A) good-till-canceled orders.
B) stop limit orders.
C) market orders.
D) stop orders.
Answer: C) market orders.
A) It is reduced to 17.45.
B) It remains at 18.
C) It is increased to 18.55.
D) It is canceled.
Answer: A) It is reduced to 17.45.
A) protect unrealized gains on a long position.
B) limit losses in a long position.
C) protect profits in a short position.
D) guarantee execution at a specified price.
Answer: D) guarantee execution at a specified price.
A) The order is executed in the day, at a price as close to the opening price as possible.
B) The order automatically becomes an at-the-open order in the following trading session.
C) The order is canceled.
D) The order is handled as a market order.
Answer: C) The order is canceled.
A) 2,000 shares at $60.
B) 2,000 shares at $48.
C) 1,600 shares at $45.
D) 1,600 shares at $50.
Answer: B) 2,000 shares at $48.
A) once a year on the anniversary of the order.
B) every 6 months after the order has been entered.
C) April 1 and October 1.
D) the last business days of April and October.
Answer: D) the last business days of April and October.
A) handling odd-lot market orders.
B) providing liquidity.
C) acting as broker for orders placed on the book.
D) preventing the stock price from falling.
Answer: D) preventing the stock price from falling.
A) Sell stop.
B) Buy limit.
C) Sell stop limit.
D) All of these.
Answer: D) All of these.
A) the OCC.
B) a member of the exchange.
C) the NYSE.
D) the SEC.
Answer: B) a member of the exchange.
A) Buy stop limit.
B) Sell stop.
C) Buy stop.
D) Sell limit.
Answer: B) Sell stop.
A) the traders.
B) the floor brokers.
C) the specialist (designated market maker).
D) the order book official.
Answer: C) the specialist (designated market maker).
A) floor brokers based on the level of opening orders.
B) third-market makers.
C) specialist (designated market maker).
D) exchange.
Answer: C) specialist (designated market maker).
A) Good-for-a-week.
B) Good-for-a-month.
C) Not-held.
D) Good-till-canceled.
Answer: D) Good-till-canceled.
not-held orders.
good-for-a-month orders.
stop limit orders.
market orders.
A) II and III.
B) III and IV.
C) I and II.
D) I and IV.
Answer: C) I and II.
A) sell stop limit.
B) buy stop.
C) buy limit.
D) sell stop.
Answer: B) buy stop.
A) market.
B) stop.
C) limit.
D) not-held.
Answer: D) not-held.
A) GTC order.
B) FOK order.
C) day order.
D) limit order.
Answer: C) day order.
A) short sales may take place at the closing.
B) the buyer must be advised that he is purchasing borrowed shares.
C) a short sale can be effected at any time in the trade sequence.
D) short sales may take place at the opening.
Answer: B) the buyer must be advised that he is purchasing borrowed shares.
A) limit orders.
B) stop limit orders.
C) stop orders.
D) market orders.
Answer: D) market orders.
Plus tick.
Zero-plus tick.
Minus tick.
Zero-minus tick.
A) I and III.
B) II and IV.
C) I, II, III and IV.
D) I and II.
Answer: C) I, II, III and IV.
when a stock ticks up.
when a stock ticks down.
unrestrictedly in both exchange and OTC markets.
A) I, II and III.
B) I and II.
C) I and III.
D) II and III.
Answer: A) I, II and III.
A) NASDAQ.
B) listed stocks trading OTC.
C) listed stocks trading on an exchange.
D) Bulletin Board stocks.
Answer: C) listed stocks trading on an exchange.
A) An existing order has precedence over a new order when it comes to execution.
B) Additional cost to the firm of changing the order twice in a day.
C) Weakening the customer's risk tolerance by encouraging him to change orders frequently.
D) Day orders are less risky than GTC orders.
Answer: A) An existing order has precedence over a new order when it comes to execution.
A) parity, precedence, then priority.
B) priority, precedence, then parity.
C) priority then precedence.
D) priority then parity.
Answer: B) priority, precedence, then parity.
