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Terms in this set (257)
Active trading in markets and competition among securities analysts helps ensure that:
I. Security prices approach informational efficiency.
II. Riskier securities are priced to offer higher potential returns.
III. Investors are unlikely to be able to consistently find under- or overvalued securities.
A.
I only
B.
I and II only
C.
II and III only
D.
I, II, and III
I. Security prices approach informational efficiency.
II. Riskier securities are priced to offer higher potential returns.
III. Investors are unlikely to be able to consistently find under- or overvalued securities.
A.
I only
B.
I and II only
C.
II and III only
D.
I, II, and III
__________ assets generate net income to the economy, and __________ assets define allocation of income among investors.
A.
Financial, financial
B.
Financial, real
C.
Real, financial
D.
Real, realCWhich of the following are financial assets?
I. Debt securities
II. Equity securities
III. Derivative securities
A.
I only
B.
I and II only
C.
II and III only
D.
I, II, and IIID__________ are examples of financial intermediaries.
A.
Commercial banks
B.
Insurance companies
C.
Investment companies
D.
All of the optionsDAsset allocation refers to _________.
A.
the allocation of the investment portfolio across broad asset classes
B.
the analysis of the value of securities
C.
the choice of specific assets within each asset class
D.
none of the optionsAWhich one of the following best describes the purpose of derivatives markets?
A.
Transferring risk from one party to another.
B.
Investing for a short time period to earn a small rate of return.
C.
Investing for retirement.
D.
Earning interest income.ASecurity selection refers to the ________.
A.
allocation of the investment portfolio across broad asset classes
B.
analysis of the value of securities
C.
choice of specific securities within each asset class
D.
top-down method of investingCWhich of the following is an example of an agency problem?
A.
Managers engage in empire building.
B.
Managers protect their jobs by avoiding risky projects.
C.
Managers overconsume luxuries such as corporate jets.
D.
All of the options are examples of agency problems.D_____ is a mechanism for mitigating potential agency problems.
A.
Tying income of managers to success of the firm
B.
Directors defending top management
C.
Antitakeover strategies
D.
All of the options.A__________ is (are) real assets.
A.
Bonds
B.
Production equipment
C.
Stocks
D.
Life insuranceB__________ portfolio construction starts with selecting attractively priced securities.
A.
Bottom-up
B.
Top-down
C.
Upside-down
D.
Side-to-sideAIn a market economy, capital resources are primarily allocated by ____________.
A.
governments
B.
corporation CEOs
C.
financial markets
D.
investment bankersC__________ represents an ownership share in a corporation.
A.
A call option
B.
Common stock
C.
A fixed-income security
D.
Preferred stockBThe value of a derivative security _________.
A.
depends on the value of another related security
B.
affects the value of a related security
C.
is unrelated to the value of a related security
D.
can be integrated only by calculus professorsACommodity and derivative markets allow firms to adjust their _________.
A.
management styles
B.
focus from their main line of business to their investment portfolios
C.
ways of doing business so that they'll always have positive returns
D.
exposure to various business risksD__________ portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis.
A.
Active
B.
Momentum
C.
Passive
D.
Market-timingCFinancial markets allow for all but which one of the following?
A.
shift consumption through time from higher-income periods to lower
B.
price securities according to their riskiness
C.
channel funds from lenders of funds to borrowers of funds
D.
allow most participants to routinely earn high returns with low riskDFinancial intermediaries exist because small investors cannot efficiently _________.
A.
diversify their portfolios
B.
gather information
C.
assess and monitor the credit risk of borrowers
D.
all of the optionsDMethods of encouraging managers to act in shareholders' best interest include:
I. Threat of takeover.
II. Proxy fights for control of the board of directors.
III. Tying managers' compensation to stock price performance.
A.
I only
B.
I and II only
C.
II and III only
D.
I, II, and IIIDFirms that specialize in helping companies raise capital by selling securities to the public are called _________.
A.
pension funds
B.
investment banks
C.
savings banks
D.
REITsBIn securities markets, there should be a risk-return trade-off with higher-risk assets having _________ expected returns than lower-risk assets.
A.
higher
B.
lower
C.
the same
D.
The answer cannot be determined from the information given.AWhen the market is more optimistic about a firm, its share price will ______; as a result, it will need to issue _______ shares to raise funds that are needed.
A.
rise; fewer
B.
fall; fewer
C.
rise; more
D.
fall; moreASecurity selection refers to _________.
A.
choosing specific securities within each asset class
B.
deciding how much to invest in each asset class
C.
deciding how much to invest in the market portfolio versus the riskless asset
D.
deciding how much to hedgeAAn example of a derivative security is _________.
A.
a common share of General Motors
B.
a call option on Intel stock
C.
a Ford bond
D.
a U.S. Treasury bondB__________ portfolio construction starts with asset allocation.
A.
Bottom-up
B.
Top-down
C.
Upside-down
D.
Side-to-sideBWhich one of the following firms falsely claimed to have a $4.8 billion bank account at Bank of America and vastly understated its debts, eventually resulting in the firm's bankruptcy?
A.
WorldCom
B.
Enron
C.
Parmalat
D.
Global CrossingCDebt securities promise:
I. A fixed stream of income.
II. A stream of income that is determined according to a specific formula.
III. A share in the profits of the issuing entity.
A.
I only
B.
I or II only
C.
I and III only
D.
II or III onlyBThe Sarbanes-Oxley Act tightened corporate governance rules by requiring all but which one of the following?
A.
Required that corporations have more independent directors.
B.
Required that the CFO personally vouch for the corporation's financial statements.
C.
Required that firms could no longer employ investment bankers to sell securities to the public.
D.
Required the creation of a new board to oversee the auditing of public companies.CThe success of common stock investments depends on the success of _________.
A.
derivative securities
B.
fixed-income securities
C.
the firm and its real assets
D.
government methods of allocating capitalCThe historical average rate of return on large company stocks since 1926 has been _____ .
A.
5%
B.
8%
C.
11.5%
D.
20%CThe average rate of return on U.S. Treasury bills since 1926 was _________.
A.
less than 1%
B.
less than 3%
C.
less than 4%
D.
less than 7%CAn example of a real asset is:
I. A college education
II. Customer goodwill
III. A patent
A.
I only
B.
