WorksheetsFinancial Investment part 2
Total questions: 50
Worksheet time: 4hrs 10mins
1. Certificates of deposits are insured for up to _______ in the event of bank insolvency.
A. $10,000
A. $100,000
A. $250,000
A. $500,000
1. The maximum maturity of commercial paper that can be issued without SEC registration is __________
A. 270 days.
A. 180 days.
A. 90 days.
A. 30 days.
1. Which of the following is used extensively in foreign trade when the creditworthiness of one trader is unknown to the trading partner?
A. Repos
A. Bankers’ acceptances
A. Eurodollars
A. Federal funds
1. A U.S. dollar – denominated bond that is sold in Singapore is a ____________
A. Eurobond.
A. Yankee bond.
A. Samurai bond.
A. Bulldog bond.
1. A municipal bond issued to finance an airport, hospital, turnpike, or port authority is typically a ___________
A. revenue bond.
A. general obligation bond.
A. industrial development bond,
A. revenue bond or general obligation bond.
1. Unsecured bonds are called __________
A. junk bonds.
A. debentures.
A. indentures.
A. subordinated debentures.
A. either debentures or subordinated debentures.
1. A bond that can be retired prior to maturity by the issuer is a(an) _________ bond.
A. convertible
A. secured
A. unsecured
A. callable
A. yankee
1. The trading of stock that was previously issued takes place _____________
A. in the secondary market.
A. in the primary market.
A. usually with the assistance of an investment banker.
A. in the secondary and primary markets.
1. A purchase of a new issue of stock takes place ________________
A. in the secondary market.
A. in the primary market.
A. usually with the assistance of an investment banker.
A. in the secondary and primary markets.
A. in the primary market and usually with the assistance of an investment banker.
1. Firms raise capital by issuing stock _____________
A. in the secondary market.
A. in the primary market.
A. to unwary investors.
A. only on days when the market is up.
1. Which of the following statements regarding the specialist are TRUE?
A. Specialists maintain a book listing outstanding unexecuted limit orders.
A. Specialists earn income from commissions and spreads in stock prices.
A. Specialists stand ready to trade at quoted bid and ask prices.
A. Specialists cannot trade in their own accounts.
A. Specialists maintain a book listing outstanding unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices.
1. Investment bankers ________
A. act as intermediaries between issuers of stocks and investors.
A. act as advisors to companies in helping them analyze their financial needs and find buyers for newly issued securities.
A. accept deposits from savers and lend them out to companies.
A. act as intermediaries between issuers of stocks and investors and act as advisors to companies in helping them analyze their financial needs and find buyers for newly issued securities.
1. In a “firm commitment” the investment banker ________
A. buys the stock from the company and resells the issue to the public.
A. agrees to help the firm sell the stock at a favorable price.
A. finds the best marketing arrangement for the investment banking firm.
A. agrees to help the firm sell the stock at a favorable price and finds the best marketing arrangement for the investment banking firm.
1. The secondary market consists of _________
A. transactions on the AMEX.
A. transactions in the OTC market.
A. transactions through the investment banker.
A. transactions on the AMEX and in the OTC market.
A. transactions on the AMEX, through the investment banker, and in the OTC market.
1. Initial margin requirements are determined by ________
A. the Securities and Exchange Commission.
A. the Federal Reserve System.
A. the New York Stock Exchange.
A. the Federal Reserve System and the New York Stock Exchange.
1. You purchased JNJ stock at $50 per share. The stock is currently selling at $65. Your gains may be protected by placing a __________
A. stop-buy order.
A. limit-buy order.
A. market order.
A. limit-sell order.
A. None of the options
1. You sold JCP stock short at $80 per share. Your losses could be minimized by placing a ___________
A. limit-sell order.
A. limit-buy order.
A. stop-buy order.
A. day-order.
A. None of the options
1. Which one of the following statements regarding orders is FALSE?
A. A market order is simply an order to buy or sell a stock immediately at the prevailing market price.
A. A limit-sell order is where investors specify prices at which they are willing to sell a security.
A. If stock ABC is selling at $50, a limit-buy order may instruct the broker to buy the stock if and when the share price falls below $45.
