ch05 - Chapter 5 HOW SECURITIES ARE TRADED Multiple Choice...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 HOW SECURITIES ARE TRADED Multiple Choice Questions Brokerage Transactions 1. Merrill Lynch and Paine Webber are examples of : a. discount brokers b. wholesale brokers c. full-service brokers d. blue-chip brokers (c, easy) 2. Which of the following statements is true regarding full-service brokers? a. They typically seek clients with at least $10,000 in their accounts. b. They derive only a small percentage of their revenues from commissions. c. They compete primarily on price and services offered. d. Less than 10 percent of U.S. households now use a full-service broker. (b, moderate) 3. Which of the following statements regarding commissions charged by full-service brokers is not true? a. Commissions vary by product. b. The more complicated the transaction, the higher the commission. c. The commission on many bonds is already built into the trade. d. There is no commission on U.S. Treasury securities. (d, moderate) 4. Which of the following statements regarding discount brokers is true? a. The number of on-line discount brokers is the largest type of discount broker. b. Discount brokers only execute orders on stock transactions. c. Discount brokers may offer little investment advice. d. All of the above statements are true. (c, moderate) Chapter Five How Securities Are Traded 53
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
5. Which of the following accounts often requires an annual fee? a. a cash account b. an asset management account c. a margin account d. All of the above require an annual fee. (b, moderate) 6. Which of the following requires a relatively large minimum investment, usually $100,000 or higher? a. a cash account b. an asset management account c. a margin account d. a wrap account (d, moderate) 7. A newer variation of the wrap account is the: a. mutual fund wrap account. b. asset allocation wrap account. c. small-cap wrap account. d. index wrap account. (a, easy) 8. Which of the following laws eliminated all fixed commissions? a. Securities Exchange Act of 1934 b. Securities Acts Amendments of 1975 c. Investor Advisor Act of 1940 d. Securities Investor Protection Act of 1970 (b, moderate) 9. