Question 1

If the Dow Jones Industrial Average falls by 10% by 11 am,trading will ______.

Accepted Answer

A)   continue unchanged
B)   will be halted for one hour
C)   will be halted for one-half hour
D)   will be halted for the rest of the dayE) All of the above
F) B) and D)

Question 2

Private placements can be advantageous rather than public issue because ______.
I.private placements are cheaper to market than public issues
II.private placements may still be sold to the general public under SEC Rule 144A
III.privately placed securities trade on secondary markets

Accepted Answer

A)   I only
B)   I and III only
C)   II and III only
D)   I, II and IIIE) A) and B)
F) A) and C)

Question 3

Barnegat Light sold 200,000 shares in an initial public offering.The underwriter's explicit fees were $90,000.The offering price for the shares was $35,but immediately upon issue,the share price jumped to $43.What is the best estimate of the total cost to Barnegat Light of the equity issue?

Accepted Answer

A)   $90,000
B)   $1,290,000
C)   $2,390,000
D)   $1,690,000E) A) and B)
F) A) and C)

Question 4

The ______________ is the most important dealer market in the U.S.and the ______________ is the most important auction market.

Accepted Answer

A)   NYSE; NASDAQ
B)   NASDAQ; NYSE
C)   CME; OTC
D)   AMEX; NYSEE) A) and D)
F) C) and D)

Question 5

The SIPC was established by the ____.

Accepted Answer

A)   Insider Trading Act of 1931
B)   Securities Act of 1933
C)   Securities Exchange Act of 1934
D)   none of these acts established the SIPCE) C) and D)
F) A) and C)

Question 6

The fully automated trade-execution system installed on the NYSE is called

Accepted Answer

A)   FAX
B)   Direct Plus
C)   NASDAQ
D)   SUPERDOTE) A) and B)
F) All of the above

Question 7

Purchases of new issues of stock take place _________.

Accepted Answer

A)   at the desk of the Fed
B)   in the primary market
C)   in the secondary market
D)   in the money marketsE) All of the above
F) C) and D)

Question 8

Which of the following are true concerning short sales of exchange listed stocks?
I.A short sale is permitted only if the last recorded change in the stock's price was positive
II.Proceeds from the short sale must be kept on deposit with the broker
III.Short-sellers must post margin with their broker to cover potential losses on the position
IV.The short-seller earns interest on any cash deposited with the broker that is used to meet the margin requirement

Accepted Answer

A)   I and II only
B)   I, III and IV only
C)   II and III only
D)   I, II, III and IVE) B) and D)
F) B) and C)

Question 9

Assume you purchased 500 shares of XYZ common stock on margin at $40 per share from your broker.If the initial margin is 60%,the amount you borrowed from the broker is _________.

Accepted Answer

A)   $20,000
B)   $12,000
C)   $8,000
D)   $15,000E) A) and B)
F) A) and C)

Question 10

Most European markets,including Euronext,use a/an _____________________.

Accepted Answer

A)   specialist trading system
B)   electronic trading system
C)   continuous auction market
D)   direct search marketE) A) and B)
F) A) and C)

Question 11

The margin requirement on a stock purchase is 25%.You fully use the margin allowed to purchase 100 shares of MSFT at $25.If the price drops to $22,what is your percentage loss?

Accepted Answer

A)   9%
B)   15%
C)   48%
D)   57%E) None of the above
F) A) and C)

Question 12

You sold short 300 shares of common stock at $30 per share.The initial margin is 50%.You must put up _________.

Accepted Answer

A)   $4,500
B)   $6,000
C)   $9,000
D)   $10,000E) B) and C)
F) All of the above

Question 13

Which of the following statements about Saitoris in Japanese stock markets is incorrect?

Accepted Answer

A)   Saitoris maintain the limit order book but may not trade for their own account
B)   Saitoris have more responsibilities than NYSE specialists
C)   Saitoris act as dealers in the Japanese markets
D)   Saitoris are the principle source of liquidity in Japanese marketsE) None of the above
F) A) and B)

Question 14

You purchased 250 shares of common stock on margin for $25 per share.The initial margin is 65% and the stock pays no dividend.Your rate of return would be __________ if you sell the stock at $32 per share.Ignore interest on margin.

Accepted Answer

A)   35%
B)   39%
C)   43%
D)   28%E) None of the above
F) A) and B)

Question 15

What percentage of NYSE transactions is executed by specialists?

Accepted Answer

A)   10%
B)   25%
C)   50%
D)   75%E) All of the above
F) None of the above

Question 16

Brokerage firms can change margin-loan practices ____.

Accepted Answer

A)   without notice
B)   only after 72 hours notice
C)   only on new orders
D)   only with permission from the SECE) All of the above
F) None of the above

Question 17

Which one of the following statements about IPOs is not true?

Accepted Answer

A)   IPOs generally underperform in the short run.
B)   IPOs often provide very good initial returns to investors.
C)   IPOs generally provide superior long-term performance as compared to other stocks.
D)   Shares in IPOs are often primarily allocated to institutional investors.E) None of the above
F) All of the above

Question 18

The New York Stock Exchange is a good example of _________.

Accepted Answer

A)   an auction market
B)   a brokered market
C)   a dealer market
D)   a direct search marketE) C) and D)
F) B) and D)

Question 19

The bid-ask spread exists because of _______________.