A. A market order is an order to buy or sell a stock on a specific exchange (market).
1. Restrictions on trading involving insider information apply to the following EXCEPT _______
A. corporate officers.
A. corporate directors.
A. major stockholders.
A. All of the options are subject to insider trading restrictions.
A. None of the options is subject to insider trading restrictions.
1. The cost of buying and selling a stock consists of ________
A. broker's commissions.
A. dealer's bid-asked spread.
A. a price concession an investor may be forced to make.
A. broker's commissions and dealer's bid-asked spread.
A. broker's commissions, dealer's bid-asked spread, and a price concession an investor may be forced to make.
1. Specialists on stock exchanges perform which of the following functions?
A. Act as dealers in their own accounts.
A. Analyze the securities in which they specialize.
A. Provide liquidity to the market.
A. Act as dealers in their own accounts and analyze the securities in which they specialize.
A. Act as dealers in their own accounts and provide liquidity to the market.
1. Shares for short transactions _______
A. are usually borrowed from other brokers.
A. are typically shares held by the short seller's broker in street name.
A. are borrowed from commercial banks.
A. are typically shares held by the short seller's broker in street name and are borrowed from commercial banks.
1. Which of the following orders is most useful to short sellers who want to limit their potential losses?
A. Limit order
A. Discretionary order
A. Limit-loss order
A. Stop-buy order
1. Which of the following orders instructs the broker to buy at the current market price?
A. Limit order
A. Discretionary order
A. Limit-loss order
A. Stop-buy order
A. Market order
1. Which of the following orders instructs the broker to buy at or below a specified price?
A. Limit-loss order
A. Discretionary order
A. Limit-buy order
A. Stop-buy order
A. Market order
1. Which of the following orders instructs the broker to sell at or below a specified price?
A. Limit-sell order
A. Stop-loss
A. Limit-buy order
A. Stop-buy order
A. Market order
1. Which of the following orders instructs the broker to sell at or above a specified price?
A. Limit-buy order
A. Discretionary order
A. Limit-sell order
A. Stop-buy order
A. Market order
1. Which of the following orders instructs the broker to buy at or above a specified price?
A. Limit-buy order
A. Discretionary order
A. Limit-sell order
A. Stop-buy order
A. Market order
1. Shelf registration ___________
A. is a way of placing issues in the primary market.
A. allows firms to register securities for sale over a two-year period.
A. increases transaction costs to the issuing firm.
A. is a way of placing issues in the primary market and allows firms to register securities for sale over a two-year period.
A. is a way of placing issues in the primary market and increases transaction costs to the issuing firm.
1. Block transactions are transactions for more than ________ shares and they account for about ________ percent of all trading on the NYSE.
A. 1,000; 5
A. 500; 10
A. 100,000; 50
A. 10,000; 30
A. 5,000; 23
1. A program trade is ___________
A. a trade of 10,000 (or more) shares of a stock.
A. a trade of many shares of one stock for one other stock.
A. a trade of analytic programs between financial analysts.
A. a coordinated purchase or sale of an entire portfolio of stocks.
A. not feasible with current technology but is expected to be popular in the near future.
1. When stocks are held in street name __________
A. the investor receives a stock certificate with the owner's street address.
A. the investor receives a stock certificate without the owner's street address.
A. the investor does not receive a stock certificate.
A. the broker holds the stock in the brokerage firm's name on behalf of the client.
A. the investor does not receive a stock certificate and the broker holds the stock in the brokerage firm's name on behalf of the client.
1. NASDAQ subscriber levels _____________
A. permit those with the highest level, 3, to "make a market" in the security.
A. permit those with a level 2 subscription to receive all bid and ask quotes, but not to enter their own quotes.
A. permit level 1 subscribers to receive general information about prices.
A. include all OTC stocks.
A. permit those with the highest level, 3, to "make a market" in the security; permit those with a level 2 subscription to receive all bid and ask quotes, but not to enter their own quotes; and permit level 1 subscribers to receive general information about prices.
