Question 1

An order to execute a trade at the best price available as soon as the transaction reaches the market is called a ____ order.

Accepted Answer

A)  Market 
B)  Stop 
C)  Limit 
D)  Day 
E)  Fill or kill 
A)  Market 
B)  Stop 
C)  Limit 
D)  Day 
E)  Fill or kill

Question 2

A ____ order is an order to buy or sell a stock at no worse than a specified price.

Accepted Answer

A)  price 
B)  limit 
C)  market 
D)  stop 
A)  price 
B)  limit 
C)  market 
D)  stop

Question 3

Because the simple arithmetic return does not consider compounding,its value will always be less than the geometric average return,unless the annual rates of return are constant.

Accepted Answer

A) True 
 B)False

Question 4

The degree of risk adversity exhibited by investors varies among individuals at any point in time and changes for individuals across time.

Accepted Answer

A) True 
 B)False

Question 5

An investor purchased 1,000 shares of AZT stock on January 5,2012 for $83.25 per share.On March 20,a dividend of $0.75 per share was paid.Fifty days later,on May 9,2012,the stock was sold for $85.00.What is the holding period return? Assume the dividend is not reinvested.

Accepted Answer

A)  21.6% 
B)  3.0% 
C)  9.5% 
D)  15.1% 
E)  1.0% 
A)  21.6% 
B)  3.0% 
C)  9.5% 
D)  15.1% 
E)  1.0%

Question 6

An investor receives a margin call because

Accepted Answer

A)  the value of the stock that was sold short has decreased below a price specified by the broker. 
B)  the brokerage firm wants to provide her with information about a new public stock issue that it will be handling in the future. 
C)  interest rates in the financial markets have increased substantially,and the brokerage firm wants her to immediately repay the loan she has outstanding. 
D)  the Federal Reserve intends to sell a special issue of Treasury securities and it needs investors to subscribe to the issue as quickly as possible. 
E)  the price of the stock she purchased on margin has decreased enough so that the actual margin is below the maintenance margin. 
A)  the value of the stock that was sold short has decreased below a price specified by the broker. 
B)  the brokerage firm wants to provide her with information about a new public stock issue that it will be handling in the future. 
C)  interest rates in the financial markets have increased substantially,and the brokerage firm wants her to immediately repay the loan she has outstanding. 
D)  the Federal Reserve intends to sell a special issue of Treasury securities and it needs investors to subscribe to the issue as quickly as possible. 
E)  the price of the stock she purchased on margin has decreased enough so that the actual margin is below the maintenance margin.

Question 7

Staci purchased a stock on April 12 for $78.00 and sold it on October 13 the same year,for $76.75.What is Staci's holding period return assuming she received a dividend of $2.20 per share on June 14,which was not reinvested?

Accepted Answer

A)  −1.6% 
B)  4.4% 
C)  1.2% 
D)  9.0% 
E)  2.4% 
A)  −1.6% 
B)  4.4% 
C)  1.2% 
D)  9.0% 
E)  2.4%

Question 8

Foxy Ladies Investment Club
The Foxy Ladies Investment Club purchased 100 shares of common stock each in Coca-Cola, Intel, and Merck on January 02, 2010. A summary of their portfolio is given below:
 
-Refer to Foxy Ladies Investment Club.What is the portfolio's three-year holding period return (from January 2010 through December 2012)?

Accepted Answer

A)  71.8% 
B)  23.9% 
C)  68.3% 
D)  22.8% 
E)  None of the above. 
A)  71.8% 
B)  23.9% 
C)  68.3% 
D)  22.8% 
E)  None of the above.

Question 9

An investor who wants to have a "hands on" approach to managing his or her investment portfolio in order to take advantage of market anomalies would want to follow the passive management style of investing.

Accepted Answer

A) True 
 B)False

Question 10

Foxy Ladies Investment Club
The Foxy Ladies Investment Club purchased 100 shares of common stock each in Coca-Cola, Intel, and Merck on January 02, 2010. A summary of their portfolio is given below:
 
-Refer to Foxy Ladies Investment Club.What was the 12-month holding period return for Coca-Cola during 2010?