A) should be held for execution on the following trading day
B) should be held for execution on the following trading day unless canceled by the customer
C) are converted to market orders and executed at the opening on the following trading day
D) must be canceled
Answer: D) must be canceled
A) The S&P 100 index recalculated monthly
B) The Wilshire index recalculated daily
C) The S&P 500 index recalculated daily
D) The DJIA recalculated quarterly
Answer: C) The S&P 500 index recalculated daily
A) number of shareholders.
B) market value of publicly held shares.
C) earnings per share.
D) number of publicly held shares.
Answer: C) earnings per share.
A) two-dollar brokers.
B) designated market maker
C) floor brokers.
D) allied members.
Answer: D) allied members.
A) OTC market.
B) NYSE and the OTC.
C) third market.
D) NYSE.
Answer: D) NYSE.
Two-dollar broker.
Registered market maker.
Allied member.
Stock lending representative.
A) III and IV.
B) I and II.
C) I and III.
D) II and IV.
Answer: B) I and II.
A) there can never be an arbitrage opportunity in a hostile takeover scenario
B) buy shares of the target company (XYZ) and short shares of the aggressor (ABC)
C) buy shares of the aggressor company (ABC)
D) sell shares of the target company (XYZ)
Answer: B) buy shares of the target company (XYZ) and short shares of the aggressor (ABC)
A) the Designated Market Maker (DMM) display book
B) Super Display Book (SDBK)
C) Consolidate Tape System (CTS)
D) Trade Reporting Facility (TRF)
Answer: D) Trade Reporting Facility (TRF)
A) trades in Nasdaq-listed securities and exchange-listed securities when they occur off of the exchange trading floor
B) trades in NYSE-listed securities occurring on the NYSE
C) brokers executing orders as agents in an auction market on any exchange trading floors
D) brokers acting as agents in all order execution scenarios
Answer: A) trades in Nasdaq-listed securities and exchange-listed securities when they occur off of the exchange trading floor
A) lessen the transparency of the overall market as volume, quote and price information, and market participant identity is unknown
B) allow them to enter orders that are sent directly to the trading floors of stock exchanges
C) allow them to give an order to their broker/dealer to buy or sell securities while only referencing an account known by a number and not their name
D) prevent them from having their own orders entered on exchanges for execution
Answer: A) lessen the transparency of the overall market as volume, quote and price information, and market participant identity is unknown
Global select market.
Global market.
Bulletin Board listings.
Electronic OTC Pink listings.
A) III and IV.
B) I and II.
C) I and IV.
D) II and III.
Answer: B) I and II.
A) 12,000 shares of PQ, a stock listed on the Philadelphia Stock Exchange are sold on the Chicago Stock Exchange floor.
B) 10,000 shares of LMNO, a stock listed on Nasdaq, are traded between two financial institutions via an electronic communications network (ECN).
C) 12,000 shares of XYZ, a stock listed on the New York Stock Exchange, are sold over the counter.
D) 10,000 shares of XYZ, a stock listed on the New York Stock Exchange, are sold on the Chicago Stock Exchange floor.
Answer: C) 12,000 shares of XYZ, a stock listed on the New York Stock Exchange, are sold over the counter.
Nasdaq Regional exchange-listed securities.
Nasdaq Global Market.
Nasdaq MidCap Market.
Nasdaq Capital Market.
A) I and II.
B) I and III.
C) III and IV.
D) II and IV.
Answer: D) II and IV.
A) dealer (or principal).
B) broker/dealer.
C) broker (or agent).
D) floor broker.
Answer: A) dealer (or principal).
A) the CBOE (Chicago Board Options Exchange).
B) Nasdaq.
C) the Chicago Stock Exchange.
D) the OTCBB (over-the-counter bulletin board).
Answer: C) the Chicago Stock Exchange.
A) pegging.
B) taking a position.
C) commingling.
D) churning.
Answer: B) taking a position.
Market maker.
Specialist.
Auction market.
Negotiated market.
A) I and IV.
B) I and III.
C) II and III.
D) II and IV.
Answer: A) I and IV.
A) The SEC.
B) The New York Stock Exchange.
C) The Board of Directors of KPL.
D) FINRA.
Answer: B) The New York Stock Exchange.
