Question 1

Which of the following is not an advantage of shelf registration?

Accepted Answer

A) saving time on issuing securities 
B) none of the above 
C) allows issuer to determine which investment bank offers the best service 
D) eliminates filing fees 
E) all the above 
A) saving time on issuing securities 
B) none of the above 
C) allows issuer to determine which investment bank offers the best service 
D) eliminates filing fees 
E) all the above

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

___________________ is the market for large blocks of listed stocks that operates outside the confines of the organized exchanges.

Accepted Answer

A) The primary market 
B) The secondary market 
C) The third market 
D) The fourth market 
A) The primary market 
B) The secondary market 
C) The third market 
D) The fourth market

Question 4

The aftermarket is the market where securities are subsequently bought and sold after they are initially issued.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is false?

Accepted Answer

A) The Dow Jones Industrial Average is an example of 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) Each of the above statements is correct. 
A) The Dow Jones Industrial Average is an example of 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) Each of the above statements is correct.

Question 6

Commissions on stock trades are set by the stock exchanges.

Accepted Answer

A) True 
 B)False

Question 7

If a limit order is not quite close to the current market price is turned over to the specialist,it is placed into:

Accepted Answer

A) central limit order book 
B) market order book 
C) short sale book 
D) none of the above 
A) central limit order book 
B) market order book 
C) short sale book 
D) none of the above

Question 8

Churning happens when a broker constantly buys and sells securities from a client's portfolio in an effort to generate commissions.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Rights offerings among public corporations became infrequent in the United States during the 1980s and 1990s.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

The primary market is a market in which securities are traded among investors.

Accepted Answer

A) True 
 B)False

Question 14

If an investor feels the price of a stock will decline in the future,which trade should the investor undertake?

Accepted Answer

A) market order 
B) buy on margin 
C) limit order 
D) short sale 
A) market order 
B) buy on margin 
C) limit order 
D) short sale

Question 15

A dealer is a person who assists in the trading process by buying or selling securities in the market for an investor.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following is not a primary market function of investment bankers?

Accepted Answer

A) originating 
B) underwriting 
C) selling 
D) making loans 
A) originating 
B) underwriting 
C) selling 
D) making loans

Question 17

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 18

If the initial margin requirement is 50% and you have $5,000 in your brokerage account,you may purchase an additional __________ worth of securities on margin.

Accepted Answer

A) $2,000 
B) $2,500 
C) $10,000 
D) none of the above 
A) $2,000 
B) $2,500 
C) $10,000 
D) none of the above

Question 19

An order that remains in effect until the end of the day is called a:

Accepted Answer

A) good-until-canceled order 
B) limit order 
C) day order 
D) stop-loss order 
A) good-until-canceled order 
B) limit order 
C) day order 
D) stop-loss order

Question 20

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

Which of the following is not an advantage of shelf registration?

The syndicate dissolves:

___________________ is the market for large blocks of listed stocks that operates outside the confines of the organized exchanges.

The aftermarket is the market where securities are subsequently bought and sold after they are initially issued.

Which of the following statements is false?

Commissions on stock trades are set by the stock exchanges.

If a limit order is not quite close to the current market price is turned over to the specialist,it is placed into:

Churning happens when a broker constantly buys and sells securities from a client's portfolio in an effort to generate commissions.

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.

Rights offerings among public corporations became infrequent in the United States during the 1980s and 1990s.

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

Existing securities are traded:

The primary market is a market in which securities are traded among investors.

If an investor feels the price of a stock will decline in the future,which trade should the investor undertake?

A dealer is a person who assists in the trading process by buying or selling securities in the market for an investor.

Which one of the following is not a primary market function of investment bankers?

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

If the initial margin requirement is 50% and you have $5,000 in your brokerage account,you may purchase an additional __________ worth of securities on margin.

An order that remains in effect until the end of the day is called a:

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 _______________.

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

Which of the following is not an advantage of shelf registration?

The syndicate dissolves:

___________________ is the market for large blocks of listed stocks that operates outside the confines of the organized exchanges.

The aftermarket is the market where securities are subsequently bought and sold after they are initially issued.

Which of the following statements is false?

Commissions on stock trades are set by the stock exchanges.

If a limit order is not quite close to the current market price is turned over to the specialist,it is placed into:

Churning happens when a broker constantly buys and sells securities from a client's portfolio in an effort to generate commissions.

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.

Rights offerings among public corporations became infrequent in the United States during the 1980s and 1990s.

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

Existing securities are traded:

The primary market is a market in which securities are traded among investors.

If an investor feels the price of a stock will decline in the future,which trade should the investor undertake?

A dealer is a person who assists in the trading process by buying or selling securities in the market for an investor.

Which one of the following is not a primary market function of investment bankers?

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

If the initial margin requirement is 50% and you have $5,000 in your brokerage account,you may purchase an additional __________ worth of securities on margin.

An order that remains in effect until the end of the day is called a:

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 _______________.

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