Accepted Answer

A)  −30.0% 
B)  43.7% 
C)  −29.0% 
D)  30.6% 
E)  −41.4% 
A)  −30.0% 
B)  43.7% 
C)  −29.0% 
D)  30.6% 
E)  −41.4%

Question 11

Discount brokers can offer trades at lower commissions than full service brokers because they require all of their clients to trade electronically rather than through a broker.

Accepted Answer

A) True 
 B)False

Question 12

The relative amount of personal funds,or initial equity,an investor has to "put up" when purchasing stocks on margin is called the initial margin requirement.

Accepted Answer

A) True 
 B)False

Question 13

An individual's risk tolerance level depends on existing economic conditions.For example,when the economy is doing well an individual is more likely to have lower risk tolerance level.

Accepted Answer

A) True 
 B)False

Question 14

All of the following are examples of transactions costs for buying securities except

Accepted Answer

A)  time costs 
B)  bid/ask spread 
C)  brokerage fees 
D)  telephone calls 
E)  all of the above are example of transaction costs 
A)  time costs 
B)  bid/ask spread 
C)  brokerage fees 
D)  telephone calls 
E)  all of the above are example of transaction costs

Question 15

A portfolio contains three stocks (Stock A,Stock B,and Stock C).The overall value of the portfolio increased 20 percent during 2010⎯the value of Stock A increased by 15 percent,the value of Stock B increased by 22 percent,and the value of Stock C increased by 30 percent.If 40 percent of the total funds in the portfolio were in Stock A at the beginning of 2010,what was the percent of funds (weight)invested in stock B?

Accepted Answer

A)  50% 
B)  30% 
C)  10% 
D)  60% 
E)  40% 
A)  50% 
B)  30% 
C)  10% 
D)  60% 
E)  40%

Question 16

Asset allocation recommendations shift from investments like ____ to ____ as the individual investor gets closer to retirement.

Accepted Answer

A)  stocks;equity 
B)  stocks;cash 
C)  cash;stocks 
D)  bonds;stocks 
A)  stocks;equity 
B)  stocks;cash 
C)  cash;stocks 
D)  bonds;stocks

Question 17

All of the following are reasons to monitor your investment portfolio except to

Accepted Answer

A)  Ensure the goals are being met. 
B)  Take advantage of changes in economic and legal conditions. 
C)  Adjust the portfolio with respect to a change in risk attitude. 
D)  Capture additional transaction costs. 
E)  None of the above. 
A)  Ensure the goals are being met. 
B)  Take advantage of changes in economic and legal conditions. 
C)  Adjust the portfolio with respect to a change in risk attitude. 
D)  Capture additional transaction costs. 
E)  None of the above.

Question 18

Use the information below to solve for the dividend yield for Lowes.

Accepted Answer

A)  1.9% 
B)  1.4% 
C)  2.6% 
D)  0.9% 
E)  None of the above. 
A)  1.9% 
B)  1.4% 
C)  2.6% 
D)  0.9% 
E)  None of the above.

Question 19

A limit order,which is an order to trade at no worse than the price specified by the investor,is the most common type of order placed by investors.

Accepted Answer

A) True 
 B)False

Question 20

Tristar Growth Mutual Fund reported annual holding period returns of 22 percent in 2010,25 percent in 2011,and 31 percent in 2012.What was the simple arithmetic average return generated by Tristar for the period 2010 through 2012?

Accepted Answer

A)  31.0% 
B)  33.3% 
C)  26.0% 
D)  28.0% 
E)  25.0% 
A)  31.0% 
B)  33.3% 
C)  26.0% 
D)  28.0% 
E)  25.0%

An order to execute a trade at the best price available as soon as the transaction reaches the market is called a ____ order.

A ____ order is an order to buy or sell a stock at no worse than a specified price.

Because the simple arithmetic return does not consider compounding,its value will always be less than the geometric average return,unless the annual rates of return are constant.

The degree of risk adversity exhibited by investors varies among individuals at any point in time and changes for individuals across time.

An investor purchased 1,000 shares of AZT stock on January 5,2012 for $83.25 per share.On March 20,a dividend of $0.75 per share was paid.Fifty days later,on May 9,2012,the stock was sold for $85.00.What is the holding period return? Assume the dividend is not reinvested.

An investor receives a margin call because

Staci purchased a stock on April 12 for $78.00 and sold it on October 13 the same year,for $76.75.What is Staci's holding period return assuming she received a dividend of $2.20 per share on June 14,which was not reinvested?

