Question 1

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is most correct?

Accepted Answer

A) Because a specialist is given the monopoly power to make a market on a particular stock, all trades must pass through the specialist. 
B) A specialist can also perform the function of a commission broker. 
C) A floor broker acts as an agent to execute customer's orders for securities purchases and sales. 
D) Each of the above statements is false. 
A) Because a specialist is given the monopoly power to make a market on a particular stock, all trades must pass through the specialist. 
B) A specialist can also perform the function of a commission broker. 
C) A floor broker acts as an agent to execute customer's orders for securities purchases and sales. 
D) Each of the above statements is false.

Question 3

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

Accepted Answer

A) $5.00 
B) $10.00 
C) $15.00 
D) $25.00 
E) none of the above. 
A) $5.00 
B) $10.00 
C) $15.00 
D) $25.00 
E) none of the above.

Question 4

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

Question 5

An underwriting agreement is a contract in which the investment banker agrees to underwrite or do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is most correct?

Accepted Answer

A) The Dow Jones Industrial Average is market-value weighted. 
B) The Dow Jones Industrial Average is a good benchmark by which to measure the performance of investment managers. 
C) The 500 stocks comprising the S&P 500 are the largest 500 firms. 
D) The 60 largest capitalization stocks in the S&P 500 account for over half of the market value of the index.Indexes exist for the bond market. 
A) The Dow Jones Industrial Average is market-value weighted. 
B) The Dow Jones Industrial Average is a good benchmark by which to measure the performance of investment managers. 
C) The 500 stocks comprising the S&P 500 are the largest 500 firms. 
D) The 60 largest capitalization stocks in the S&P 500 account for over half of the market value of the index.Indexes exist for the bond market.

Question 7

The Federal Reserve System and the New York Stock Exchange regulations currently require the short seller to have an initial margin of at least _______ of the price of the stock:

Accepted Answer

A) 10% 
B) 25% 
C) 30% 
D) 50% 
A) 10% 
B) 25% 
C) 30% 
D) 50%

Question 8

The aftermarket is:

Accepted Answer

A) the over-the-counter market 
B) the foreign exchange market 
C) the period after a new issue is initially sold to the public 
D) none of the above 
A) the over-the-counter market 
B) the foreign exchange market 
C) the period after a new issue is initially sold to the public 
D) none of the above

Question 9

If a Microsoft January 20 put option with had a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $15.00, 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

Question 10

An order for immediate purchase or sale at the best possible price is called a:

Accepted Answer

A) market order 
B) limit order 
C) stop loss order 
D) margin order 
A) market order 
B) limit order 
C) stop loss order 
D) margin order

Question 11

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

Accepted Answer

A) A prospectus 
B) An underwriting agreement 
C) A best-effort agreement 
D) none of the above 
A) A prospectus 
B) An underwriting agreement 
C) A best-effort agreement 
D) none of the above

Question 12

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

Accepted Answer

A) good-until-canceled order Not n the book 
B) limit order 
C) day order 
D) stop-loss order 
A) good-until-canceled order Not n the book 
B) limit order 
C) day order 
D) stop-loss order

Question 13

___________________________________ 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 14

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in the:

Accepted Answer

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

Question 15

Which of the following markets allow for nighttime trading?

Accepted Answer

A) American Stock Exchange 
B) New York Stock Exchange 
C) Chicago Board Options Exchange 
D) all the above 
E) none of the above 
A) American Stock Exchange 
B) New York Stock Exchange 
C) Chicago Board Options Exchange 
D) all the above 
E) none of the above

Question 16

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are considered futures exchanges EXCEPT:

Accepted Answer

A) the Chicago Board of Trade (CBOT) 
B) The Chicago Mercantile Exchange (CM
E)  
C) the Commodity Exchange (COMEX) 
D) all of the above 
E) none of the above 
A) the Chicago Board of Trade (CBOT) 
B) The Chicago Mercantile Exchange (CM
E)  
C) the Commodity Exchange (COMEX) 
D) all of the above 
E) none of the above

Question 18

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

Question 19

A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

Accepted Answer

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

Question 20

Exchange-traded options are liquid because they are standardized in terms of:

Accepted Answer

A) announcement dates 
B) future prices 
C) timing of the underlying asset 
D) location of the underlying asset 
E) none of the above. 
A) announcement dates 
B) future prices 
C) timing of the underlying asset 
D) location of the underlying asset 
E) none of the above.

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

Which of the following statements is most correct?

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

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

An underwriting agreement is a contract in which the investment banker agrees to underwrite or do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

Which of the following statements is most correct?

The Federal Reserve System and the New York Stock Exchange regulations currently require the short seller to have an initial margin of at least _______ of the price of the stock:

The aftermarket is:

If a Microsoft January 20 put option with had a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $15.00, the price of the put option would be _______________.

An order for immediate purchase or sale at the best possible price is called a:

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

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

___________________________________ 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.

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in the:

Which of the following markets allow for nighttime trading?

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

All of the following are considered futures exchanges EXCEPT:

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 market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

Exchange-traded options are liquid because they are standardized in terms of:

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

The Glass-Steagall Act of 1933 ended the ability of commercial banks to act as underwriters of newly issued securities.

Which of the following statements is most correct?

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

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

An underwriting agreement is a contract in which the investment banker agrees to underwrite or do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

Which of the following statements is most correct?

The Federal Reserve System and the New York Stock Exchange regulations currently require the short seller to have an initial margin of at least _______ of the price of the stock:

The aftermarket is:

If a Microsoft January 20 put option with had a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $15.00, the price of the put option would be _______________.

An order for immediate purchase or sale at the best possible price is called a:

___________________ is an agreement by the investment banker to sell securities of the issuing corporation whereby the investment banker assumes no risk for the possible failure of the flotation.

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

___________________________________ 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.

Trades between large institutional investors that take place without the benefits of brokers or dealers occur in the:

Which of the following markets allow for nighttime trading?

Organized securities exchanges include the New York Stock Exchange, the American Stock Exchange, and NASDAQ.

All of the following are considered futures exchanges EXCEPT:

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 market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:

Exchange-traded options are liquid because they are standardized in terms of:

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