Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Chap003_Text bank(1)_Solution

Chap003_Text bank(1)_Solution

|Views: 2,353|Likes:
Published by Morcy Jones

More info:

Published by: Morcy Jones on Feb 08, 2011
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as RTF, PDF, TXT or read online from Scribd
See more
See less





Chapter 03 - How Securities are Traded
Chapter 03How Securities are Traded
Multiple Choice Questions
3. Firms raise capital by issuing stock A.in the secondary market.
in the primary market.C.to unwary investors.D.only on days when the market is up.E.C and D.Funds from the sale of new issues flow to the issuing corporation, making this a primarymarket transaction.
 Difficulty: Easy 
4. The following statements regarding the specialist are
:A.Specialists maintain a book listing outstanding unexecuted limit orders.B.Specialists earn income from commissions and spreads in stock prices.C.Specialists stand ready to trade at quoted bid and ask prices.D.Specialists cannot trade in their own accounts.
A, B, and C are all true.
The specialists' functions are all of the items listed in A, B, and C. In addition, specialiststrade in their own accounts.
 Difficulty: Moderate 
7. The secondary market consists of A.transactions on the AMEX.B.transactions in the OTC market.C.transactions through the investment banker.
A and B.E.A, B, and C.The secondary market consists of transactions on the organized exchanges and in the OTCmarket. The investment banker is involved in the placement of new issues in the primarymarket.
 Difficulty: Moderate 
8. The use of the Internet to trade and underwrite securitiesA.is illegal under SEC regulations.B.is regulated by the New York Stock Exchange.
decreases underwriting costs for a new security issue.D.increases underwriting costs for a new security issue.E.is regulated by the National Association of Securities Dealers.The SEC permits trading and underwriting of securities over the Internet, but has requiredfirms participating in this activity to take steps to safeguard investment funds. This form of underwriting is expected to grow quickly due to its lower cost.
 Difficulty: Moderate 
9. Initial margin requirements are determined byA.the Securities and Exchange Commission.
the Federal Reserve System.C.the New York Stock Exchange.D.B and C.E.A and B
Chapter 03 - How Securities are Traded
The Board of Governors of the Federal Reserve System determines initial marginrequirements. The New York Stock Exchange determines maintenance margin requirementson NYSE-listed stocks; however, brokers usually set maintenance margin requirements abovethose established by the NYSE.
 Difficulty: Moderate 
10. 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 B.limit-buy order C.market order 
limit-sell order E.none of the above.With a limit-sell order, your stock will be sold only at a specified price, or better. Thus, suchan order would protect your gains. None of the other orders are applicable to this situation.
 Difficulty: Moderate 
11. You sold JCP stock short at $80 per share. Your losses could be minimized by placing a __________.A.limit-sell order B.limit-buy order 
stop-buy order D.day-order E.none of the aboveWith a stop-buy order, the stock would be purchased if the price increased to a specified level,thus limiting your loss. None of the other orders are applicable to this situation.
 Difficulty: Moderate 

Activity (13)

You've already reviewed this. Edit your review.
xhuang43 liked this
1 thousand reads
1 hundred reads
Haris Bin Saqib liked this
Brent Plante liked this
Brent Plante liked this
Brent Plante liked this
Brent Plante liked this
Brent Plante liked this
Adam Schmidt liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->