Question 1

Is investing on margin what the average investor should do?

Accepted Answer

Investing on margin is highly risky and should not be done unless the investor can afford to lose the money.

Question 2

One way for an investor to protect themselves when selling a stock short is to

Accepted Answer

A)  not make the sale on margin. 
B)  buy an offsetting amount of the same shares coincident with the short sale to perfectly hedge the transaction. 
C)  issue a stop buy limit order at a price somewhere above the short sale price. 
D)  An investor cannot protect against large losses in a short sale transaction. 
A)  not make the sale on margin. 
B)  buy an offsetting amount of the same shares coincident with the short sale to perfectly hedge the transaction. 
C)  issue a stop buy limit order at a price somewhere above the short sale price. 
D)  An investor cannot protect against large losses in a short sale transaction. C

Question 3

Stocks that are subject to more uncertainty tend to have a

Accepted Answer

A)  wider range in prices over time. 
B)  narrower range in prices over time. 
C)  higher closing price. 
D)  higher annual dividend. 
A)  wider range in prices over time. 
B)  narrower range in prices over time. 
C)  higher closing price. 
D)  higher annual dividend. A

Question 4

Which of the following is the most risky?

Accepted Answer

A)  Buying stocks online 
B)  Buying on margin 
C)  Buying from a broker 
D)  Buying a bond 
A)  Buying stocks online 
B)  Buying on margin 
C)  Buying from a broker 
D)  Buying a bond

Question 5

Use the exhibit below to answer the following question(s):
  
-What was the closing price per share for Drizel on the day before the trading shown on this listing?

Accepted Answer

A)  $45.49 
B)  $45.69 
C)  $45.29 
D)  $48.78 
A)  $45.49 
B)  $45.69 
C)  $45.29 
D)  $48.78

Question 6

To start an online brokerage account,you need to do all of the following except

Accepted Answer

A)  follow instructions to set up an account. 
B)  mail or deposit cash in an account. 
C)  go to the Web site. 
D)  deposit a minimum number of shares already owned. 
A)  follow instructions to set up an account. 
B)  mail or deposit cash in an account. 
C)  go to the Web site. 
D)  deposit a minimum number of shares already owned.

Question 7

How much cash would you need to purchase 500 shares of stock at $21 per share plus brokerage commissions of $125,if you purchase on margin and the margin requirement is 50%?

Accepted Answer

A)  $10,625 
B)  $5,312.50 
C)  $10,500 
D)  $5,250 
A)  $10,625 
B)  $5,312.50 
C)  $10,500 
D)  $5,250

Question 8

Online trading of stocks is not only less expensive than using traditional brokers,but is usually more convenient too.

Accepted Answer

A) True 
 B)False

Question 9

The NYSE MKT LLC (formerly called the American Stock Exchange)is the largest of the physical stock exchanges.

Accepted Answer

A) True 
 B)False

Question 10

A ________ trader helps create a market in one or more stocks by taking an opposite position to the orders placed by clients.

Accepted Answer

A)  day 
B)  stock 
C)  floor 
D)  specialist 
A)  day 
B)  stock 
C)  floor 
D)  specialist

Question 11

Use the exhibit below to answer the following question(s):
  
-Approximately how much did Bixto Company earn per share of common stock during the last year?

Accepted Answer

A)  $1.00 
B)  $15.00 
C)  $.44 
D)  $7.22 
A)  $1.00 
B)  $15.00 
C)  $.44 
D)  $7.22

Question 12

You bought IBM stock at $70 per share.It is now $120 a share.You think it could go higher but you are nervous that it could go down and you would lose your gains.To protect your gains but still give yourself the chance to make future profits you could place a

Accepted Answer

A)  market order. 
B)  sell stop order at $100 a share. 
C)  buy stop order at $100 a share. 
D)  sell stop order at $150 a share. 
A)  market order. 
B)  sell stop order at $100 a share. 
C)  buy stop order at $100 a share. 
D)  sell stop order at $150 a share.

