Question 1

Explain the differences between the primary and secondary security markets.

Accepted Answer

primary securities markets: involve the

Question 2

An average that indicates the overall trend of Canadian security prices is

Accepted Answer

A)  the Dow Jones index. 
B)  the S&P/TSX index. 
C)  the price of Bell Telephone stock. 
D)  the average price of all oil stocks. 
E)  the NASDAQ index. 
A)  the Dow Jones index. 
B)  the S&P/TSX index. 
C)  the price of Bell Telephone stock. 
D)  the average price of all oil stocks. 
E)  the NASDAQ index.

Question 3

________ are trading rules reducing excessive market volatility and promoting investor confidence that temporarily suspend trading on the New York Stock Exchange.

Accepted Answer

A)  Auto-buy 
B)  Automated quotations 
C)  Program trading 
D)  Robotics 
E)  Circuit breakers 
A)  Auto-buy 
B)  Automated quotations 
C)  Program trading 
D)  Robotics 
E)  Circuit breakers

Question 4

The face value of stock is known as its book value.

Accepted Answer

A) True 
 B)False

Question 5

Tom has authorized the purchase of a certain stock only if its price is less than or equal to a given amount.This is known as a(n)

Accepted Answer

A)  short sale. 
B)  odd lot order. 
C)  market order. 
D)  limit buy order. 
E)  round lot order. 
A)  short sale. 
B)  odd lot order. 
C)  market order. 
D)  limit buy order. 
E)  round lot order.

Question 6

Independent dealers who own the securities that they buy and sell do their trading

Accepted Answer

A)  on the Toronto Stock Exchange. 
B)  only at par value. 
C)  with investors who want to hide their identity. 
D)  in the over-the-counter market. 
E)  only on foreign stock exchanges. 
A)  on the Toronto Stock Exchange. 
B)  only at par value. 
C)  with investors who want to hide their identity. 
D)  in the over-the-counter market. 
E)  only on foreign stock exchanges.

Question 7

Which of the following statements about short selling is false?

Accepted Answer

A)  At some time in the future,the speculator must buy the security to "cover" the short sale. 
B)  Short selling is legal. 
C)  Short selling involves selling a security that you do not own by borrowing it from your broker. 
D)  Speculators may profit from short selling when stock prices are falling. 
E)  Speculators will generally profit from short selling when the company puts out positive information about its sales prospects. 
A)  At some time in the future,the speculator must buy the security to "cover" the short sale. 
B)  Short selling is legal. 
C)  Short selling involves selling a security that you do not own by borrowing it from your broker. 
D)  Speculators may profit from short selling when stock prices are falling. 
E)  Speculators will generally profit from short selling when the company puts out positive information about its sales prospects.

Question 8

Scott just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

Accepted Answer

A)  Stop order,round lot 
B)  Round lot,limit order 
C)  Market order,round lot 
D)  Limit order,odd lot 
E)  Odd lot,stop order 
A)  Stop order,round lot 
B)  Round lot,limit order 
C)  Market order,round lot 
D)  Limit order,odd lot 
E)  Odd lot,stop order

Question 9

Insider trading is an illegal act in which an individual with special knowledge about a firm trades on that information for profit.

Accepted Answer

A) True 
 B)False

Question 10

Corporations issuing debentures should expect to pay higher interest rates than corporations issuing secured bonds.

Accepted Answer

A) True 
 B)False

Question 11

In order for a security to be listed on the Toronto Stock Exchange,the issuing corporation must

Accepted Answer

A)  have at least 200 employees. 
B)  have paid a fee. 
C)  have a market capitalization of at least $1 million. 
D)  be making a profit. 
E)  provide physical goods,not services. 
A)  have at least 200 employees. 
B)  have paid a fee. 
C)  have a market capitalization of at least $1 million. 
D)  be making a profit. 
E)  provide physical goods,not services.

Question 12

Scott just called his broker to place an order to buy 200 shares of IBM at the best price the broker could get.Which of the terms below describe his order?

Accepted Answer

A)  Stop order,round lot 
B)  Round lot,limit order 
C)  Limit order,odd lot 
D)  Odd lot,stop order 
E)  Market order,round lot 
A)  Stop order,round lot 
B)  Round lot,limit order 
C)  Limit order,odd lot 
D)  Odd lot,stop order 
E)  Market order,round lot

Question 13

A blue-chip stock is a stock of a well-established,financially sound firm.

Accepted Answer

A) True 
 B)False

Question 14

Les says that it is foolish to invest in the stock market because you can lose money.It is much better to simply put your money in a savings account where it is safe.Laura agrees that investing is risky,but says that even relatively low-risk investments will earn more than the low rate of interest that is paid in a savings account.What are Les and Laura disagreeing about?

Accepted Answer

A)  Whether the risk of investing is worthwhile 
B)  Whether savings accounts earn more interest than the return on stocks 
C)  Whether companies tell the truth about their financial status 
D)  Whether anyone can make money by investing in stocks 
E)  Whether investing always involves risk,or only sometimes involves risk. 
A)  Whether the risk of investing is worthwhile 
B)  Whether savings accounts earn more interest than the return on stocks 
C)  Whether companies tell the truth about their financial status 
D)  Whether anyone can make money by investing in stocks 
E)  Whether investing always involves risk,or only sometimes involves risk.

Question 15

Online trading is becoming increasingly popular because

Accepted Answer

A)  experts manage the traders' portfolios. 
B)  traders do not need to use a broker to buy and sell stocks. 
C)  online brokerages provide investment advice. 
D)  it is facilitated by convenient access to the internet. 
E)  all of these are reasons. 
A)  experts manage the traders' portfolios. 
B)  traders do not need to use a broker to buy and sell stocks. 
C)  online brokerages provide investment advice. 
D)  it is facilitated by convenient access to the internet. 
E)  all of these are reasons.

Question 16

New securities are traded in the ______________,while existing securities are traded in the _____________.

Accepted Answer

A)  primary securities market; secondary securities market 
B)  equity market; debt market 
C)  debt market; equity market 
D)  secondary securities market; primary securities market 
E)  common stock market; preferred stock market 
A)  primary securities market; secondary securities market 
B)  equity market; debt market 
C)  debt market; equity market 
D)  secondary securities market; primary securities market 
E)  common stock market; preferred stock market

Question 17

What is a mutual fund?

Accepted Answer

A mutual fund is a company tha

Question 18

The issuer of a callable bond has the right to raise the interest rate and extend the maturity date at any time.

Accepted Answer

A) True 
 B)False

Question 19

If the market price of Gentec's shares is $30.00,and there are 3 million shares outstanding,then Gentec's market capitalization is $9 million.

Accepted Answer

A) True 
 B)False

Question 20

The par value of a stock is an arbitrary accounting value that is of little interest to stock purchasers.

Accepted Answer

A) True 
 B)False

Explain the differences between the primary and secondary security markets.

An average that indicates the overall trend of Canadian security prices is

________ are trading rules reducing excessive market volatility and promoting investor confidence that temporarily suspend trading on the New York Stock Exchange.

The face value of stock is known as its book value.

Tom has authorized the purchase of a certain stock only if its price is less than or equal to a given amount.This is known as a(n)

Independent dealers who own the securities that they buy and sell do their trading

Which of the following statements about short selling is false?

Scott just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

Insider trading is an illegal act in which an individual with special knowledge about a firm trades on that information for profit.

Corporations issuing debentures should expect to pay higher interest rates than corporations issuing secured bonds.

In order for a security to be listed on the Toronto Stock Exchange,the issuing corporation must

Scott just called his broker to place an order to buy 200 shares of IBM at the best price the broker could get.Which of the terms below describe his order?

A blue-chip stock is a stock of a well-established,financially sound firm.

Online trading is becoming increasingly popular because

New securities are traded in the __,while existing securities are traded in the _.

What is a mutual fund?

The issuer of a callable bond has the right to raise the interest rate and extend the maturity date at any time.

If the market price of Gentec's shares is $30.00,and there are 3 million shares outstanding,then Gentec's market capitalization is $9 million.

The par value of a stock is an arbitrary accounting value that is of little interest to stock purchasers.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Financial Decisions and Risk Management

Filters

Exam 19: Understanding Securities and Investments

Explain the differences between the primary and secondary security markets.

An average that indicates the overall trend of Canadian security prices is

________ are trading rules reducing excessive market volatility and promoting investor confidence that temporarily suspend trading on the New York Stock Exchange.

The face value of stock is known as its book value.

Tom has authorized the purchase of a certain stock only if its price is less than or equal to a given amount.This is known as a(n)

Independent dealers who own the securities that they buy and sell do their trading

Which of the following statements about short selling is false?

Scott just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

Insider trading is an illegal act in which an individual with special knowledge about a firm trades on that information for profit.

Corporations issuing debentures should expect to pay higher interest rates than corporations issuing secured bonds.

In order for a security to be listed on the Toronto Stock Exchange,the issuing corporation must

Scott just called his broker to place an order to buy 200 shares of IBM at the best price the broker could get.Which of the terms below describe his order?

A blue-chip stock is a stock of a well-established,financially sound firm.

Online trading is becoming increasingly popular because

New securities are traded in the ______________,while existing securities are traded in the _____________.

What is a mutual fund?

The issuer of a callable bond has the right to raise the interest rate and extend the maturity date at any time.

If the market price of Gentec's shares is $30.00,and there are 3 million shares outstanding,then Gentec's market capitalization is $9 million.

The par value of a stock is an arbitrary accounting value that is of little interest to stock purchasers.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Financial Decisions and Risk Management

Filters

New securities are traded in the __,while existing securities are traded in the _.