Securities Firms Quiz

Which of the following statements are true of the activities of securities firms? I) Dealers may act as principals in secondary market transactions II) Traditionally, bonds were a principal business while stocks were a dealer business III) When acting as a principal in an underwriting agreement, the investment dealer assumes all of the risk IV) When acting as a principal, the dealer makes his money on the commission charged

• a) I and IV

• b) I and III

• c) I, II, III, and IV

• d) II and III

What is the primary function of the primary market?

• Dealing with securities issued for the first time

• Promoting liquidity of financial assets

• Trading previously issued securities

• Providing investment advice

Which of the following does not influence interest rates?

• demand and supply of capital

• default risk

• central bank credibility

• all of the above influence interest rates

Assume you are a Canadian investor who has recently purchased bonds denominated in Euros. The central banks in the European Union have stated that they intend to expand the money supply to help to stimulate the economy. How will this affect your investment?

• 
  

  The investment value will decrease

• 
  

  The investment value will stay the same

• Cannot answer this question from the information given

• The investment value will increase

A bond purchase fund is primarily used to:

• A) Provide short-term liquidity for operational expenses.

• B) Invest in stocks to maximize capital gains.

• C) Accumulate funds for the future purchase of bonds.

• D) Generate income through trading commodities.

SROs require that member firms and their investment dealers learn the essential facts relative to every client and to every order or account accepted. This is known as the :

• Information rule

• KYC rule

• preferential trading rule

What is frictional unemployment?

• Frictional unemployment is the temporary unemployment that occurs when people are between jobs or entering the labor market.
• Frictional unemployment is the long-term unemployment due to economic downturns.
• Frictional unemployment refers to workers who are laid off permanently.
• Frictional unemployment is the unemployment caused by automation and technological changes.

Which of the following factors can lead to an increase in bond prices?

• A) Rising interest rates

• B) Decreasing interest rates

• C) Increasing inflation

• D) Higher default risk

What is the primary role of a central bank in an economy?

• A) To regulate stock markets

• B) To control the money supply and interest rates

• C) To provide loans to businesses

• D) To set tax rates

Which of the following best describes structural unemployment?

• Structural unemployment is caused by a mismatch between workers' skills and the skills needed for available jobs.

• Structural unemployment is the temporary unemployment that occurs when people are between jobs.

• Structural unemployment is the result of seasonal changes in employment.

• Structural unemployment is the unemployment caused by cyclical economic downturns.