1. You want to buy 100 shares of Hotstock Inc. at the best possible price as quickly as possible. You would most likely place a _____________
A. stop-loss order.
A. stop-buy order.
A. market order.
A. limit-sell order.
A. limit-buy order.
1. You want to purchase XON stock at $60 from your broker using as little of your own money as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?
A. 100 shares
A. 200 shares
A. 50 shares
A. 500 shares
A. 25 shares
1. A sale by IBM of new stock to the public would be a(n) __________
A. short sale.
A. seasoned equity offering.
A. private placement.
A. secondary market transaction.
A. initial public offering.
1. The finalized registration statement for new securities approved by the SEC is called__________
A. a red herring.
A. the preliminary statement.
A. the prospectus.
A. a best – efforts agreement.
A. a firm commitment.
1. One outcome from the SEC investigation of the "Flash Crash of 2010" was ________
A. a prohibition of short selling.
A. higher margin requirements.
A. approval of new circuit breakers.
A. establishment of electronic communications networks (ECNS).
A. passage of the Sarbanes-Oxley Act.
1. All of the following are considered new trading strategies EXCEPT _______
A. high frequency trading.
A. algorithmic trading.
A. dark pools.
A. short selling.
1. You sell short 100 shares of Loser Co. at a market price of $45 per share. Your maximum possible loss is ___________
A. $4,500.
A. unlimited.
A. zero.
A. $9,000.
A. Cannot tell from the information given.
1. You buy 300 shares of Qualitycorp for $30 per share and deposit initial margin of 50%. The next day, Qualitycorp's price drops to $25 per share. What is your actual margin?
A. 50%
A. 40%
A. 33%
A. 60%
A. 25%
1. When a firm markets new securities, a preliminary registration statement must be filed with _____________
A. the exchange on which the security will be listed.
A. the Securities and Exchange Commission.
A. the Federal Reserve.
A. all other companies in the same line of business.
A. the Federal Deposit Insurance Corporation.
1. In a typical underwriting arrangement the investment banking firm _________
I. sells shares to the public via an underwriting syndicate.
II. purchases the securities from the issuing company.
III. assumes the full risk that the shares may not be sold at the offering price.
IV. agrees to help the firm sell the issue to the public, but does not actually purchase the securities.
A. I, II, and III
A. I, III, and IV
A. I and IV
A. II and III
1. Which of the following is TRUE regarding private placements of primary security offerings?
A. Extensive and costly registration statements are required by the SEC.
A. For very large issues, they are better suited than public offerings.
A. They trade in secondary markets.
A. The shares are sold directly to a small group of institutional or wealthy investors.
A. They have greater liquidity than public offerings.
1. Which one of the following statements regarding open-end mutual funds is FALSE?
A. The funds redeem shares at net asset value.
A. The funds offer investors professional management.
A. The funds offer investors a guaranteed rate of return.
A. The funds offer investors professional management and a guaranteed rate of return.
A. The funds redeem shares at net asset value and offer investors professional management.
1. Which one of the following statements regarding closed-end mutual funds is FALSE?
A. The funds always trade at a discount from NAV.
A. The funds redeem shares at their net asset value.
A. The funds offer investors professional management.
A. The funds always trade at a discount from NAV and redeem shares at their net asset value.
A. None of the options
1. Which of the following functions do investment companies perform for their investors?
A. Record keeping and administration
A. Diversification and divisibility
A. Professional management
A. Lower transaction costs
A. All of the options
1. Multiple Mutual Funds had year-end assets of $457,000.000 and liabilities of $17,000,000. There were 24,300,000 shares in the fund at year-end. What was Multiple Mutual's net asset value?
$18.11
A. $18.81
A. $69.96
A. $7.00
A. $181.07
1. Growth Fund had year-end assets of $862,000,000 and liabilities of $12,000,000. There were 32,675,254 shares in the fund at year-end. What was Growth Fund's net asset value?
A. $28.17
A. $25.24
A. $19.62
$26.01
A. $21.56
1. Diversified Portfolios had year-end assets of $279,000,000 and liabilities of $43,000,000. If Diversified's NAV was $42.13, how many shares must have been held in the fund?
A. 43,000,000
A. 6,488,372
5,601,709
A. 1,182,203