A) the intermarket.
B) Nasdaq.
C) electronic communications networks (ECNs).
D) any regional exchange.
Answer: C) electronic communications networks (ECNs).
A) First.
B) Primary.
C) Dealer.
D) Auction.
Answer: C) Dealer.
Prices are set by negotiation between interested parties.
The highest bid and the lowest offer prevail.
Only listed securities can be traded.
Minimum prices are established at the beginning of the day.
A) I and III.
B) I and IV.
C) II and IV.
D) II and III.
Answer: D) II and III.
A) The services of a brokerage firm are not used.
B) It refers to the block trading of unlisted securities.
C) It is composed of listed securities traded OTC.
D) It is composed only of unlisted securities.
Answer: C) It is composed of listed securities traded OTC.
A) position trading.
B) arbitrage.
C) hedging.
D) short selling.
Answer: A) position trading.
A) It is underwriting securities in the primary market.
B) It is acting as a broker for customers.
C) It is trading for its own account.
D) It is violating NYSE rules.
Answer: C) It is trading for its own account.
A) an insurance company buying corporate bonds directly from another insurance company.
B) a corporate bond syndicate selling new issues to the public.
C) a specialist (designated market maker)on the NYSE buying stock as principal.
D) an agent buying unlisted securities for a client.
Answer: B) a corporate bond syndicate selling new issues to the public.
I. Transactions in listed securities occur mainly in the OTC market.
II. Transactions in unlisted securities occur in the OTC market.
III. Transactions in listed securities that occur in the OTC market are said to take place in the fourth market.
IV. Transactions in listed securities that occur directly between institutions without the use of broker/dealers as intermediaries are said to take place in the fourth market.
A) I and III.
B) I and IV.
C) II and III.
D) II and IV.
Answer: D) II and IV.
A) It halts all trading in ABC until the NYSE reopens it.
B) It applies to the SEC for a decision within 30 minutes of the opening.
C) It may either halt or continue trading as it sees fit.
D) It continues to trade ABC with the NYSE specialist's (Designated Market Maker) permission.
Answer: C) It may either halt or continue trading as it sees fit.
Listed registered.
Unlisted nonexempt.
Registered unlisted.
Unregistered exempt.
A) I, II, III and IV.
B) I and II.
C) I and III.
D) II and III.
Answer: A) I, II, III and IV.
A) Primary.
B) Secondary.
C) Third.
D) Fourth.
Answer: D) Fourth.
enhance market transparency for public retail customers
diminish market transparency for public retail customers
accommodate small transactions for institutional traders
accommodate large-volume transactions for institutional traders
A) II and III
B) I and III
C) I and IV
D) II and IV
Answer: D) II and IV
A) 0.81.
B) -0.68.
C) 0.16.
D) -0.11.
Answer: A
A) Real estate investment trust (REIT).
B) Municipal bond unit investment trust (UIT).
C) Long-term bond mutual fund.
D) Rental apartment building.
Answer: D
A) Municipal revenue bond issued by a township.
B) Oil drilling limited partnership interest.
C) Common stock in a small oil drilling corporation that is quoted on the Pink Sheets.
D) Long-term municipal bond fund.
Answer: D
90-day T-bill rate: 4%.
Actual return: 14%.
Beta 1.40.
CPI 3%.
Standard Deviation 5.0.
A) 2.0.
B) 5.0.
C) 10.0.
D) 11.0.
Answer: A
A) not increase as much as the market when the market is up.
B) increase more than the market when the market is up.
C) decrease more than the market when the market is down.
D) decrease regardless of whether the market is up or down.
Answer: A
A) standard deviation.
B) alpha.
C) beta.
D) net present value.
Answer: A
A) 5.0%
B) 3.5%
C) 8.5%
D) 6.5%
Answer: B
credit risk.
interest rate risk.
opportunity cost.
purchasing power risk.
A) I, II, III and IV.
B) II and IV.
C) I II, and IV.
D) I and II.
Answer: A
A) Security DEF with an expected return of 20% whose return's correlation with the portfolio is +2.0.
B) Security ABC with an expected return of 10% whose return's correlation with the portfolio is -1.0.
