Question 1

The maintenance margin requirement sets the minimum an investor must remit to purchase a stock.

Accepted Answer

A) True 
 B)False  False

Question 2

The level of securities prices is set by market makers.

Accepted Answer

A) True 
 B)False  False

Question 3

Investors are insured from brokerage firm losses by

Accepted Answer

A) the SEC 
B) the Federal Reserve 
C) the SIPC 
D) the FDIC 
A) the SEC 
B) the Federal Reserve 
C) the SIPC 
D) the FDIC C

Question 4

If the investor buys stock on margin and the price subsequently declines, the percentage loss is magnified.

Accepted Answer

A) True 
 B)False

Question 5

The margin requirement is set by the SEC.

Accepted Answer

A) True 
 B)False

Question 6

A short sale is a sale that occurs quickly after the stock is purchased.

Accepted Answer

A) True 
 B)False

Question 7

The primary role of organized securities exchanges is to raise capital (money)for firms.

Accepted Answer

A) True 
 B)False

Question 8

The spread between the bid and ask prices should be viewed as one of the costs of investing.

Accepted Answer

A) True 
 B)False

Question 9

The spread is the

Accepted Answer

A) difference between the bid and ask prices 
B) commission charged by the broker 
C) difference between the purchase and sale prices 
D) difference between the commissions charged by full service and discount/online brokers 
A) difference between the bid and ask prices 
B) commission charged by the broker 
C) difference between the purchase and sale prices 
D) difference between the commissions charged by full service and discount/online brokers

Question 10

The SEC establishes the price of a new stock issue.

Accepted Answer

A) True 
 B)False

Question 11

Concerning a new issue of stock, a lock-up refers to

Accepted Answer

A) a guaranteed profit on the initial purchase 
B) a guaranteed profit to the underwriter 
C) the requirement that shares purchased by insiders prior to an initial public offering must retain those shares for a specified period 
D) initial buyers of the stock in the IPO must hold the shares for a specified period of time 
A) a guaranteed profit on the initial purchase 
B) a guaranteed profit to the underwriter 
C) the requirement that shares purchased by insiders prior to an initial public offering must retain those shares for a specified period 
D) initial buyers of the stock in the IPO must hold the shares for a specified period of time

Question 12

If the quote on stock is reduced, that implies
1. supply exceeded demand
2. demand exceeded supply
3. the price was too high
4. the price was too low

Accepted Answer

A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4 
A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4

Question 13

Daily securities transactions that are reported in the financial media generally include
1. the volume of transactions
2. the high and low prices for the day
3. the net change in price from the previous day

Accepted Answer

A) 1 and 2 
B) 1 and 3 
C) 2 and 3 
D) all of the above 
A) 1 and 2 
B) 1 and 3 
C) 2 and 3 
D) all of the above

Question 14

If the underwriter overprices a new issue, the market price of the securities will rise.

Accepted Answer

A) True 
 B)False

Question 15

The direct sale of new securities to a pension plan is a private placement, and the securities do not have to be registered with the SEC.

Accepted Answer

A) True 
 B)False

Question 16

U. S. citizens may invest in foreign stocks by purchasing American Depository Receipts (ADRs).

Accepted Answer

A) True 
 B)False

Question 17

The Securities Investor Protection Corporation (SIPC)protects individuals from poor investments.

Accepted Answer

A) True 
 B)False

Question 18

Sarbanes-Oxley created the Public Company Accounting Oversight Board whose task is to regulate securities prices.

Accepted Answer

A) True 
 B)False

Question 19

Inside information

Accepted Answer

A) is obtained from inside brokerage firms 
B) is reported in a firm's financial statements 
C) must be disclosed to the SEC 
D) may not be legally used to obtain security profits 
A) is obtained from inside brokerage firms 
B) is reported in a firm's financial statements 
C) must be disclosed to the SEC 
D) may not be legally used to obtain security profits

Question 20

Short selling requires
1. no collateral
2. a margin payment
3. delivering securities owned
4. borrowing securities to deliver

Accepted Answer

A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4 
A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4

The maintenance margin requirement sets the minimum an investor must remit to purchase a stock.

The level of securities prices is set by market makers.

Investors are insured from brokerage firm losses by

If the investor buys stock on margin and the price subsequently declines, the percentage loss is magnified.