II only
C.
I and III only
D.
I, II, and IIIDThe 2002 law designed to improve corporate governance is titled the _____ .
A.
Pension Reform Act
B.
ERISA
C.
Financial Services Modernization Act
D.
Sarbanes-Oxley ActDWhich of the following is not a financial intermediary?
A.
a mutual fund
B.
an insurance company
C.
a real estate brokerage firm
D.
a credit unionCThe combined liabilities of American households represent approximately __________ of combined assets.
A.
11%
B.
14%
C.
25%
D.
33%BIn 2014 real assets represented approximately __________ of the total asset holdings of American households.
A.
30%
B.
42%
C.
48%
D.
55%AIn 2014 mortgages represented approximately __________ of total liabilities and net worth of American households.
A.
10%
B.
14%
C.
28%
D.
42%ALiabilities equal approximately _____ of total assets for nonfinancial U.S. businesses.
A.
10%
B.
25%
C.
45%
D.
75%CWhich of the following is not an example of a financial intermediary?
A.
Goldman Sachs
B.
Allstate Insurance
C.
First Interstate Bank
D.
IBMDReal assets represent about ____ of total assets for commercial banks.
A.
1%
B.
15%
C.
25%
D.
40%AMoney market securities are characterized by:
I. Maturity less than 1 year
II. Safety of the principal investment
III. Low rates of return
A.
I only
B.
I and II only
C.
I and III only
D.
I, II, and IIIDAfter much investigation, an investor finds that Intel stock is currently underpriced. This is an example of ______.
A.
asset allocation
B.
security analysis
C.
top-down portfolio management
D.
passive managementBAfter considering current market conditions, an investor decides to place 60% of her funds in equities and the rest in bonds. This is an example of _____ .
A.
asset allocation
B.
security analysis
C.
top-down portfolio management
D.
passive managementASuppose an investor is considering one of two investments that are identical in all respects except for risk. If the investor anticipates a fair return for the risk of the security he invests in, he can expect to _____ .
A.
earn no more than the Treasury-bill rate on either security.
B.
pay less for the security that has higher risk.
C.
pay less for the security that has lower risk.
D.
earn more if interest rates are lower.BThe efficient market hypothesis suggests that _______.
A.
active portfolio management strategies are the most appropriate investment strategies
B.
passive portfolio management strategies are the most appropriate investment strategies
C.
either active or passive strategies may be appropriate, depending on the expected direction of the market
D.
a bottom-up approach is the most appropriate investment strategyBIn a perfectly efficient market the best investment strategy is probably _____ .
A.
an active strategy
B.
a passive strategy
C.
asset allocation
D.
market timingBMarket signals will help to allocate capital efficiently only if investors are acting _____ .
A.
on the basis of their individual hunches
B.
as directed by financial experts
C.
as dominant forces in the economy
D.
on accurate informationDWhich of the following is (are) true about hedge funds?
I. They are open to institutional investors.
II. They are open to wealthy individuals.
III. They are more likely than mutual funds to pursue simple strategies.
A.
I and II only
B.
I and III only
C.
II and III only
D.
I, II, and IIIAVenture capital is _________.
A.
frequently used to expand the businesses of well-established companies
B.
supplied by venture capital funds and individuals to start-up companies
C.
illegal under current U.S. laws
D.
most frequently issued with the help of investment bankersBIndividuals may find it more advantageous to purchase claims from a financial intermediary rather than directly purchasing claims in capital markets because:
I. Intermediaries are better diversified than most individuals.
II. Intermediaries can exploit economies of scale in investing that individual investors cannot.
III. Intermediated investments usually offer higher rates of return than direct capital market claims.
A.
I only
B.
I and II only
C.
II and III only
D.
I, II, and IIIBSurf City Software Company develops new surf forecasting software. It sells the software to Microsoft in exchange for 1,000 shares of Microsoft common stock. Surf City Software has exchanged a _____ asset for a _____ asset in this transaction.
A.
real; real
B.
financial; financial
C.
real; financial
D.
financial; realCStone Harbor Products takes out a bank loan. It receives $100,000 and signs a promissory note to pay back the loan over 5 years. In this transaction, _____ .
A.
a new financial asset was created
B.
a financial asset was traded for a real asset
C.
a financial asset was destroyed
D.
a real asset was createdAWhich of the following firms was not engaged in a major accounting scandal between 2000 and 2005?
A.
General Electric
B.
Parmalat
C.
Enron
D.
WorldComAAccounting scandals can often be attributed to a particular concept in the study of finance known as the _____ .
A.
agency problem
B.
risk-return trade-off
C.
allocation of risk
D.
securitizationAAn intermediary that pools and manages funds for many investors is called ______.
A.
an investment company
B.
a credit union
C.
an investment banker
D.
a commercial bankAFinancial institutions that specialize in assisting corporations in primary market transactions are called _______.
A.
mutual funds
B.
investment bankers
C.
pension funds
D.
globalization specialistsBWhen a pass-through mortgage security is issued, what does the issuing agency expect to receive?
A.
the amount of the original loan plus a servicing fee
B.
the principal and interest that are paid by the homeowner
C.
the principal and interest that are paid by the homeowner, minus a servicing fee
D.
the interest paid by the homeowner, plus a servicing feeCIn 2008 the largest corporate bankruptcy in U.S. history involved the investment banking firm of ______.
A.
Goldman Sachs
B.
Lehman Brothers
C.
Morgan Stanley
D.
Merrill LynchBThe inability of shareholders to influence the decisions of managers, despite overwhelming shareholder support, is a breakdown in what process or mechanism?
A.
auditing
B.
public finance
C.
corporate governance
D.
public reportingCReal assets are ______.
A.
assets used to produce goods and services
B.
always the same as financial assets
C.
always equal to liabilities
D.
claims on a company's incomeAA major cause of the mortgage market meltdown in 2007 and 2008 was linked to ________.
A.
private equity investments
B.
securitization
C.
negative analyst recommendations
D.
online tradingBIn recent years the greatest dollar amount of securitization occurred for which type of loan?
A.
home mortgages
B.
credit card debt
C.
automobile loans
D.
equipment leasingAWhich of the following is (are) true about nonconforming mortgage loans?
A.
They are also known as subprime loans.
B.
