Question 1

Program trading simply means that trades are executed on computer programs written by the SEC.

Accepted Answer

A) True 
 B)False

Question 2

The process of selling a new issue of securities so that the price is guaranteed to the selling firm is referred to as:

Accepted Answer

A) underwriting. 
B) best efforts. 
C) direct by issuer. 
D) shelf registration. 
E) All of the above involve a price guarantee 
A) underwriting. 
B) best efforts. 
C) direct by issuer. 
D) shelf registration. 
E) All of the above involve a price guarantee

Question 3

A security traded on an exchange must meet listing requirements.

Accepted Answer

A) True 
 B)False

Question 4

The investment banker assumes a price risk under a best efforts agreement.

Accepted Answer

A) True 
 B)False

Question 5

Specialists are now able to keep their limit orders in the Electronic Book rather than the old manual "specialist's book."

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT a characteristic of an organized exchange?

Accepted Answer

A) It functions as a primary market 
B) Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers in a central location 
C) It may be either national or regional 
D) It has a central location where all trading takes place 
E) It functions as a secondary market 
A) It functions as a primary market 
B) Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers in a central location 
C) It may be either national or regional 
D) It has a central location where all trading takes place 
E) It functions as a secondary market

Question 7

Program trading decreases market efficiency by exaggerating price discrepancies between the cash and futures markets.

Accepted Answer

A) True 
 B)False

Question 8

The first exchange to become a publicly traded company was the:

Accepted Answer

A) New York Stock Exchange. 
B) Chicago Board of Trade. 
C) NASDAQ Stock Market. 
D) American Stock Exchange. 
E) Chicago Mercantile Exchange. 
A) New York Stock Exchange. 
B) Chicago Board of Trade. 
C) NASDAQ Stock Market. 
D) American Stock Exchange. 
E) Chicago Mercantile Exchange.

Question 9

The investment banker is responsible for everything except:

Accepted Answer

A) underwriting an issue of securities. 
B) being the leader and a part of the syndicate of large issues, providing that one is formed. 
C) the distribution process of a security issue. 
D) selling an agreed-upon number of bonds and stocks. 
A) underwriting an issue of securities. 
B) being the leader and a part of the syndicate of large issues, providing that one is formed. 
C) the distribution process of a security issue. 
D) selling an agreed-upon number of bonds and stocks.

Question 10

Why was the Sarbanes-Oxley Act enacted?

Accepted Answer

The Sarbanes-Oxley Act was ena

Question 11

The Gramm-Leach-Bliley Act was passed in 1999 by the U.S. Congress to allow:

Accepted Answer

A) financial institutions to offer full financial services, such as insurance and investment banking, as well as traditional commercial banking. 
B) financial institutions to be sued by stockholders for off-balance sheet accounting errors. 
C) savings and loans to compete with commercial banks in both the commercial banking arena and mortgage loans. 
D) European banks to acquire U.S. financial institutions. 
A) financial institutions to offer full financial services, such as insurance and investment banking, as well as traditional commercial banking. 
B) financial institutions to be sued by stockholders for off-balance sheet accounting errors. 
C) savings and loans to compete with commercial banks in both the commercial banking arena and mortgage loans. 
D) European banks to acquire U.S. financial institutions.

Question 12

The least popular form of distributing corporate securities is:

Accepted Answer

A) underwriting. 
B) best efforts. 
C) firm commitment. 
D) syndicated offering. 
E) direct by issuer. 
A) underwriting. 
B) best efforts. 
C) firm commitment. 
D) syndicated offering. 
E) direct by issuer.

Question 13

The _______________ has/have the most restrictive listing requirements.

Accepted Answer

A) Regional exchanges 
B) ECNs 
C) NASDAQ Stock market 
D) New York Stock Exchange 
E) American Stock Exchange 
A) Regional exchanges 
B) ECNs 
C) NASDAQ Stock market 
D) New York Stock Exchange 
E) American Stock Exchange

Question 14

International competition from world markets has had very little effect on U.S. exchanges.

Accepted Answer

A) True 
 B)False

Question 15

One of the functions of a specialist is:

Accepted Answer

A) to manipulate price continuity. 
B) to change quotation spreads. 
C) to measure market depth as needed. 
D) to execute special orders for floor brokers. 
A) to manipulate price continuity. 
B) to change quotation spreads. 
C) to measure market depth as needed. 
D) to execute special orders for floor brokers.

Question 16

The Chicago Stock Exchange is the only one of the regional stock exchanges still viable.

Accepted Answer

A) True 
 B)False

Question 17

Electronic communication systems:

Accepted Answer

A) allow investors to communicate with others in investor chat rooms. 
B) allow markets to trade American Depository Receipts online in Europe and Asia. 
C) automatically match buy and sell orders at specified prices. 
D) are operated by the investment bankers to stabilize new issue markets. 
A) allow investors to communicate with others in investor chat rooms. 
B) allow markets to trade American Depository Receipts online in Europe and Asia. 
C) automatically match buy and sell orders at specified prices. 
D) are operated by the investment bankers to stabilize new issue markets.

Question 18

NASDAQ ranks as the largest equity market in the world.

Accepted Answer

A) True 
 B)False

Question 19

Deregulation of financial institutions and mergers has created a more competitive environment for retail brokerage houses.

Accepted Answer

A) True 
 B)False

Question 20

One characteristic of efficient markets is that prices adjust rapidly to new information.

Accepted Answer

A) True 
 B)False

Exam 2: Security Markets

Program trading simply means that trades are executed on computer programs written by the SEC.

The process of selling a new issue of securities so that the price is guaranteed to the selling firm is referred to as:

A security traded on an exchange must meet listing requirements.

The investment banker assumes a price risk under a best efforts agreement.

Specialists are now able to keep their limit orders in the Electronic Book rather than the old manual "specialist's book."

Which of the following is NOT a characteristic of an organized exchange?

Program trading decreases market efficiency by exaggerating price discrepancies between the cash and futures markets.

The first exchange to become a publicly traded company was the:

The investment banker is responsible for everything except:

Why was the Sarbanes-Oxley Act enacted?

The Gramm-Leach-Bliley Act was passed in 1999 by the U.S. Congress to allow:

The least popular form of distributing corporate securities is:

The _______________ has/have the most restrictive listing requirements.

International competition from world markets has had very little effect on U.S. exchanges.

One of the functions of a specialist is:

The Chicago Stock Exchange is the only one of the regional stock exchanges still viable.

Electronic communication systems:

NASDAQ ranks as the largest equity market in the world.

Deregulation of financial institutions and mergers has created a more competitive environment for retail brokerage houses.

One characteristic of efficient markets is that prices adjust rapidly to new information.

The Investment Setting

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Economic Activity

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters