Question 1

Which of the following represents a stock's real value?

Accepted Answer

A)  Profitability ratio 
B)  Market value 
C)  Price earnings ratio 
D)  Par value 
E)  Book value

Question 2

Deprenyl Research Ltd.makes a drug that is used to control Parkinson's disease.When the company convinced a Wall Street health care analyst to recommend the company's stock to his clients,this was an example of

Accepted Answer

A)  a prospectus. 
B)  publicity. 
C)  insider trading. 
D)  investor relations. 
E)  margin trading.

Question 3

A futures contract is an agreement to purchase a specified amount of a mutual fund at a given price on a set date in the future.

Accepted Answer

A) True 
 B)False

Question 4

Primary securities markets are those that handle the most important stock and bond issues,while secondary markets are those that handle the less important issues.

Accepted Answer

A) True 
 B)False

Question 5

Selling prices in the commodities market reflect traders' beliefs about the future prices of commodities such as coffee beans,livestock,and gold.

Accepted Answer

A) True 
 B)False

Question 6

A market order requests the broker to buy or sell a certain security at the prevailing market price at the time.

Accepted Answer

A) True 
 B)False

Question 7

How do the commodity markets work? What are the risks involved when investing in the commodities market? What are the rewards or potential rewards?

Accepted Answer

The answer of How do the commodity markets work? What...

Question 8

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 assumption is Les making when he makes his argument?

Accepted Answer

A)  Some people do,in fact,make money by investing. 
B)  Interest earned on money in a savings account is the only thing that affects the value of the savings account. 
C)  The typical person wants to save money instead of spending it. 
D)  Companies issue stock only if there is no other way to make money. 
E)  There are only a few companies whose stock always grows in value.

Question 9

If the market value of a stock falls to approximately the book value,investor interest in buying the stock generally increases.

Accepted Answer

A) True 
 B)False

Question 10

A(n)________ is an individual or organization who receives and executes buy and sell orders on behalf of other people in return for commissions.

Accepted Answer

A)  commodities market 
B)  broker 
C)  stock exchange 
D)  agent 
E)  investment bank

Exam 19: Understanding Securities and Investments

Which of the following represents a stock's real value?

Deprenyl Research Ltd.makes a drug that is used to control Parkinson's disease.When the company convinced a Wall Street health care analyst to recommend the company's stock to his clients,this was an example of

A futures contract is an agreement to purchase a specified amount of a mutual fund at a given price on a set date in the future.

Primary securities markets are those that handle the most important stock and bond issues,while secondary markets are those that handle the less important issues.

Selling prices in the commodities market reflect traders' beliefs about the future prices of commodities such as coffee beans,livestock,and gold.

A market order requests the broker to buy or sell a certain security at the prevailing market price at the time.

How do the commodity markets work? What are the risks involved when investing in the commodities market? What are the rewards or potential rewards?

If the market value of a stock falls to approximately the book value,investor interest in buying the stock generally increases.

A(n) ________ is an individual or organization who receives and executes buy and sell orders on behalf of other people in return for commissions.