They have higher default risk than conforming loans.
C.
They were able to be offered without due diligence.
D.
All of the options are true.DThe systemic risk that led to the financial crisis of 2008 was increased by _____ .
A.
collateralized debt obligations
B.
subprime mortgages
C.
credit default swaps
D.
all of the optionsDAn investment adviser has decided to purchase gold, real estate, stocks, and bonds in equal amounts. This decision reflects which part of the investment process?
A.
asset allocation
B.
investment analysis
C.
portfolio analysis
D.
security selectionAThe Volker Rule
A.
prohibits banks from proprietary trading.
B.
restricts banks' investments in hedge funds.
C.
restricts banks' investments in private equity funds.
D.
All of the options.DUntil 1999, the __________ Act separated commercial banking and investment banking activities.
A.
Dodd-Frank Wall Street Reform and Consumer Protection
B.
Sarbanes-Oxley
C.
Glass-Steagall
D.
Volker RuleCThe difference between LIBOR and the Treasury-bill rate
A.
is called the TED spread.
B.
measures credit risk in the banking sector.
C.
was very low just before the 2008 financial crisis.
D.
All of the options.DThe Dodd-Frank Reform Act does all of the following except:
A.
reduces capital requirements for banks.
B.
increases transparency in the derivatives market
C.
limits the risk-taking in which banks can engage
D.
requires public companies to set "claw-back" provisions
E.
creates an office within the SEC to oversee credit rating agencies.AWhich insurance company sold more than $400 billion of CDS contracts on subprime mortgages prior to the 2008 market crash?
A.
Metlife
B.
AIG
C.
Northwestern Mutual
D.
New York LifeBWhich of the following is not a money market instrument?
A. Treasury bill
B. commercial paper
C. preferred stock
D. bankers' acceptanceCT-bills are issued with initial maturities of:
I. 4 weeks
II. 16 weeks
III. 26 weeks
IV. 32 weeks
A. I and II only
B. I and III only
C. I, II, and III only
D. I, II, III, and IVBWhen computing the bank discount yield, you would use ____ days in the year.
A. 260
B. 360
C. 365
D. 366BA dollar-denominated deposit at a London bank is called _____.
A. eurodollars
B. LIBOR
C. fed funds
D. bankers' acceptanceAMoney market securities are sometimes referred to as cash equivalents because _____.
A. they are safe and marketable
B. they are not liquid
C. they are high-risk
D. they are low-denominationAThe most marketable money market security is _____.
A. Treasury bills
B. bankers' acceptances
C. certificates of deposit
D. common stockA7. The minimum tick size, or spread between prices in the Treasury bond market, is
A. 1/8 of a point.
B. 1/16 of a point.
C. 1/32 of a point.
D. 1/128 of a point.D8. An investor in a T-bill earns interest by _________.
A. receiving interest payments every 90 days
B. receiving dividend payments every 30 days
C. converting the T-bill at maturity into a higher-valued T-note
D. buying the bill at a discount from the face value to be received at maturityD9. ______ would not be included in the EAFE index.
A. Australia
B. Canada
C. France
D. JapanB_____ is considered to be an emerging market country.
A. France
B. Norway
C. Brazil
D. CanadaCWhich one of the following is a true statement?
A. Dividends on preferred stocks are tax-deductible to individual investors but not to corporate investors.
B. Common dividends cannot be paid if preferred dividends are in arrears on cumulative preferred stock.
C. Preferred stockholders have voting power.
Investors can sue managers for nonpayment of preferred dividendsBThe bid price of a Treasury bill is _________.
A. the price at which the dealer in Treasury bills is willing to sell the bill
B. the price at which the dealer in Treasury bills is willing to buy the bill
C. greater than the ask price of the Treasury bill expressed in dollar terms
D. the price at which the investor can buy the Treasury billBThe German stock market is measured by which market index?
A. FTSE
B. Dow Jones 30
C. DAX
D. NikkeiCDeposits of commercial banks at the Federal Reserve are called _____.
A. bankers' acceptances
B. federal funds
C. repurchase agreements
D. time depositsB15. Which of the following is not a true statement regarding municipal bonds?
A. A municipal bond is a debt obligation issued by state or local governments.
B. A municipal bond is a debt obligation issued by the federal government.
C. The interest income from a municipal bond is exempt from federal income taxation.
D. The interest income from a municipal bond is exempt from state and local taxation in the issuing state.BWhich of the following is not a characteristic of a money market instrument?
A. liquidity
B. marketability
C. low risk
D. maturity greater than 1 yearDAn individual who goes short in a futures position _____.
A. commits to delivering the underlying commodity at contract maturity
B. commits to purchasing the underlying commodity at contract maturity
C. has the right to deliver the underlying commodity at contract maturity
D. has the right to purchase the underlying commodity at contract maturityAWhich of the following is not a nickname for an agency associated with the mortgage markets?
A. Fannie Mae
B. Freddie Mac
C. Sallie Mae
D. Ginnie MaeCCommercial paper is a short-term security issued by __________ to raise funds.
A. the Federal Reserve
B. the New York Stock Exchange
C. large well-known companies
D. all of these optionsCThe maximum maturity on commercial paper is _____.
A. 270 days
B. 180 days
C. 90 days
D. 30 daysAWhich one of the following is a true statement regarding the Dow Jones Industrial Average?
A. It is a value-weighted average of 30 large industrial stocks.
B. It is a price-weighted average of 30 large industrial stocks.
C. It is a price-weighted average of 100 large stocks traded on the New York Stock Exchange.
D. It is a value-weighted average of all stocks traded on the New York Stock Exchange.BTreasury bills are financial instruments issued by __________ to raise funds.
A. commercial banks
B. the federal government
C. large corporations
D. state and city governmentsBWhich of the following are true statements about T-bills?
I. T-bills typically sell in denominations of $10,000.
II. Income earned on T-bills is exempt from all federal taxes.
III. Income earned on T-bills is exempt from state and local taxes.
A. I only
B. I and II only
C. I and III only
D. I, II, and IIICA bond that has no collateral is called a _________.
A. callable bond
B. debenture
C. junk bond
D. mortgageBA __________ gives its holder the right to sell an asset for a specified exercise price on or before a specified expiration date.
A. call option
B. futures contract
C. put option
D. interest rate swapC26. A T-bill quote sheet has 90-day T-bill quotes with a 4.92 bid and a 4.86 ask. If the bill has a $10,000 face value, an investor could buy this bill for
_____.
A. $10,000
B. $9,878.50
C. $9,877
D. $9,880.16BWhich one of the following is a true statement regarding corporate bonds?
A. A corporate callable bond gives its holder the right to exchange it for a specified number of the company's common shares.
B. A corporate debenture is a secured bond.
C. A corporate convertible bond gives its holder the right to exchange it for a specified number of the company's common shares.
D. Holders of corporate bonds have voting rights in the company.CThe yield on tax-exempt bonds is ______.
A. usually less than 50% of the yield on taxable bonds
B. normally about 90% of the yield on taxable bonds
C. greater than the yield on taxable bonds
D. less than the yield on taxable bondsD__________ is not a money market instrument.
A. A certificate of deposit
B. A Treasury bill
C. A Treasury bond
D. Commercial paperC30. An investor buys a T-bill at a bank discount quote of 4.80 with 150 days to maturity. The investor's bond equivalent yield on this investment is
_____.
A. 4.8%
B. 4.97%
C. 5.47%
D. 5.74%BThe U.K. stock index is the _________.
A. DAX
B. FTSE
C. GSE
D. TSEBA __________ gives its holder the right to buy an asset for a specified exercise price on or before a specified expiration date.
A. call option
B. futures contract
C. put option
D. interest rate swapAWhich one of the following provides the best example of securitization?
A. convertible bond
B. call option
C. mortgage pass-through security
D. preferred stockCWhich of the following indexes are market value-weighted?
I. The NYSE Composite
II. The S&P 500
III.The Wilshire 5000
A. I and II only
B. II and III only
C. I and III only
D. I, II, and IIIDThe interest rate charged by large banks in London to lend money among themselves is called _________.
A. the prime rate
B. the discount rate
C. the federal funds rate
D. LIBORD36. A firm that has large securities holdings and wishes to raise money for a short length of time may be able to find the cheapest financing from which of the following?
A. reverse repurchase agreement
B. bankers' acceptance
C. commercial paper
D. repurchase agreementDCurrently, the Dow Jones Industrial Average is computed by _________.
A. adding the prices of 30 large "blue-chip" stocks and dividing by 30
B. calculating the total market value of the 30 firms in the index and dividing by 30
C. measuring the current total market value of the 30 stocks in the index relative to the total value on the previous day
adding the prices of 30 large "blue-chip" stocks and dividing by a divisor adjusted for stock splits and large stock dividendsD38. An investor purchases one municipal bond and one corporate bond that pay rates of return of 5% and 6.4%, respectively. If the investor is in the 15% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively, _____.
A. 5% and 6.4%
B. 5% and 5.44%
C. 4.25% and 6.4%
D. 5.75% and 5.44%B. If a Treasury note has a bid price of $996.25, the quoted bid price in the Wall Street Journal would be _________.
A. 99:5/8
B. 99:6/10
C. 99.6250
D. none of the optionsCTIPS are ______.
A. Treasury bonds that pay no interest and are sold at a discount
B. U.K. bonds that protect investors from default risk
C. securities that trade on the Toronto stock index
D. Treasury bonds that protect investors from inflationD41. The price quotations of Treasury bonds in the Wall Street Journal show a bid price of 104.5313 and an ask price of 104.5489. If you sell a Treasury bond, you expect to receive _________.
A. $ 1,000.00
B. $ 1,045.00
C. $ 1,045.31
D. $ 1,045.48CThe Dow Jones Industrial Average is _________.
A. a price-weighted average
B. a value weight and average
C. an equally weighted average
D. an unweighted averageAInvestors will earn higher rates of returns on TIPS than on equivalent default-risk standard bonds if _______________.
A. inflation is lower than anticipated over the investment period
B. inflation is higher than anticipated over the investment period
C. the U.S. dollar increases in value against the euro
D. the spread between commercial paper and Treasury securities remains lowBPreferred stock is like long-term debt in that ___________.
A. it gives the holder voting power regarding the firm's management
B. it promises to pay to its holder a fixed stream of income each year
C. the preferred dividend is a tax-deductible expense for the firm
D. in the event of bankruptcy preferred stock has equal status with debtBWhich of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. an equally weighted index
B. a price-weighted index
C. a value-weighted index
D. all of these options (Weights are not a factor in this situation.)A. In calculating the Dow Jones Industrial Average, the adjustment for a stock split occurs _________.
A. automatically
B. by adjusting the divisor
C. by adjusting the numerator
D. by adjusting the market value weightsBA bond issued by the state of Alabama is priced to yield 6.25%. If you are in the 28% tax bracket, this bond would provide you with an equivalent taxable yield of _________.
A. 4.5%
B. 7.25%
C. 8.68%
D. none of these optionsCThe purchase of a futures contract gives the buyer _________.
A. the right to buy an item at a specified price
B. the right to sell an item at a specified price
C. the obligation to buy an item at a specified price
D. the obligation to sell an item at a specified priceC49. Ownership of a put option entitles the owner to the __________ to ___________ a specific stock, on or before a specific date, at a specific price.
A. right; buy
B. right; sell
C. obligation; buy
D. obligation; sellB50. An investor in a 28% tax bracket is trying to decide whether to invest in a municipal bond or a corporate bond. She looks up municipal bond yields (rm) but wishes to calculate the taxable equivalent yield r. The formula she should use is given by ______.
A. r = rm × (1 - 28%)
B. r = rm / (1 - 72%)
C. r = rm × (1 - 72%)
D. r = rm / (1 - 28%)DONT KNOW A OR D51. June call and put options on King Books Inc. are available with exercise prices of $30, $35, and $40. Among the different exercise prices, the call option with the _____ exercise price and the put option with the _____ exercise price will have the greatest value.
A. $40; $30
B. $30; $40
C. $35; $35
D. $40; $40BOwnership of a call option entitles the owner to the __________ to __________ a specific stock, on or before a specific date, at a specific price.
A. right; buy
B. right; sell
C. obligation; buy
D. obligation; sellA53. The ________ the ratio of municipal bond yields to corporate bond yields, the _________ the cutoff tax bracket at which more individuals will prefer to hold municipal debt.
A. higher; lower
B. lower; lower
C. higher; higher
The answer cannot be determined without more information.AThe Hang Seng index reflects market performance on which of the following major stock markets?
A. Japan
B. Singapore
C. Taiwan
D. Hong KongDThe Standard & Poor's 500 is __________ weighted index.
A. an equally
B. a price-
C. a value-
D. a share-C56. Large well-known companies often issue their own short-term unsecured debt notes directly to the public, rather than borrowing from banks; their notes are called _________.
A. certificates of deposit
B. repurchase agreements
C. bankers' acceptances
D. commercial paperDWhich of the following is most like a short-term collateralized loan?
A. certificate of deposit
B. repurchase agreement
C. bankers' acceptance
D. commercial paperB. Eurodollars are _________.
A. dollar-denominated deposits at any foreign bank or foreign branch of an American bank
B. dollar-denominated bonds issued by firms outside their home market
C. currency issued by Euro Disney and traded in France
dollars that wind up in banks as a result of money-laundering activitieAWhich of the following is used to back international sales of goods and services?
A. certificate of deposit
B. bankers' acceptance
C. eurodollar deposits
D. commercial paperBTreasury notes have initial maturities between ________ years.
A. 2 and 4
B. 5 and 10
C. 10 and 30
D. 1 and 10DWhich of the following is not a characteristic of common stock ownership?
A. residual claimant
B. unlimited liability
C. voting rights
D. right to any dividend paid by the corporation.BIf you thought prices of stock would be rising over the next few months, you might want to __________________ on the stock.
A. purchase a call option
B. purchase a put option
C. sell a futures contract
D. place a short-sale orderAA typical bond price quote includes all but which one of the following?
A. coupon
B. closing bond price
C. yield to maturity
D. dividend yieldD64. What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11, 2001?
A. no change, as both yields will remain the same
B. increase, as the spread usually increases in response to a crisis
C. decrease, as the spread usually decreases in response to a crisis
D. no change, as both yields will move in the same directionB65. A stock quote indicates a stock price of $60 and a dividend yield of 3%. The latest quarterly dividend received by stock investors must have been ______ per share.
A. $0.55
B. $1.80
C. $0.45
D. $1.25C66. Three stocks have share prices of $12, $75, and $30 with total market values of $400 million, $350 million, and $150 million, respectively. If you were to construct a price-weighted index of the three stocks, what would be the index value?
A. 300
B. 39
C. 43BWhich of the following is not considered a money market investment?
A. bankers' acceptance
B. eurodollar
C. repurchase agreement
D. Treasury noteDThe rate of interest on short-term loans among financial institutions is _____.
A. bankers' acceptances
B. brokers' calls
C. federal funds
D. LIBORC69. You decide to purchase an equal number of shares of stocks of firms to create a portfolio. If you wanted to construct an index to track your portfolio performance, your best match for your portfolio would be to construct ______.
A. a value-weighted index
B. an equally weighted index
C. a price-weighted index
D. a bond price indexC70. In a ___________ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal.
A. value-weighted index
B. equally weighted index
C. price-weighted index
D. bond price indexA71. A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pretax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is _______, and the after-tax return to the individual investor is _______.
A. 3.96%; 5.1%
B. 5.39%; 5.1%
C. 6%; 6%
D.
3.96%; 6%BAll but which one of the following indices is value weighted?
A. NASDAQ Composite
B. S&P 500
C. Wilshire 5000
D. DJIADWhat is the tax exempt equivalent yield on a 9% bond yield given a marginal tax rate of 28%?
A. 6.48%
B. 7.25%
C. 8.02%
D. 9%AA tax free municipal bond provides a yield of 3.2%. What is the equivalent taxable yield on the bond given a 35% tax bracket?
A. 3.2%
B. 3.68%
C. 4.92%
D. 5%CAn index computed from a simple average of returns is a/an _____.
A. equal weighted index
B. value weighted index
C. price weighted index
D. share weighted indexAA tax free municipal bond provides a yield of 2.34%. What is the equivalent taxable yield on the bond given a 28% tax bracket?
A. 2.34%
B. 2.68%
C. 3.25%
D. 4.92%C77. The Hydro Index is a price weighted stock index based on the 5 largest boat manufacturers in the nation. The stock prices for the five stocks are $10, $20, $80, $50 and $40. The price of the last stock was just split 2 for 1 and the stock price was halved from $40 to $20. What is the new divisor for a price weighted index?
A. 5.00
B. 4.85
C. 4.50
D. 4.75C78. A benchmark index has three stocks priced at $23, $43, and $56. The number of outstanding shares for each is 350,000 shares, 405,000 shares, and 553,000 shares, respectively. If the market value weighted index was 970 yesterday and the prices changed to $23, $41, and $58 today, what is the new index value?
A. 960
B. 970
C. 975
D. 985C79. A benchmark market value index is comprised of three stocks. Yesterday the three stocks were priced at $12, $20, and $60. The number of outstanding shares for each is 600,000 shares, 500,000 shares, and 200,000 shares, respectively. If the stock prices changed to $16, $18, and $62 today respectively, what is the 1-day rate of return on the index?
A. 5.78%
B. 4.35%
C. 6.16%
D. 7.42%CWhich of the following mortgage scenarios will benefit the homeowner the most?
A. adjustable rate mortgage when interest rate increases.
B. fixed rate mortgage when interest rates falls.
C. fixed rate mortgage when interest rate rises.
D. None of these options, as the banker's interest will always be protected.CThe brokers' call rate represents
A. the rate the broker charges an investor on a margin account.
B. the rate the broker pays its bank on borrowed funds.
C. the return earned by the broker on a margin account.
D. the return earned by the investor on a margin account .BLIBOR is a key reference rate in the money markets. Many ______ of dollars of loans and derivative assets are tied to it.
A. thousands
B. millions
C. billions
D. trillionsDSeveral large banks manipulated the reported rates on which key money market rate?
A. federal funds rate
B. LIBOR
C. bankers' acceptances
D. brokers' calls rateBWhich of the following reforms were not included in 2014 regulations regarding money market funds?
A. Institutional funds will "float" the prices of their shares.
B. Funds can limit redemptions or impose a 2% fee if assets fall by more than 30%.
C. increased disclosure of assets' values and liquidity
D. All of the options were included.D85. What would be the profit or loss per share of stock to an investor who bought an October expiration Apple call option with an exercise price of $130 if Apple closed on the expiration date at $120? Assume the option premium was $3.00.
A. $0
B. $3.00 gain
C. $3.00 loss
D. $7.00 gainCUnderwriting is one of the services provided by _____.
A. the SEC
B. investment bankers
C. publicly traded companies
D. FDICB2. Under firm-commitment underwriting, the ______ assumes the full risk that the shares cannot be sold to the public at the stipulated offering price.
A. red herring
B. issuing company
C. initial stockholder
D. underwriterD3. Explicit costs of an IPO tend to be around ______ of the funds raised.
A. 1%
B. 7%
C. 15%
D. 25%B4. 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?
A. $90,000
B. $1,290,000
C. $2,390,000
D. $1,690,000DA red herring becomes a prospectus when ____.
A. the preliminary registration statement is approved by the SEC
B. the IPO is complete
C. the offering is seasoned
D. the lockup period expiresAPrivate placements can be advantageous, compared to 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.
A. I only
B. I and III only
C. II and III only
D. I, II, and IIIA7. A level _____ subscriber to the NASDAQ system may enter bid and ask prices.
A. 1
B. 2
C. 3
D. 4CWhich one of the following statements about IPOs is not true?
A. IPOs generally have been poor long-term investments.
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.C9. 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?
A. 9%
B. 15%
C. 48%
D. 57%CThe NYSE acquired the ECN _______, and NASDAQ recently acquired the ECN ________.
A. Archipelago; Instinet
B. Instinet; Archipelago
C. Island; Instinet
D. LSE; EuronextARank the following types of markets from least integrated and organized to most integrated and organized:
I. Brokered markets
II. Continuous auction markets
III. Dealer markets
IV. Direct search markets
A. IV, II, I, III
B. I, III, IV, II
C. II, III, IV, I
D. IV, I, III, IID12. As a result of flash crashes, the SEC is trying circuit breakers that will halt trading for 5 minutes if large stocks' prices change by more than _____ in a 5-minute period.
A. 10%
B. 20%
C. 30%
D. 40%AWhich one of the following is not an example of a brokered market?
A. residential real estate market
B. market for large block security transactions
C. primary market for securities
D. NASDAQDMore than ______ of all trading is believed to be initiated by computer algorithms.
A. 25%
B. 40%
C. 50%
D. 75%CPurchases of new issues of stock take place _________.
A. at the desk of the Fed
B. in the primary market
C. in the secondary market
D. in the money marketsBInitial margin requirements on stocks are set by _________.
A. the Federal Deposit Insurance Corporation
B. the Federal Reserve
C. the New York Stock Exchange
D. the Securities and Exchange CommissionBWhich one of the following types of markets requires the greatest level of trading activity to be cost-effective?
A. broker market
B. dealer market
C. continuous auction market
D. direct search marketCWhich one of the following is a false statement regarding NYSE specialists?
A. On a stock exchange most buy or sell orders are executed via an electronic system rather than through specialists.
B. Specialists cannot trade for their own accounts.
C. Specialists maintain limit order books, which contain the outstanding unexecuted limit orders.
Specialists stand ready to trade at narrower bid-ask spreads in cases where the spread has become too wide.BRestrictions on trading involving insider information apply to:
I. Corporate officers and directors
II. Major stockholders
III. Relatives of corporate directors and officers
A. I only
B. I and II only
C. II and III only
D. I, II, and IIIDAn order to buy or sell a security at the current price is a ______________.
A. limit order
B. market order
C. stop-loss order
D. stop-buy orderBThe term inside quotes refers to _____.
A. the difference between the lowest bid price and the highest ask price in the limit order book.
B. the difference between the highest bid price and the lowest ask price in the limit order book.
C. the difference between the lowest bid price and the lowest ask price in the limit order book.
D. the difference between the highest bid price and the highest ask price in the limit order book.BThe term latency refers to _____.
A. the lag between when an order is placed on the NYSE and when it is executed.
B. the amount of time it takes to accept, process, and deliver a trading order.
C. the time it takes to implement new rules and procedures for stock exchanges and computer trading systems.
the lag between when an order is executed and when the investor takes possession of the securitiesB23. If an investor places a _________ order, the stock will be sold if its price falls to the stipulated level. If an investor places a __________
order, the stock will be bought if its price rises above the stipulated level.
A. stop-buy; stop-loss
B. market; limit
C. stop-loss; stop-buy
D. limit; marketC24. On a given day a stock dealer maintains a bid price of $1,000.50 for a bond and an ask price of $1003.25. The dealer made 10 trades that totaled 500 bonds traded that day. What was the dealer's gross trading profit for this security?
A. $1,375
B. $500
C. $275
D.
$1,450AAdvantages of ECNs over traditional markets include all but which one of the following?
A. lower transactions costs
B. anonymity of the participants
C. small amount of time needed to execute and order
D. ability to handle very large ordersDThe __________ was established to protect investors from losses if their brokerage firms fail.
A. CFTC
B. SEC
C. SIPC
D. AIMRCWhen matching orders from the public, a specialist is required to use the _______.
A. lowest outstanding bid price and highest outstanding ask price
B. highest outstanding bid price and highest outstanding ask price
C. lowest outstanding bid price and lowest outstanding ask price
D. highest outstanding bid price and lowest outstanding ask priceDThe process of polling potential investors regarding their interest in a forthcoming initial public offering (IPO) is called ________.
A. interest building
B. book building
C. market analysis
D. customer identificationBThe bulk of most initial public offerings (IPOs) of equity securities goes to ___________.
A. institutional investors
B. individual investors
C. the firm's current shareholders
D. day tradersA30. Initial public offerings (IPOs) are usually ___________ relative to the levels at which their prices stabilize after they begin trading in the secondary market.
A. overpriced
B. correctly priced
C. underpriced
D. mispriced, but without any particular biasC31. According to multiple studies by Ritter, initial public offerings tend to exhibit __________ performance initially and __________
performance over the long term.
