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Exam 3: How Securities Are Traded

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Question 21

Multiple Choice

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The securities act of 1933 I) requires full disclosure of relevant information relating to the issue of new securities. II. requires registration of new securities. III. requires issuance of a prospectus detailing financial prospects of the firm. IV. established the SEC. V. requires periodic disclosure of relevant financial information. VI. empowers SEC to regulate exchanges, OTC trading, brokers, and dealers.

A) I, II, and III
B) I, II, III, IV, V, and VI
C) I, II, and V
D) I, II, and IV
E) IV only

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Question 22

Multiple Choice

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Which of the following orders instructs the broker to buy at or below a specified price

A) Limit-loss order
B) Discretionary order
C) Limit-buy order
D) Stop-buy order
E) Market order

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Question 23

Multiple Choice

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A purchase of a new issue of stock takes place

Assume you sold short 100 shares of common stock at $40 per share.The initial margin is 50%.What would be the maintenance margin if a margin call is made at a stock price of $50

The trading of stock that was previously issued takes place

You want to purchase IBM stock at $80 from your broker using as little of your own money as possible.If initial margin is 50% and you have $2,000 to invest, how many shares can you buy

Assume you purchased 200 shares of GE common stock on margin at $70 per share from your broker.If the initial margin is 55%, how much did you borrow from the broker

You sold JCP stock short at $80 per share.Your losses could be minimized by placing a

A program trade is

Which of the following orders instructs the broker to sell at or above a specified price

You sold short 100 shares of common stock at $75 per share.The initial margin is 50%.At what stock price would you receive a margin call if the maintenance margin is 30%

You purchased 100 shares of common stock on margin at $45 per share.Assume the initial margin is 50% and the stock pays no dividend.What would the maintenance margin be if a margin call is made at a stock price of $30 Ignore interest on margin.

All of the following are considered new trading strategies except

You want to buy 100 shares of Hotstock Inc.at the best possible price as quickly as possible.You would most likely place a

The finalized registration statement for new securities approved by the SEC is called

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

You purchased 1000 shares of CSCO common stock on margin at $19 per share.Assume the initial margin is 50% and the maintenance margin is 30%.Below what stock price level would you get a margin call Assume the stock pays no dividend; ignore interest on margin.

Restrictions on trading involving insider information apply to the following except

The secondary market consists of

You sold short 200 shares of common stock at $60 per share.The initial margin is 60%.Your initial investment was