Question 13

In the U.S.,IPO shares are generally listed on the ________ because the listing requirements are ________.

Accepted Answer

A)  NASDAQ; less stringent 
B)  NYSE MKT LLC; less stringent 
C)  NYSE; more stringent 
D)  Amex; flexible 
A)  NASDAQ; less stringent 
B)  NYSE MKT LLC; less stringent 
C)  NYSE; more stringent 
D)  Amex; flexible

Question 14

You purchase 300 shares of stock on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50%.How much additional cash would you need to deposit with your broker if the price of the stock dropped to $37 per share?

Accepted Answer

A)  $825 
B)  $1,500 
C)  $1,650 
D)  $5,550 
A)  $825 
B)  $1,500 
C)  $1,650 
D)  $5,550

Question 15

A stock dividend is distributed to the company's

Accepted Answer

A)  individual creditors. 
B)  bank lenders. 
C)  suppliers. 
D)  stockholders. 
A)  individual creditors. 
B)  bank lenders. 
C)  suppliers. 
D)  stockholders.

Question 16

You can currently borrow up to 75% of stock transactions under today's margin rules.

Accepted Answer

A) True 
 B)False

Question 17

A ________ order is an order to execute a transaction to buy or sell a stock only if the price is within the range specified.

Accepted Answer

A)  limit 
B)  stock 
C)  market 
D)  written 
A)  limit 
B)  stock 
C)  market 
D)  written

Question 18

Technical analysis and fundamental analysis are methods commonly used by investors to value stocks.

Accepted Answer

A) True 
 B)False

Question 19

The most up-to-date quotes of stock prices may be found in The Wall Street Journal.

Accepted Answer

A) True 
 B)False

Question 20

With an online brokerage firm,you have all of the following except

Accepted Answer

A)  money market fund for uninvested cash. 
B)  a personal sales representative to answer your questions. 
C)  quick and convenient trades. 
D)  very low cost trades. 
A)  money market fund for uninvested cash. 
B)  a personal sales representative to answer your questions. 
C)  quick and convenient trades. 
D)  very low cost trades.

Exam 15: Investing in Stocks

Is investing on margin what the average investor should do?

One way for an investor to protect themselves when selling a stock short is to

Stocks that are subject to more uncertainty tend to have a

Which of the following is the most risky?

Use the exhibit below to answer the following question(s): -What was the closing price per share for Drizel on the day before the trading shown on this listing?

To start an online brokerage account,you need to do all of the following except

How much cash would you need to purchase 500 shares of stock at $21 per share plus brokerage commissions of $125,if you purchase on margin and the margin requirement is 50%?

Online trading of stocks is not only less expensive than using traditional brokers,but is usually more convenient too.

The NYSE MKT LLC (formerly called the American Stock Exchange)is the largest of the physical stock exchanges.

A ________ trader helps create a market in one or more stocks by taking an opposite position to the orders placed by clients.

Use the exhibit below to answer the following question(s): -Approximately how much did Bixto Company earn per share of common stock during the last year?

You bought IBM stock at $70 per share.It is now $120 a share.You think it could go higher but you are nervous that it could go down and you would lose your gains.To protect your gains but still give yourself the chance to make future profits you could place a

In the U.S.,IPO shares are generally listed on the ________ because the listing requirements are ________.

You purchase 300 shares of stock on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50%.How much additional cash would you need to deposit with your broker if the price of the stock dropped to $37 per share?

A stock dividend is distributed to the company's

You can currently borrow up to 75% of stock transactions under today's margin rules.

A ________ order is an order to execute a transaction to buy or sell a stock only if the price is within the range specified.

Technical analysis and fundamental analysis are methods commonly used by investors to value stocks.

The most up-to-date quotes of stock prices may be found in The Wall Street Journal.

With an online brokerage firm,you have all of the following except

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

In the U.S.,IPO shares are generally listed on the because the listing requirements are .