Exam 12: Securities Markets

Acting upon assumed good advice, your brother buys stock in I-Link, an upcoming communications firm. Since this is the first time I-Link is trading its stock, your brother will be involved in a(n) ________.

Patti DeVry has been trading stocks in the over-the-counter market. When she wants to sell her stocks she will specify the ________ price and when she wants to purchase stocks she will specify the ________ price.

An individual selling previously issued shares to another individual is a transaction that would be traded in the primary market.

An ask on offer price is one at which an individual is willing to sell a security.

A margin call requires you to replenish the margin account by adding additional cash or securities to bring the account back up to the minimum.

Explain the bid and ask price system when trading in stocks.

Is Value Line useful? How is it useful?

A good source of investment advice is a neutral party that doesn't charge a fee or earn a commission from you.

Much of the day-to-day regulation of the market is left to the securities industry and is performed by the exchanges and the

An individual investor should look for a stock broker who will churn their accounts for them.

Should the average investor consider using short selling techniques? Why or why not?

You have decided to borrow stock from your broker, sell it in the market, and then (you hope) replace the borrowed shares when the price drops in the future. This is an example of

In the over-the-counter market, the individual investor must be physically present to purchase the security over-the-counter.

Stocks of most larger companies trade on the American Stock Exchange, while the stocks of most smaller companies trade on the New York Stock Exchange.

A sale of a security in the primary markets is the only time the issuing company receives the proceeds from the sale.

The New York Stock Exchange and the American Stock Exchange are considered regional stock exchanges.

What personal characteristics should you look for in a full-service broker and why are they important?

Assume you have a margin account with a 50% initial margin. You purchase 100 shares of Microsoft at $150 per share. The price increases to $175 per share. What is the net value of your investment (margin) now?

Assume you have a margin account with a 50% initial margin. You purchase 100 shares of stock at $80 per share. The price increases to $100 per share. What is the net value of your investment (margin) now?

ABC Corporation is selling additional shares of common stock. These are new shares of stock, and have never been sold or traded previously. The selling of these shares would take place in the ________ market.