An investor who wants to have a "hands on" approach to managing his or her investment portfolio in order to take advantage of market anomalies would want to follow the passive management style of investing.

Discount brokers can offer trades at lower commissions than full service brokers because they require all of their clients to trade electronically rather than through a broker.

The relative amount of personal funds,or initial equity,an investor has to "put up" when purchasing stocks on margin is called the initial margin requirement.

An individual's risk tolerance level depends on existing economic conditions.For example,when the economy is doing well an individual is more likely to have lower risk tolerance level.

All of the following are examples of transactions costs for buying securities except

Asset allocation recommendations shift from investments like to as the individual investor gets closer to retirement.

All of the following are reasons to monitor your investment portfolio except to

Use the information below to solve for the dividend yield for Lowes.

A limit order,which is an order to trade at no worse than the price specified by the investor,is the most common type of order placed by investors.

Tristar Growth Mutual Fund reported annual holding period returns of 22 percent in 2010,25 percent in 2011,and 31 percent in 2012.What was the simple arithmetic average return generated by Tristar for the period 2010 through 2012?

An Overview of Finance

Financial Assets Instruments

Financial Markets and the Investment Banking Process

Financial Intermediaries and the Banking System

The Cost of Money Interest Rates

Business Organizations and the Tax Environment

Analysis of Financial Statements

Financial Planning and Control

Time Value of Money

Valuation Concepts

Risk and Rates of Return

The Cost of Capital

Capital Budgeting

Capital Structure and Dividend Policy Decisions

Working Capital Management

Investment Analysis and Valuation Techniques

Filters

Exam 16: Investment and Securities

An order to execute a trade at the best price available as soon as the transaction reaches the market is called a ____ order.

A ____ order is an order to buy or sell a stock at no worse than a specified price.

Because the simple arithmetic return does not consider compounding,its value will always be less than the geometric average return,unless the annual rates of return are constant.

The degree of risk adversity exhibited by investors varies among individuals at any point in time and changes for individuals across time.

An investor purchased 1,000 shares of AZT stock on January 5,2012 for $83.25 per share.On March 20,a dividend of $0.75 per share was paid.Fifty days later,on May 9,2012,the stock was sold for $85.00.What is the holding period return? Assume the dividend is not reinvested.

An investor receives a margin call because

Staci purchased a stock on April 12 for $78.00 and sold it on October 13 the same year,for $76.75.What is Staci's holding period return assuming she received a dividend of $2.20 per share on June 14,which was not reinvested?

An investor who wants to have a "hands on" approach to managing his or her investment portfolio in order to take advantage of market anomalies would want to follow the passive management style of investing.

Discount brokers can offer trades at lower commissions than full service brokers because they require all of their clients to trade electronically rather than through a broker.

The relative amount of personal funds,or initial equity,an investor has to "put up" when purchasing stocks on margin is called the initial margin requirement.

An individual's risk tolerance level depends on existing economic conditions.For example,when the economy is doing well an individual is more likely to have lower risk tolerance level.

All of the following are examples of transactions costs for buying securities except

Asset allocation recommendations shift from investments like ____ to ____ as the individual investor gets closer to retirement.

All of the following are reasons to monitor your investment portfolio except to

Use the information below to solve for the dividend yield for Lowes.

A limit order,which is an order to trade at no worse than the price specified by the investor,is the most common type of order placed by investors.

Tristar Growth Mutual Fund reported annual holding period returns of 22 percent in 2010,25 percent in 2011,and 31 percent in 2012.What was the simple arithmetic average return generated by Tristar for the period 2010 through 2012?

An Overview of Finance

Financial Assets Instruments

Financial Markets and the Investment Banking Process

Financial Intermediaries and the Banking System

The Cost of Money Interest Rates

Business Organizations and the Tax Environment

Analysis of Financial Statements

Financial Planning and Control

Time Value of Money

Valuation Concepts

Risk and Rates of Return

The Cost of Capital

Capital Budgeting

Capital Structure and Dividend Policy Decisions

Working Capital Management

Investment Analysis and Valuation Techniques

Filters

Asset allocation recommendations shift from investments like to as the individual investor gets closer to retirement.