C) Security XYZ with an expected return of 10% whose return's correlation with the portfolio is +1.0.
D) Security LMN with an expected return of 10% whose return's correlation with the portfolio is 0.
Answer: B
A) The investor's estimated tolerance for risk and volatility.
B) The amount of time elapsing between the deposit of the investment and the investor's anticipated use of the funds.
C) Components of an investor's current portfolio.
D) Whether the investment is made directly through the fund itself or through a broker/dealer.
Answer: D
A) 0.83%.
B) 3.85%.
C) 3.33%.
D) 27.20%.
Answer: C
A) 5%.
B) 5.26%
C) 5.26% plus the implied coupon rate.
D) The return cannot be determined without knowing current interest rates.
Answer: B
A) Internal rate of return.
B) Current yield.
C) Future value.
D) Discounted cash flow.
Answer: D
A) in danger of default.
B) selling at a discount.
C) selling at par.
D) selling at a premium.
Answer: B
A) STU common stock, beta .95, correlation to the S&P 500, +.84, VWX common stock, beta .90, correlation to the S&P 500, +.07; YZA common stock, beta .88, correlation to the S&P 500, -.45.
B) ABC common stock, beta 1.20, correlation to the S&P 500, +.82; DEF common stock, beta .90, correlation to the S&P 500, +.91; GHI common stock; beta +.65, correlation to the S&P 500, .56.
C) DCB common stock, beta 1.00, correlation to the S&P 500, +.75; HGF common stock, beta .10, correlation to the S&P 500, +.25; KJI common stock, beta -.50, correlation to the S&P 500 +.50.
D) JKL common stock, beta 1.50, correlation to the S&P 500, +.77; MNO common stock, beta 1.00, correlation to the S&P 500, +.93, PQR common stock, beta .50, correlation to the S&P 500, +.34.
Answer: A
cash.
wages payable.
patents.
preferred stock.
A) I and II.
B) III and IV.
C) I and IV.
D) II and III.
Answer: B
A) an estimate of probable returns an investment may yield.
B) the one discount rate that equates the future value of an investment with its net present value.
C) the difference between an investment's present value and its cost.
D) the worth of future income discounted to reflect what that income is worth today.
Answer: A
A) Treasury bond issued at par and carrying a 4% coupon.
B) Treasury bond issued at par carrying a 5% coupon.
C) Treasury bond issued at par carrying a 7% coupon.
D) Treasury bond issued at par carrying a 6% coupon.
Answer: A
A) assume higher risk in the secondary market.
B) increase the portfolio duration.
C) invest in high-yield or junk bonds.
D) decrease the portfolio duration.
Answer: D
A) mid cap.
B) large cap.
C) small cap.
D) a blend of large, mid, and small cap.
Answer: B
A) present value would be lower.
B) yield to maturity would decrease.
C) future value would be lower.
D) present value would be higher.
Answer: D) present value would be higher.
A) Preferred stock fund.
B) Aggressive growth fund.
C) Money market fund.
D) High-yield bond fund.
A) Preferred stock fund.
Answer: A
A) domicile of the investor.
B) issuer.
C) quality.
D) maturity.
Answer: A
investment objectives.
financial background.
tax status.
A) I and II.
B) II and III.
C) I, II and III.
D) I only.
Answer: C
A) made an unsuitable recommendation, since a municipal revenue bond would have been more appropriate.
B) made an unsuitable recommendation based on the client's needs and objectives.
C) recommended a suitable investment because GOs are good long-term investments.
D) committed no violation because municipal bonds are well suited for the market's volatility.
Answer: B
The client's risk tolerance.
Past performance of the adviser representative's recommendations.
The client's investment needs and objectives.
The client's previous investment experience with other advisers.
A) II and III.
B) II and IV.
C) I and III.
D) I and IV.
Answer: C
A) the client's job is not secure.
B) the client is willing to accept a moderate amount of risk.
C) the client is in the 18% tax bracket.
D) this would be the client's only investment.
Answer: B
A) Establish an emergency fund.
B) Set goals and dates for reaching them.
C) Pay off credit card debt.
