Question 1

The maximum buying price or the minimum selling price specified by the investor is called a:

Accepted Answer

A)  stop-loss order
B)  market order
C)  short sale
D)  limit orderE) A) and B)
F) A) and C)

Question 2

On average and across countries, underpricing securities issues represents a significant cost to firms that issue securities.

Accepted Answer

A) True 
 B)False

Question 3

__________________ is a technique for trading stocks as a group rather than individually, defined as a minimum of at least 15 different stocks with a maximum value of $1 million.

Accepted Answer

A)  A short sale
B)  A stop-loss order
C)  Margin trading
D)  Program tradingE) A) and D)
F) A) and C)

Question 4

A global depository receipt is traded on the American Stock Exchange.

Accepted Answer

A) True 
 B)False  False

Question 5

The maintenance margin is the minimum margin to which an investment may fall before a margin call is placed.

Accepted Answer

A) True 
 B)False

Question 6

An important function of the Securities and Exchange Commission is to pass judgment on the investment merit of a security.

Accepted Answer

A) True 
 B)False  False

Question 7

Investment banks engage in all of the following activities EXCEPT:

Accepted Answer

A)  underwrite corporate securities
B)  buy and sell commercial paper
C)  mergers and acquisitions
D)  all of the above
E)  none of the aboveF) A) and B)
G) B) and D)

Question 8

___________________ is the market for large blocks of listed stocks that operates outside the confines of the organized exchanges.

Accepted Answer

A)  The primary market
B)  The secondary market
C)  The third market
D)  The fourth marketE) B) and D)
F) A) and C)

Question 9

While the Chicago Board Options Exchange remains the main market for exchange traded options, the ______________ exchange also deals in option contracts.

Accepted Answer

A)  Miami
B)  Indianapolis
C)  San Francisco
D)  all of the above
E)  none of the above.F) All of the above
G) A) and C)

Question 10

A person who facilitates market transactions by selling (buying)  when other investors wish to buy (sell)  is called a:

Accepted Answer

A)  registered trader
B)  floor broker
C)  market maker
D)  commission brokerE) A) and B)
F) None of the above

Question 11

The ___________________ Exchange (ICE)  serves the global markets for agricultural, credit, currency, emissions, energy and equity index markets.

Accepted Answer

A)  Italian
B)  Indianapolis
C)  Istanbul
D)  International
E)  none of the above.F) None of the above
G) A) and E)

Question 12

The price for which the owner is willing to sell the security is called the:

Accepted Answer

A)  bid price
B)  spread
C)  ask price
D)  limit priceE) B) and C)
F) A) and D) C

Question 13

The lead investment banker:

Accepted Answer

A)  is elected by members of the syndicate
B)  is appointed by the SEC
C)  originates and handles a flotation
D)  none of the aboveE) B) and D)
F) B) and C)

Question 14

The term "Big Board" is another name for the NASDAQ market.

Accepted Answer

A) True 
 B)False

Question 15

___________________ is the maximum purchase price or minimum selling price specified by an investor.

Accepted Answer

A)  A short sale
B)  A stop-loss order
C)  A limit order
D)  Buying on marginE) A) and B)
F) None of the above

Question 16

Existing firms that are already public and wish to raise additional funds may:

Accepted Answer

A)  sell additional securities by using the underwriting process
B)  sell securities to a private party
C)  seek competitive bid
D)  all the above
E)  none of the aboveF) B) and E)
G) A) and E)

Question 17

___________________ is when an investor borrows money and invests t he borrowed funds along with his or her own funds in securities.

Accepted Answer

A)  A short sale
B)  A stop-loss order
C)  A limit order
D)  Buying on marginE) A) and B)
F) None of the above

Question 18

___________________ is the maximum purchase price or minimum selling price specified by an investor.

Accepted Answer

A)  A short sale
B)  A stop-loss order
C)  A limit order
D)  Buying on marginE) B) and C)
F) A) and C)

Question 19

An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

Accepted Answer

A)  due diligence agreement
B)  best-effort agreement
C)  firm commitment price agreement
D)  shelf registration agreementE) B) and D)
F) A) and B)

Question 20

Commercial banks were for many years prohibited from full-fledged investment banking by the:

Accepted Answer

A)  Glass-Steagall Act
B)  Garn-St.Germain Depository Institutions Act
C)  Securities Act of 1933
D)  National Association of Securities DealersE) B) and C)
F) B) and D)

Exam 11: Securities Markets

The maximum buying price or the minimum selling price specified by the investor is called a:

Correct AnswerverifiedShow Answer

On average and across countries, underpricing securities issues represents a significant cost to firms that issue securities.

Correct AnswerverifiedShow Answer

__________________ is a technique for trading stocks as a group rather than individually, defined as a minimum of at least 15 different stocks with a maximum value of $1 million.

Correct AnswerverifiedShow Answer

A global depository receipt is traded on the American Stock Exchange.

Correct AnswerverifiedFalse

The maintenance margin is the minimum margin to which an investment may fall before a margin call is placed.

Correct AnswerverifiedShow Answer

An important function of the Securities and Exchange Commission is to pass judgment on the investment merit of a security.

Correct AnswerverifiedFalse

Investment banks engage in all of the following activities EXCEPT:

Correct AnswerverifiedShow Answer

___________________ is the market for large blocks of listed stocks that operates outside the confines of the organized exchanges.

Correct AnswerverifiedShow Answer

While the Chicago Board Options Exchange remains the main market for exchange traded options, the ______________ exchange also deals in option contracts.

Correct AnswerverifiedShow Answer

A person who facilitates market transactions by selling (buying) when other investors wish to buy (sell) is called a:

Correct AnswerverifiedShow Answer

The ___________________ Exchange (ICE) serves the global markets for agricultural, credit, currency, emissions, energy and equity index markets.

Correct AnswerverifiedShow Answer

The price for which the owner is willing to sell the security is called the:

Correct AnswerverifiedC

The lead investment banker:

Correct AnswerverifiedShow Answer

The term "Big Board" is another name for the NASDAQ market.

Correct AnswerverifiedShow Answer

___________________ is the maximum purchase price or minimum selling price specified by an investor.

Correct AnswerverifiedShow Answer

Existing firms that are already public and wish to raise additional funds may:

Correct AnswerverifiedShow Answer

___________________ is when an investor borrows money and invests t he borrowed funds along with his or her own funds in securities.

Correct AnswerverifiedShow Answer

___________________ is the maximum purchase price or minimum selling price specified by an investor.

Correct AnswerverifiedShow Answer

An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:

Correct AnswerverifiedShow Answer

Commercial banks were for many years prohibited from full-fledged investment banking by the:

Correct AnswerverifiedShow Answer

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False

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False

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C

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