A. bad; good
B. bad; bad
C. good; good
good; badDSpecialists try to maintain a narrow bid-ask spread because:
I. If the spread is too large, they will not participate in as many trades, losing commission income.
II. The exchange requires specialists to maintain price continuity.
III. Specialists are nonprofit entities designed to facilitate market transactions rather than make a profit.
A. I only
B. I and II only
C. II and III only
I, II, and IIIB33. In a __________ underwriting arrangement, the underwriter assumes the full risk that shares may not be sold to the public at the stipulated offering price.
A. best-efforts
B. firm-commitment
C. private placement
D. none of these optionsB34. The ______________ is the most important dealer market in the United States, and the ______________ is the most important auction market.
A. NYSE; NASDAQ
B. NASDAQ; NYSE
C. CME; OTC
AMEX; NYSEBThe inside quotes on a limit order book can be found ______.
A. at the top of the list
B. at the bottom of the list
C. by taking the averages of the bid and ask prices on the list
only by direct contact with the specialist who maintains the bookAThe __________ system enables exchange members to send orders directly to a specialist over computer lines.
A. FAX
B. Direct Plus
C. NASDAQ
SUPERDOTDThe fully automated trade-execution system installed on the NYSE is called _____.
A. FAX
B. Direct +
C. NASDAQ
SUPERDOTBThe NYSE Hybrid Market allows _____.
A. individuals to send orders directly to a specialist
B. individuals to send orders directly to an electronic system
C. brokers to send orders directly to a specialist
brokers to send orders either to an electronic system or to a specialistD39. Approximately __________ of trades involving shares issued by firms listed on the New York Stock Exchange actually take place on the New York Stock Exchange.
A. 50%
B. 25%
C. 60%
D. 75%BThe _________ price is the price at which a dealer is willing to purchase a security.
A. bid
B. ask
C. clearing
D. settlementAThe _________ price is the price at which a dealer is willing to sell a security.
A. bid
B. ask
C. clearing
D. settlementBThe difference between the price at which a dealer is willing to buy and the price at which a dealer is willing to sell is called the _________.
A. market spread
B. bid-ask spread
C. bid-ask gap
D. market variationBThe bid-ask spread exists because of _______________.
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 marketsCThe NYSE has lost market share to ECNs in recent years. Part of the NYSE's response to the growth of ECNs has been to:
I. Purchase Archipelago, a major ECN, and rename it NYSE Arca II. Enable automatic trade execution through its new Market Center
III. Impose a tighter limit on bid-ask spreads
A. I only
B. II and III only
C. I and II only
D. I, II, and IIIAThe cost of buying and selling a stock includes:
I. Broker's commissions
II. Dealer's bid-asked spread
III. Price concessions that investors may be forced to make
A. I and II only
B. II and III only
C. I and III only
D. I, II, and IIIDWhich of the following is (are) true about dark pools?
I. They allow anonymity in trading.
II. They often involve large blocks of stocks.
III. Trades made through them might not be reported.
A. I and II only
B. II and III only
C. I and III only
D. I, II, and IIIDYou purchased XYZ stock at $50 per share. The stock is currently selling at $65. Your gains could be protected by placing a _________.
A. limit buy order
B. limit sell order
C. market order
D. stop-loss orderDConsider the following limit order book of a specialist. The last trade in the stock occurred at a price of $40. If a market buy order for 100 shares comes in, at what price will it be filled?
A. $39.75
B. $40.25
C. $40.375
D. $40.25 or lessD49. You find that the bid and ask prices for a stock are $10.25 and $10.30, respectively. If you purchase or sell the stock, you must pay a flat commission of $25. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars?
A. $50
B. $25
C. $30
D. $55D50. According to SEC Rule 415 regarding shelf registration, firms can gradually sell securities to the public for __________ following initial registration.
A. 1 year
B. 2 years
C. 3 years
D. 4 yearsB51. What happened to the effective spread on trades when the SEC allowed the minimum tick size to move from one-eighth of a dollar to one-sixteenth of a dollar in 1997 and from one-sixteenth of a dollar to one cent in 2001?
A. The effective spread increased in 1997 but decreased in 2001.
B. The effective spread increased in both cases.
C. The effective spread decreased in 1997 but increased in 2001.
D. The effective spread decreased in both cases.D52. 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 _________.
A. $20,000
B. $12,000
C. $8,000
D.
$15,000CYou sold short 300 shares of common stock at $30 per share. The initial margin is 50%. You must put up _________.
A. $4,500
B. $6,000
C. $9,000
D. $10,000AYou short-sell 200 shares of Tuckerton Trading Co., now selling for $50 per share. What is your maximum possible loss?
A. $50
B. $150
C. $10,000
D. unlimitedD55. You short-sell 200 shares of Tuckerton Trading Co., now selling for $50 per share. What is your maximum possible gain, ignoring transactions cost?
A. $50
B. $150
C. $10,000
D. unlimitedC56. You short-sell 200 shares of Rock Creek Fly Fishing Co., now selling for $50 per share. If you want to limit your loss to $2,500, you should place a stop-buy order at ____.
A. $37.50
B. $62.50
C. $56.25
D. $59.75B57. You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below ________. (Assume the stock pays no dividends, and ignore interest on the margin loan.)
A. $26.55
B. $35.71
C. $28.95
D. $30.77BYou 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.
A. 35%
B. 39%
C. 43%
D. 28%C59. You sell short 200 shares of Doggie Treats Inc. that are currently selling at $25 per share. You post the 50% margin required on the short sale. If your broker requires a 30% maintenance margin, at what stock price will you get a margin call? (You earn no interest on the funds in your margin account, and the firm does not pay any dividends.)
A. $28.85
B. $35.71
C. $31.50
D.
$32.25ATransactions that do not involve the original issue of securities take place in _________.
A. primary markets
B. secondary markets
C. over-the-counter markets
D. institutional marketsBWhat was the result of high-frequency traders' leaving the market during the flash crash of 2010?
A. Market liquidity decreased.
B. Market liquidity increased.
C. Market volatility decreased.
D. Trading frequency increased.A__________ often accompany short sales and are used to limit potential losses from the short position.