D) Determine a reasonable fee for designing the plan.
Answer: A) Establish an emergency fund.
dividends.
credit card debt.
autos.
mortgage interest.
A) II and III.
B) III and IV.
C) I and IV.
D) I and II.
Answer: C) I and IV.
A) taxes.
B) assets.
C) salary.
D) expenses.
Answer: B) assets.
A) salary or wages.
B) assets.
C) interest expense.
D) accumulated depreciation.
Answer: A balance sheet, whether for an individual, a family, or a business, is a listing of assets and liabilities. Interest expense and salary go on the income statement. Accumulated depreciation is a balance sheet item, but only for a business.
expectation of rewards.
emotional risk tolerance.
type of retirement plan.
time horizon.
A) II and IV.
B) I and II.
C) I and IV.
D) I, II and IV.
Answer: D) I, II and IV.
attitudes.
demographics.
experience with investments.
values.
A) II and IV.
B) I and III.
C) I, II, III and IV.
D) I, II and IV.
Answer: C
A) $150,000.
B) $130,000.
C) $122,000.
D) $138,000.
Answer: B) $130,000.
A) assets, liabilities, and net worth.
B) income, liabilities, and net worth.
C) assets, expenditures, and balance.
D) income, liabilities, and balance.
Answer: A
A) the difference between the individual's assets and the individual's liabilities.
B) best determined by examining the individual's personal income statement.
C) largely irrelevant in identifying the individual's investment objectives.
D) another term for discretionary income.
Answer: A) the difference between the individual's assets and the individual's liabilities.
A) $466,000.00
B) $475,000.00
C) $491,000.00
D) $500,000.00
Answer: D) $500,000.00
car loan.
gold watch.
Keogh plan.
salary.
A) I and II.
B) I and IV.
C) III and IV.
D) II and III.
Answer: D) II and III.
A) Emergency fund.
B) Adequate life insurance.
C) Established short- and long-term investment goals.
D) Zero balance on all credit cards.
Answer: D) Zero balance on all credit cards.
anticipated number of years until retirement.
location of current bank and brokerage accounts.
current savings and investments.
college alma mater.
A) III and IV.
B) I and III.
C) I and II.
D) II and IV.
Answer: B) I and III.
A) proceed with opening the account.
B) refuse to open the account.
C) seek permission to consult with the client's fiduciary team including accountants and attorneys to obtain the financial information.
D) consult a registered principal of the firm to determine its policy on opening an account when the customer refuses to provide financial information.
Answer: D) consult a registered principal of the firm to determine its policy on opening an account when the customer refuses to provide financial information.
A) place the funds in a money market fund.
B) explain the benefits and risks if Allison diversifies her portfolio with the addition of new securities that bear higher risks with returns that are not closely correlated with her present portfolio.
C) purchase investments that closely mirror Allison's current portfolio.
D) purchase long-term investment-grade bonds.
Answer: B) explain the benefits and risks if Allison diversifies her portfolio with the addition of new securities that bear higher risks with returns that are not closely correlated with her present portfolio.
Cash $20,000.
Municipal bonds $75,000.
401(k) account value $150,000.
Salary $80,000 per year.
Cars $30,000.
Home $250,000.
Miscellaneous (jewelry, etc.) $50,000.
Personal loan $10,000.
Car loan $20,000.
Mortgage $150,000.
Monthly mortgage payment $1,500.
A) $245,000.
B) $473,500.
C) $395,000.
D) $95,000.
Answer: C) $395,000.
A) death and disability needs.
B) current income.
C) educational level.
D) retirement needs.
Answer: C) educational level.
A) Client's income needs.
B) Assets under management.
C) Tolerance for risk.
D) Rate of interest on Treasury bills.
Answer: C) Tolerance for risk.
A) obtaining the information required to fulfill her professional obligation regarding suitability.
B) determining whether she has any inherent conflicts of interest with her clients.
C) violating her ethical obligation regarding confidentiality of client information.
D) giving herself an unethical advantage regarding how much the client can afford to spend on an advisory fee.
Answer: A) obtaining the information required to fulfill her professional obligation regarding suitability.