Question 1

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) 15 to 20 percent 
B) 15 to 20 dollars 
C) 10 to 15 percent 
D) 10 to 15 dollars 
E) none of the above. 
A) 15 to 20 percent 
B) 15 to 20 dollars 
C) 10 to 15 percent 
D) 10 to 15 dollars 
E) none of the above.

Question 2

ADRs are created are traded in dollars and represent share of foreign companies not traded on U.S.exchanges.

Accepted Answer

A) True 
 B)False

Question 3

American depository receipts are receipts which represent foreign shares to U.S.investors.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Commercial banks were for many years prohibited from full-fledged investment banking by the:

Accepted Answer

A) Glass-Steagall Act 
B) Garn-St.Germain Depository Institutions Act 
C) Securities Act of 1933 
D) National Association of Securities Dealers 
A) Glass-Steagall Act 
B) Garn-St.Germain Depository Institutions Act 
C) Securities Act of 1933 
D) National Association of Securities Dealers

Question 7

___________________________________ has the goal of a creating a single market for investment services across the European Union as well as creating a single set of regulations for financial services firms.

Accepted Answer

A) European Securities Services (ESS) 
B) Markets in Financial Instruments Directive (MiFI
D)  
C) Continental Brokerage Services (CBS) 
D) Money Market Clearing House (MMCH) 
E) none of the above. 
A) European Securities Services (ESS) 
B) Markets in Financial Instruments Directive (MiFI
D)  
C) Continental Brokerage Services (CBS) 
D) Money Market Clearing House (MMCH) 
E) none of the above.

Question 8

Over the counter markets are organized exchanges for trading securities such as the American Stock Exchange.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

A recent securities transaction report detailed a sale of Tandy stock.The report appeared as TAN 2s25.How many shares are being reported in this sales transaction?

Accepted Answer

A) 2 
B) 100 
C) 200 
D) 25 
A) 2 
B) 100 
C) 200 
D) 25

Question 11

An option contract is a derivative security that obligates the owner to purchase the underlying asset at a specified price on a specified day.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following securities issues do not require competitive bidding?

Accepted Answer

A) state government bond issues 
B) public utility security issues 
C) Federal government bond issues 
D) corporate bond issues 
A) state government bond issues 
B) public utility security issues 
C) Federal government bond issues 
D) corporate bond issues

Question 13

An option is ______________ if its exercise price is equal to the current market price of the underlying asset.

Accepted Answer

A) in-the-money 
B) out-of-the-money 
C) at-the money 
D) on-the-money 
A) in-the-money 
B) out-of-the-money 
C) at-the money 
D) on-the-money

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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,out-of-the-money 
C) less the volatility,in-the-money 
D) two of the above are correct. 
E) none of the above. 
A) shorter the time to expiration,in-the-money 
B) longer the time to expiration,out-of-the-money 
C) less the volatility,in-the-money 
D) two of the above are correct. 
E) none of the above.

Question 16

If a Microsoft January 20 call option with a strike price of $20 was selling for $6.62 and the market price of the underlying Microsoft stock was $25.62,the price of the call option would be _______________.

Accepted Answer

A) in-the-money 
B) out-of-the-money 
C) fairly priced 
D) not enough information to tell 
A) in-the-money 
B) out-of-the-money 
C) fairly priced 
D) not enough information to tell

Question 17

___________________ 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 18

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Accepted Answer

A) direct costs (legal fees,accounting fees,etc. ) 
B) underwriter's spread 
C) overpricing 
D) underpricing 
A) direct costs (legal fees,accounting fees,etc. ) 
B) underwriter's spread 
C) overpricing 
D) underpricing

Question 19

Existing securities are traded in the primary market.

Accepted Answer

A) True 
 B)False

Question 20

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

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.

ADRs are created are traded in dollars and represent share of foreign companies not traded on U.S.exchanges.

American depository receipts are receipts which represent foreign shares to U.S.investors.

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

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

Commercial banks were for many years prohibited from full-fledged investment banking by the:

___________________________________ has the goal of a creating a single market for investment services across the European Union as well as creating a single set of regulations for financial services firms.

Over the counter markets are organized exchanges for trading securities such as the American Stock Exchange.

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.

A recent securities transaction report detailed a sale of Tandy stock.The report appeared as TAN 2s25.How many shares are being reported in this sales transaction?

An option contract is a derivative security that obligates the owner to purchase the underlying asset at a specified price on a specified day.

Which of the following securities issues do not require competitive bidding?

An option is ______________ if its exercise price is equal to the current market price of the underlying asset.

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

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

If a Microsoft January 20 call option with a strike price of $20 was selling for $6.62 and the market price of the underlying Microsoft stock was $25.62,the price of 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.

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Existing securities are traded in the primary market.

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

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 Valuation

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 Markets

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.

ADRs are created are traded in dollars and represent share of foreign companies not traded on U.S.exchanges.

American depository receipts are receipts which represent foreign shares to U.S.investors.

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

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

Commercial banks were for many years prohibited from full-fledged investment banking by the:

___________________________________ has the goal of a creating a single market for investment services across the European Union as well as creating a single set of regulations for financial services firms.

Over the counter markets are organized exchanges for trading securities such as the American Stock Exchange.

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.

A recent securities transaction report detailed a sale of Tandy stock.The report appeared as TAN 2s25.How many shares are being reported in this sales transaction?

An option contract is a derivative security that obligates the owner to purchase the underlying asset at a specified price on a specified day.

Which of the following securities issues do not require competitive bidding?

An option is ______________ if its exercise price is equal to the current market price of the underlying asset.

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

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

If a Microsoft January 20 call option with a strike price of $20 was selling for $6.62 and the market price of the underlying Microsoft stock was $25.62,the price of 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.

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Existing securities are traded in the primary market.

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

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 Valuation

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 _.