The margin requirement is set by the SEC.

A short sale is a sale that occurs quickly after the stock is purchased.

The primary role of organized securities exchanges is to raise capital (money)for firms.

The spread between the bid and ask prices should be viewed as one of the costs of investing.

The spread is the

The SEC establishes the price of a new stock issue.

Concerning a new issue of stock, a lock-up refers to

If the quote on stock is reduced, that implies 1. supply exceeded demand 2. demand exceeded supply 3. the price was too high 4. the price was too low

Daily securities transactions that are reported in the financial media generally include 1. the volume of transactions 2. the high and low prices for the day 3. the net change in price from the previous day

If the underwriter overprices a new issue, the market price of the securities will rise.

The direct sale of new securities to a pension plan is a private placement, and the securities do not have to be registered with the SEC.

U. S. citizens may invest in foreign stocks by purchasing American Depository Receipts (ADRs).

The Securities Investor Protection Corporation (SIPC)protects individuals from poor investments.

Sarbanes-Oxley created the Public Company Accounting Oversight Board whose task is to regulate securities prices.

Inside information

Short selling requires 1. no collateral 2. a margin payment 3. delivering securities owned 4. borrowing securities to deliver

An Introduction to Investments

The Time Value of Money

Financial Planning, Taxation and the Efficiency of Financial Markets

Risk and Portfolio Management

Investment Companies: Mutual Funds

Closed-End Investment Companies, Real Estate Investment Trusts Reits, and Exchange-Traded Funds Etfs

Stock

The Valuation of Common Stock

Investment Returns and Aggregate Measures of Stock Markets

The Macroeconomic Environment for Investment Decisions

Behavioral Finance and Technical Analysis

The Bond Market

The Valuation of Fixed-Income Securities

Government Securities

Convertible Bonds and Convertible Preferred Stock

An Introduction to Options

Option Valuation and Strategies

Commodity and Financial Futures

Financial Planning and Investing in an Efficient Market Context

Filters

Exam 2: Securities Markets

The maintenance margin requirement sets the minimum an investor must remit to purchase a stock.

The level of securities prices is set by market makers.

Investors are insured from brokerage firm losses by

If the investor buys stock on margin and the price subsequently declines, the percentage loss is magnified.

The margin requirement is set by the SEC.

A short sale is a sale that occurs quickly after the stock is purchased.

The primary role of organized securities exchanges is to raise capital (money)for firms.

The spread between the bid and ask prices should be viewed as one of the costs of investing.

The spread is the

The SEC establishes the price of a new stock issue.

Concerning a new issue of stock, a lock-up refers to

If the quote on stock is reduced, that implies 1. supply exceeded demand 2. demand exceeded supply 3. the price was too high 4. the price was too low

Daily securities transactions that are reported in the financial media generally include 1. the volume of transactions 2. the high and low prices for the day 3. the net change in price from the previous day

If the underwriter overprices a new issue, the market price of the securities will rise.

The direct sale of new securities to a pension plan is a private placement, and the securities do not have to be registered with the SEC.

U. S. citizens may invest in foreign stocks by purchasing American Depository Receipts (ADRs).

The Securities Investor Protection Corporation (SIPC)protects individuals from poor investments.

Sarbanes-Oxley created the Public Company Accounting Oversight Board whose task is to regulate securities prices.

Inside information

Short selling requires 1. no collateral 2. a margin payment 3. delivering securities owned 4. borrowing securities to deliver

An Introduction to Investments

The Time Value of Money

Financial Planning, Taxation and the Efficiency of Financial Markets

Risk and Portfolio Management

Investment Companies: Mutual Funds

Closed-End Investment Companies, Real Estate Investment Trusts Reits, and Exchange-Traded Funds Etfs

Stock

The Valuation of Common Stock

Investment Returns and Aggregate Measures of Stock Markets

The Macroeconomic Environment for Investment Decisions

Behavioral Finance and Technical Analysis

The Bond Market

The Valuation of Fixed-Income Securities

Government Securities

Convertible Bonds and Convertible Preferred Stock

An Introduction to Options

Option Valuation and Strategies

Commodity and Financial Futures

Financial Planning and Investing in an Efficient Market Context

Filters