no price risk in a firm commitment offering once the offer price is set.

Accepted Answer

A) True 
 B)False

Question 11

The ________________________, the greater the chance of the option becoming _____________________.

Accepted Answer

A)  shorter the time to expiration, in-the-money 
B)  longer the time to expiration, in-the-money 
C)  less the volatility, in-the-money 
D)  longer the time to expiration, out of the money 
A)  shorter the time to expiration, in-the-money 
B)  longer the time to expiration, in-the-money 
C)  less the volatility, in-the-money 
D)  longer the time to expiration, out of the money

Question 12

Which exchange remains the main market for exchange traded options?

Accepted Answer

A)  New York Exchange Board 
B)  American Options Exchange 
C)  Chicago Board Options Exchange 
D)  Philadelphia Board of Options 
A)  New York Exchange Board 
B)  American Options Exchange 
C)  Chicago Board Options Exchange 
D)  Philadelphia Board of Options

Question 13

A trade in the multiple of 100 shares is called a (n):

Accepted Answer

A)  round lot 
B)  odd lot 
C)  block trade 
D)  none of the above 
A)  round lot 
B)  odd lot 
C)  block trade 
D)  none of the above

Question 14

The fourth market is a market for large blocks of listed stocks that operate outside the confines of the organized exchanges.

Accepted Answer

A) True 
 B)False

Question 15

Investors can purchase stocks with no money down.

Accepted Answer

A) True 
 B)False

Question 16

Federal regulation of investment banking is administered primarily under the provisions of the Investment Banking Monitoring and Control Act of 1999.

Accepted Answer

A) True 
 B)False

Question 17

Existing securities are sold in 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 18

Private placement can avoid SEC registration and all SEC regulations.

Accepted Answer

A) True 
 B)False

Question 19

If a Microsoft January 20 call option with a strike price of $20 was selling for $2.00 and the market price of the underlying Microsoft stock was $25.62, the call 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 20

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in 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

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

The secondary markets provides a means to evaluate a firm's management.

The document which details the issuer's finances and must be provided to each buyer of the security is called the:

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

If a Microsoft January 20 call option had a strike price of $20 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.

___________________ is when an investor borrows money and invests t he borrowed funds along with his or her own funds in securities.

ADRs are created and traded in dollars on U.S. exchanges. They represent a given number of shares of a foreign firm's stock.

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

Ask - Bid = Spread.

The issuer has no price risk in a firm commitment offering once the offer price is set.

The ____, the greater the chance of the option becoming _.

Which exchange remains the main market for exchange traded options?

A trade in the multiple of 100 shares is called a (n):

The fourth market is a market for large blocks of listed stocks that operate outside the confines of the organized exchanges.

Investors can purchase stocks with no money down.

Federal regulation of investment banking is administered primarily under the provisions of the Investment Banking Monitoring and Control Act of 1999.

Existing securities are sold in the:

Private placement can avoid SEC registration and all SEC regulations.

If a Microsoft January 20 call option with a strike price of $20 was selling for $2.00 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in the:

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

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

The secondary markets provides a means to evaluate a firm's management.

The document which details the issuer's finances and must be provided to each buyer of the security is called the:

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

If a Microsoft January 20 call option had a strike price of $20 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.

___________________ is when an investor borrows money and invests t he borrowed funds along with his or her own funds in securities.

ADRs are created and traded in dollars on U.S. exchanges. They represent a given number of shares of a foreign firm's stock.

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

Ask - Bid = Spread.

The issuer has no price risk in a firm commitment offering once the offer price is set.

The ________________________, the greater the chance of the option becoming _____________________.

Which exchange remains the main market for exchange traded options?

A trade in the multiple of 100 shares is called a (n):

The fourth market is a market for large blocks of listed stocks that operate outside the confines of the organized exchanges.

Investors can purchase stocks with no money down.

Federal regulation of investment banking is administered primarily under the provisions of the Investment Banking Monitoring and Control Act of 1999.

Existing securities are sold in the:

Private placement can avoid SEC registration and all SEC regulations.

If a Microsoft January 20 call option with a strike price of $20 was selling for $2.00 and the market price of the underlying Microsoft stock was $25.62, the call option would be _______________.

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in the:

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

The ____, the greater the chance of the option becoming _.