Question 1

Which of the following best describes the function of an investment banker selling an issue on a "best efforts" basis?

Accepted Answer

A) Return unsold securities to the firm 
B) Create a market for the securities 
C) Guarantee a continuous liquid market 
D) Private placements to financial institutions 
E) More than one of the above 
A) Return unsold securities to the firm 
B) Create a market for the securities 
C) Guarantee a continuous liquid market 
D) Private placements to financial institutions 
E) More than one of the above

Question 2

In order to be listed on an exchange, a firm must meet minimum standards pertaining to the following criteria:

Accepted Answer

A) the number of common shares publicly held. 
B) the net income of the firm. 
C) the number of stockholders owning a minimum of 100 shares. 
D) All of the above are requirements 
A) the number of common shares publicly held. 
B) the net income of the firm. 
C) the number of stockholders owning a minimum of 100 shares. 
D) All of the above are requirements

Question 3

Only the Chicago regional exchange is still viable, with Philadelphia and Boston being bought by NASDAQ.

Accepted Answer

A) True 
 B)False

Question 4

A syndicate is formed to:

Accepted Answer

A) share the risk between investment bankers. 
B) distribute securities to a wide group of investors. 
C) improve the liquidity/marketability of an offering. 
D) All of the above 
A) share the risk between investment bankers. 
B) distribute securities to a wide group of investors. 
C) improve the liquidity/marketability of an offering. 
D) All of the above

Question 5

Floor brokers act as agents for clients and execute buy and sell orders on the floor of the NYSE exchange.

Accepted Answer

A) True 
 B)False

Question 6

A difference between the primary market and the secondary market is:

Accepted Answer

A) liquidity. 
B) that primary markets allow corporations, government units, and others to raise needed funds for the expansion of their capital base. 
C) that price competition in the secondary markets between different risk-return classes enables the primary market to price new issues at higher prices to reflect existing risk-return relationships. 
D) that the secondary market is much more competitive than the primary market. 
A) liquidity. 
B) that primary markets allow corporations, government units, and others to raise needed funds for the expansion of their capital base. 
C) that price competition in the secondary markets between different risk-return classes enables the primary market to price new issues at higher prices to reflect existing risk-return relationships. 
D) that the secondary market is much more competitive than the primary market.

Question 7

A market is a way of exchanging assets.

Accepted Answer

A) True 
 B)False

Question 8

All markets must have a physical central trading location.

Accepted Answer

A) True 
 B)False

Question 9

In the distribution of corporate bond issues, private placements to large insurance companies dominate the volume of public offerings.

Accepted Answer

A) True 
 B)False

Question 10

A house broker is one who:

Accepted Answer

A) is registered to trade on the exchange but is not an employee of a member firm. 
B) is not associated with a member firm. 
C) represents a retail brokerage firm and transacts business on the floor for customers of that firm. 
D) transacts orders for individuals buying or selling less than 100 shares. 
A) is registered to trade on the exchange but is not an employee of a member firm. 
B) is not associated with a member firm. 
C) represents a retail brokerage firm and transacts business on the floor for customers of that firm. 
D) transacts orders for individuals buying or selling less than 100 shares.

Question 11

Bringing private companies public for the first time is called an initial public offering.

Accepted Answer

A) True 
 B)False

Question 12

The accounting frauds and scandals that took place during the stock market boom of the late 1990s resulted in what significant Act?

Accepted Answer

A) Sarbanes-Oxley Act 
B) Gramm-Leach Bliley Act 
C) Glass-Steagall Act 
D) Honesty in Financial Reporting Act 
E) Securities Exchange Act 
A) Sarbanes-Oxley Act 
B) Gramm-Leach Bliley Act 
C) Glass-Steagall Act 
D) Honesty in Financial Reporting Act 
E) Securities Exchange Act

Question 13

As a part of Super Dot, specialists are informed through Opening Automated Report Service (OARS) of market orders received before the opening bell.

Accepted Answer

A) True 
 B)False

Question 14

When investment bankers underwrite a security, they usually guarantee purchase of the securities at a fixed price for the selling firm.

Accepted Answer

A) True 
 B)False

Question 15

The NASDAQ stock market is a publicly traded corporation.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of over-the-counter markets?

Accepted Answer

A) Trading takes place by telephone or electronic network 
B) It is regulated by the Securities and Exchange Commission and the National Association of Securities Dealers 
C) The total securities traded represent the largest dollar volume in the U.S. 
D) All of the above are true 
A) Trading takes place by telephone or electronic network 
B) It is regulated by the Securities and Exchange Commission and the National Association of Securities Dealers 
C) The total securities traded represent the largest dollar volume in the U.S. 
D) All of the above are true

Question 17

In the __________ market, existing assets are exchanged between investors, while in the ___________ market, participants buy their assets directly from the source of the asset.

Accepted Answer

A) primary; secondary 
B) secondary; primary 
C) tertiary; primary 
D) primary; OTC 
E) prime; subprime 
A) primary; secondary 
B) secondary; primary 
C) tertiary; primary 
D) primary; OTC 
E) prime; subprime

Question 18

Circuit breakers will shut down the market for a period of time if a dramatic drop in stock prices occurs.

Accepted Answer

A) True 
 B)False

Question 19

The Securities and Exchange Commission was created by the:

Accepted Answer

A) Securities Act of 1933. 
B) Securities Exchange Act of 1934. 
C) Investment Advisor Act of 1940. 
D) None of the above 
A) Securities Act of 1933. 
B) Securities Exchange Act of 1934. 
C) Investment Advisor Act of 1940. 
D) None of the above

Question 20

The largest segment of the Over-the-Counter (OTC) Market, in terms of dollar volume, is the U.S. government securities markets.

Accepted Answer

A) True 
 B)False

Exam 2: Security Markets

Which of the following best describes the function of an investment banker selling an issue on a "best efforts" basis?

In order to be listed on an exchange, a firm must meet minimum standards pertaining to the following criteria:

Only the Chicago regional exchange is still viable, with Philadelphia and Boston being bought by NASDAQ.

A syndicate is formed to:

Floor brokers act as agents for clients and execute buy and sell orders on the floor of the NYSE exchange.

A difference between the primary market and the secondary market is:

A market is a way of exchanging assets.

All markets must have a physical central trading location.

In the distribution of corporate bond issues, private placements to large insurance companies dominate the volume of public offerings.

A house broker is one who:

Bringing private companies public for the first time is called an initial public offering.

The accounting frauds and scandals that took place during the stock market boom of the late 1990s resulted in what significant Act?

As a part of Super Dot, specialists are informed through Opening Automated Report Service (OARS) of market orders received before the opening bell.

When investment bankers underwrite a security, they usually guarantee purchase of the securities at a fixed price for the selling firm.

The NASDAQ stock market is a publicly traded corporation.

Which of the following is true of over-the-counter markets?

In the __________ market, existing assets are exchanged between investors, while in the ___________ market, participants buy their assets directly from the source of the asset.

Circuit breakers will shut down the market for a period of time if a dramatic drop in stock prices occurs.

The Securities and Exchange Commission was created by the:

The largest segment of the Over-the-Counter (OTC) Market, in terms of dollar volume, is the U.S. government securities markets.

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

In the market, existing assets are exchanged between investors, while in the _ market, participants buy their assets directly from the source of the asset.