Accepted Answer

A)   market inefficiencies
B)   discontinuities in the markets
C)   the need for dealers to cover expenses and make a profit
D)   lack of trading in thin marketsE) A) and C)
F) B) and C)

Question 20

Nasdaq now offers three listing options.The largest,most actively traded firms are on the

Accepted Answer

A)   Nasdaq Global Market
B)   Nasdaq Global Select Market
C)   Nasdaq Capital Market
D)   Nasdaq Pink Sheet StocksE) B) and C)
F) None of the above

Exam 3: Securities Markets

Brokerage firms can change margin-loan practices ____.

Correct Answer
verified

The margin requirement on a stock purchase is 25%.You fully use the margin allowed to purchase 100 shares of MSFT at $25.If the price drops to $22,what is your percentage loss?

Correct Answer
verified

If the Dow Jones Industrial Average falls by 10% by 11 am,trading will ______.

Correct Answer
verified

Purchases of new issues of stock take place _________.

Correct Answer
verified

Nasdaq now offers three listing options.The largest,most actively traded firms are on the

Correct Answer
verified

The fully automated trade-execution system installed on the NYSE is called

Correct Answer
verified

Assume you purchased 500 shares of XYZ common stock on margin at $40 per share from your broker.If the initial margin is 60%,the amount you borrowed from the broker is _________.

Correct Answer
verified

Which one of the following statements about IPOs is not true?

Correct Answer
verified

The New York Stock Exchange is a good example of _________.

Correct Answer
verified

What percentage of NYSE transactions is executed by specialists?

Correct Answer
verified

Barnegat Light sold 200,000 shares in an initial public offering.The underwriter's explicit fees were $90,000.The offering price for the shares was $35,but immediately upon issue,the share price jumped to $43.What is the best estimate of the total cost to Barnegat Light of the equity issue?

Correct Answer
verified

The bid-ask spread exists because of _______________.

Correct Answer
verified

Correct Answer
verified

You sold short 300 shares of common stock at $30 per share.The initial margin is 50%.You must put up _________.

Correct Answer
verified

You purchased 250 shares of common stock on margin for $25 per share.The initial margin is 65% and the stock pays no dividend.Your rate of return would be __________ if you sell the stock at $32 per share.Ignore interest on margin.

Correct Answer
verified

The SIPC was established by the ____.

Correct Answer
verified

Most European markets,including Euronext,use a/an _____________________.

Correct Answer
verified

Private placements can be advantageous rather than public issue because ______. I.private placements are cheaper to market than public issues II.private placements may still be sold to the general public under SEC Rule 144A III.privately placed securities trade on secondary markets

Correct Answer
verified

Which of the following statements about Saitoris in Japanese stock markets is incorrect?

Correct Answer
verified

The is the most important dealer market in the U.S.and the is the most important auction market.

Correct Answer
verified

Exam 3: Securities Markets

Brokerage firms can change margin-loan practices ____.

Correct AnswerverifiedShow Answer

The margin requirement on a stock purchase is 25%.You fully use the margin allowed to purchase 100 shares of MSFT at $25.If the price drops to $22,what is your percentage loss?

Correct AnswerverifiedShow Answer

If the Dow Jones Industrial Average falls by 10% by 11 am,trading will ______.

Correct AnswerverifiedShow Answer

Purchases of new issues of stock take place _________.

Correct AnswerverifiedShow Answer

Nasdaq now offers three listing options.The largest,most actively traded firms are on the

Correct AnswerverifiedShow Answer

The fully automated trade-execution system installed on the NYSE is called

Correct AnswerverifiedShow Answer

Assume you purchased 500 shares of XYZ common stock on margin at $40 per share from your broker.If the initial margin is 60%,the amount you borrowed from the broker is _________.

Correct AnswerverifiedShow Answer

Which one of the following statements about IPOs is not true?

Correct AnswerverifiedShow Answer

The New York Stock Exchange is a good example of _________.

Correct AnswerverifiedShow Answer

What percentage of NYSE transactions is executed by specialists?

Correct AnswerverifiedShow Answer

Barnegat Light sold 200,000 shares in an initial public offering.The underwriter's explicit fees were $90,000.The offering price for the shares was $35,but immediately upon issue,the share price jumped to $43.What is the best estimate of the total cost to Barnegat Light of the equity issue?

Correct AnswerverifiedShow Answer

The bid-ask spread exists because of _______________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

You sold short 300 shares of common stock at $30 per share.The initial margin is 50%.You must put up _________.

Correct AnswerverifiedShow Answer

You purchased 250 shares of common stock on margin for $25 per share.The initial margin is 65% and the stock pays no dividend.Your rate of return would be __________ if you sell the stock at $32 per share.Ignore interest on margin.

Correct AnswerverifiedShow Answer

The SIPC was established by the ____.

Correct AnswerverifiedShow Answer

Most European markets,including Euronext,use a/an _____________________.

Correct AnswerverifiedShow Answer

Private placements can be advantageous rather than public issue because ______. I.private placements are cheaper to market than public issues II.private placements may still be sold to the general public under SEC Rule 144A III.privately placed securities trade on secondary markets

Correct AnswerverifiedShow Answer

Which of the following statements about Saitoris in Japanese stock markets is incorrect?

Correct AnswerverifiedShow Answer

The ______________ is the most important dealer market in the U.S.and the ______________ is the most important auction market.

Correct AnswerverifiedShow Answer

Correct Answer
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verified

The is the most important dealer market in the U.S.and the is the most important auction market.

Correct Answer
verified