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Exam 3: Securities Markets

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Question 31

Multiple Choice

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The primary market where new security issues are offered to the public is a good example of ________.

A) an auction market
B) a brokered market
C) a dealer market
D) a direct search market

E) A) and D)
F) A) and C)

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Question 32

Multiple Choice

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As a result of flash crashes, the SEC is trying circuit breakers that will halt trading for 5 minutes if large stocks' prices change by more than ________ in a 5-minute period.

A) 10%
B) 20%
C) 30%
D) 40%

E) All of the above
F) A) and D)

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Question 33

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You purchased 250 shares of common stock on margin for $25 per share. The initial margin is 65%, and the stock pays no dividend. Your rate of return would be ________ if you sell the stock at $32 per share. Ignore interest on margin.

The largest nongovernmental regulator of securities firms in the United States is ________.

The difference between the price at which a dealer is willing to buy and the price at which a dealer is willing to sell is called the ________.

The non-European country with the highest average first-day returns in 2014 was ________.

Regulation NMS: I. Supports the goal of integrating financial markets II. Requires the use of specialists to execute trades III. Requires that exchanges honor quotes of other exchanges when they can be executed automatically

The commission structure on a stock purchase is $20 plus $.02 per share. If you purchase four round lots of a stock selling for $56, what is your commission?

The margin requirement on a stock purchase is 25%. You fully use the margin allowed to purchase 100 shares of MSFT at $25. If the price drops to $22, what is your percentage loss?

An order to buy or sell a security at the current price is a ________.

In 2013, NYSE Euronext was acquired by ________.

You purchased XYZ stock at $50 per share. The stock is currently selling at $65. Your gains could be protected by placing a ________.

The term "underwriting syndicate" describes ________.

Assume you purchased 500 shares of XYZ common stock on margin at $40 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is ________.

Explicit costs of a stock IPO tend to be around ________ of the funds raised.

Which one of the following types of markets requires the greatest level of trading activity to be cost-effective?

The NYSE acquired the ECN ________, and NASDAQ recently acquired the ECN ________.

In ________ markets, participants post bid and ask prices at which they are willing to trade, but orders are not automatically executed by computer. ________ execute trades for people other than themselves, and in ________ markets a computer matches orders with an existing limit order book and executes the trades automatically.

The ________ system enables exchange members to send orders directly to a specialist over computer lines.

Maintenance requirements for margin accounts are set by ________.