A. Limit orders
B. Restricted orders
C. Limit loss orders
D. Stop-buy ordersDThe market share held by the NYSE Arca system in February 2011 was approximately ____.
A. 65%
B. 45%
C. 25%
D. 10%DRegulation NMS:
I. Supports the goal of integrating financial markets II. II. Requires the use of specialists to execute trades
III. Requires that exchanges honor quotes of other exchanges when they can be executed automatically
A. I only
B. I and II only
C. I and III only
D. I, II, and IIIC65. The commission structure on a stock purchase is $50 plus $.03 per share. If you purchase 600 shares of a stock selling for $65, what is your commission?
A. $35
B. $45
C. $53
D. $68DAll major stock markets today are effectively _______________.
A. specialist trading systems
B. electronic trading systems
C. continuous auction markets
D. direct search marketsBIn 2008, the NASDAQ stock market merged with _____.
A. Euronext
B. OMX, which operates seven Nordic and Baltic stock exchanges
C. the International Securities Exchange (ISE)
D. BATSB68. You hold 5,000 shares of the 1 million outstanding shares of Wealthy Wranglers common stock. You've just learned that the company plans to issue more shares, so that 2 million shares will be outstanding. This is called _____.
A. an advanced equity offering
B. a weathered equity offering
C. a seasoned equity offering
D. a veteran equity offeringC69. If an investor uses the full amount of margin available, the equity in a margin account used for a stock purchase can be found as
________.
A. market value of the stock - amount owed on the margin loan
B. market value of the stock + amount owed on the margin loan
C. market value of the stock ÷ margin loan
D. margin loan × market value of the stockAThe average depth of the limit order book is _____.
A. lower for the large stocks in the S&P 500 Index than for the smaller stocks in the Russell 2000 Index
B. higher for the large stocks in the S&P 500 Index than for the smaller stocks in the Russell 2000 Index
C. about the same for both the large stocks in the S&P 500 Index and the smaller stocks in the Russell 2000 Index
D. unrelated to the sizes of the stocks in the indexesBThe CFA Institute Standards of Professional Conduct require that members _____.
A. place their clients' interests before their own
B. disclose conflicts of interest to clients
C. inform their employers that they are obligated to comply with the Standards of Professional Conduct
D. all of these optionsDTrading on inside information is:
I. Prohibited by federal law
II. Prohibited by the CFA Institute Standards of Professional Conduct
III. Monitored by the SEC
A. I and II only
B. II and III only
C. I and III only
D. I, II, and IIIDThe ____ requires full disclosure of relevant information relating to the issue of new securities.
A. Insider Trading Act of 1931
B. Securities Act of 1933
C. Securities Exchange Act of 1934
D. Investment Company Act of 1940BThe SIPC was established by the ____.
A. Insider Trading Act of 1931
B. Securities Act of 1933
C. Securities Exchange Act of 1934
D. none of these optionsDMaintenance requirements for margin accounts are set by ____.
A. brokerage firms
B. the SEC
C. the Federal Reserve System's Board of Governors
D. the Supreme CourtAWhich of the following are true concerning short sales of exchange-listed stocks?
I. Proceeds from the short sale must be kept on deposit with the broker.
II. Short-sellers must post margin with their broker to cover potential losses on the position.
III. The short-seller earns interest on any cash deposited with the broker that is used to meet the margin requirement.
A. I only
B. I and III only
C. I and II only
D. I, II, and IIICThe largest nongovernmental regulator of securities firms in the United States is ________.
A. the CFA Institute
B. the Public Company Accounting Oversight Board
C. the Financial Industry Regulatory Authority
D. the Board of Directors of NYSE EuronextC78. In ________ markets, participants post bid and ask prices at which they are willing to trade, but orders are not automatically executed by computer. ____________ execute trades for people other than themselves, and in _______________ markets a computer matches orders with an existing limit order book and executes the trades automatically.
A. electronic; Dealers; brokers
B. dealer; Brokers; electronic
C. direct search; Brokers; electronic
D. brokered; Dealers; direct searchB79. An investor puts up $5,000 but borrows an equal amount of money from his broker to double the amount invested to $10,000. The broker charges 7% on the loan. The stock was originally purchased at $25 per share, and in 1 year the investor sells the stock for $28. The investor's rate of return was ____.
A. 17%
B. 12%
C. 14%
D. 19%A80. An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In 1 year the investor has interest payable and gets a margin call. At the time of the margin call the stock's price must have been ____.
A. $20
B. $29.77
C. $30.29
D. $32.45CThe New York Stock Exchange is a good example of _________.
A. an auction market
B. a brokered market
C. a dealer market
D. a direct search marketAThe primary market where new security issues are offered to the public is a good example of _________.
A. an auction market
B. a brokered market
C. a dealer market
D. a direct search marketBThe over-the-counter securities market is a good example of _________.
A. an auction market
B. a brokered market
C. a dealer market
D. a direct search marketC84. An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $.50-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was the investor's rate of return?
A. 17.5%
B. 19.67%
C. 23.83%
D. 25.75%CLevel 3 NASDAQ subscribers _____.
A. are registered market makers
B. can post bid and ask prices
C. have the fastest execution of trades
D. all of these optionsD86. You sell short 300 shares of Microsoft that are currently selling at $30 per share. You post the 50% margin required on the short sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Microsoft is selling at $27? (Ignore any dividends.)
A. 10%
B. 20%
C. 6.67%
D. 15%B87. The commission structure on a stock purchase is $20 plus $.02 per share. If you purchase four round lots of a stock selling for $56, what is your commission?
A. $20
B. $22
C. $26
D. $28DIn 2014, BATS advertised average latency times of approximately _______. A. 100 microseconds
A. 100 microseconds
B. 200 microseconds
C. 1 second
D. 5 secondsA89. The market share held by the "Other" category (which includes dark pools) constitutes roughly ______% of trading volume in NYSE-listed shares.
A. 5%
B. 10%
C. 30%
D. 50%CIn 2013, NYSE Euronext was acquired by _______.
A. DOT
B. ICE
C. BATS
D. It was not acquired.BSIPC ensures investors against failure of a brokerage firm up to a limit of _______.
A. $100,000
B. $250,000
C. $500,000
D. $1,000,000CPrivately held firms may have only _______ shareholders.
A. 10
B. 99
C. 250
D. 499DThe term "underwriting syndicate" describes _______.
A. the issuing firm
B. the lead underwriter
C. the investment banks that participate in the underwriting
D. the private investors that purchase the sharesC
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