Question 1

Sales of securities that the seller does not own is called a:

Accepted Answer

A) stop-loss order 
B) short sale 
C) limit order 
D) maintenance margin 
A) stop-loss order 
B) short sale 
C) limit order 
D) maintenance margin

Question 2

A limit order, if not executed, will expire at the end of

Accepted Answer

A) the day. 
B) the week. 
C) the month. 
D) all of the above are possibilities as the trader will decide the expiration date. 
A) the day. 
B) the week. 
C) the month. 
D) all of the above are possibilities as the trader will decide the expiration date.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

Accepted Answer

A) 15 to 20 percent 
B) 15 to 20 dollars 
C) 10 to 15 percent 
D) 10 to 15 dollars 
E) none of the above. 
A) 15 to 20 percent 
B) 15 to 20 dollars 
C) 10 to 15 percent 
D) 10 to 15 dollars 
E) none of the above.

Question 5

CommissionFloor brokers:

Accepted Answer

A) act as agents to execute customers' orders for securities purchases and sales 
B) assist specialists in executing orders 
C) trade for their own accounts 
D) all the above 
E) none of the above 
A) act as agents to execute customers' orders for securities purchases and sales 
B) assist specialists in executing orders 
C) trade for their own accounts 
D) all the above 
E) none of the above

Question 6

Which of the following securities issues do not require competitive bidding?

Accepted Answer

A) state government bond issues 
B) public utility security issues 
C) Federal government bond issues 
D) corporate bond issues 
A) state government bond issues 
B) public utility security issues 
C) Federal government bond issues 
D) corporate bond issues

Question 7

While the Chicago Board Options Exchange remains the main market for exchange traded options, the ______________ exchange also deals in option contracts.

Accepted Answer

A) New York 
B) American 
C) Pacific 
D) Philadelphia 
E) all of the above. 
A) New York 
B) American 
C) Pacific 
D) Philadelphia 
E) all of the above.

Question 8

Floor brokers act as agents to execute customers' orders for securities purchases and sales.

Accepted Answer

A) True 
 B)False

Question 9

The aftermarket is the marketa period of time after an IPO.where securities are subsequently bought and sold after they are initially issued.

Accepted Answer

A) True 
 B)False

Question 10

In a financial context, due diligence refers to the detailed study of a corporation.

Accepted Answer

A) True 
 B)False

Question 11

Under a best-effort agreement, investment bankers try to sell the securities of the issuing corporation, but they assume no risk for a possible failure of the flotation.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Market stabilization is:

Accepted Answer

A) disallowed under the Securities Act of 1934 
B) permitted for underwriters if the market price falls below the offering price 
C) prohibited by the Securities Exchange Commission 
D) all the above 
E) none of the above 
A) disallowed under the Securities Act of 1934 
B) permitted for underwriters if the market price falls below the offering price 
C) prohibited by the Securities Exchange Commission 
D) all the above 
E) none of the above

Question 14

Over-the-counter (OTC) trades must take place:

Accepted Answer

A) on the floor of the New York Stock Exchange 
B) on the floor of the American Stock Exchange 
C) on the floor of the NASDAQ Stock Exchange 
D) none of the above 
A) on the floor of the New York Stock Exchange 
B) on the floor of the American Stock Exchange 
C) on the floor of the NASDAQ Stock Exchange 
D) none of the above

Question 15

If a market has "price pressure" this is a sign of

Accepted Answer

A) good liquidity in the market. 
B) low liquidity in the market. 
C) high listing fees. 
D) high brokerage commissions 
A) good liquidity in the market. 
B) low liquidity in the market. 
C) high listing fees. 
D) high brokerage commissions

Question 16

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Accepted Answer

A) direct costs (legal fees, accounting fees, etc.) 
B) underwriter's spread 
C) overpricing 
D) underpricing 
A) direct costs (legal fees, accounting fees, etc.) 
B) underwriter's spread 
C) overpricing 
D) underpricing

Question 17

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 18

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

Question 19

Newly created securities are sold 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 20

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

Sales of securities that the seller does not own is called a:

A limit order, if not executed, will expire at the end of

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

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

CommissionFloor brokers:

Which of the following securities issues do not require competitive bidding?

While the Chicago Board Options Exchange remains the main market for exchange traded options, the ______________ exchange also deals in option contracts.

Floor brokers act as agents to execute customers' orders for securities purchases and sales.

The aftermarket is the marketa period of time after an IPO.where securities are subsequently bought and sold after they are initially issued.

In a financial context, due diligence refers to the detailed study of a corporation.

Under a best-effort agreement, investment bankers try to sell the securities of the issuing corporation, but they assume no risk for a possible failure of the flotation.

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

Market stabilization is:

Over-the-counter (OTC) trades must take place:

If a market has "price pressure" this is a sign of

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Existing securities are traded:

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 _______________.

Newly created securities are sold in the:

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.

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

Sales of securities that the seller does not own is called a:

A limit order, if not executed, will expire at the end of

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

Purchasers and sellers of futures are generally required to deposit an initial margin in the range of ___________ with the exchange's clearinghouse to reduce credit risk.

CommissionFloor brokers:

Which of the following securities issues do not require competitive bidding?

While the Chicago Board Options Exchange remains the main market for exchange traded options, the ______________ exchange also deals in option contracts.

Floor brokers act as agents to execute customers' orders for securities purchases and sales.

The aftermarket is the marketa period of time after an IPO.where securities are subsequently bought and sold after they are initially issued.

In a financial context, due diligence refers to the detailed study of a corporation.

Under a best-effort agreement, investment bankers try to sell the securities of the issuing corporation, but they assume no risk for a possible failure of the flotation.

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

Market stabilization is:

Over-the-counter (OTC) trades must take place:

If a market has "price pressure" this is a sign of

Which one of the following is not a cost to the issuing firm of going public with an initial stock offering?

Existing securities are traded:

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 _______________.

Newly created securities are sold in the:

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.

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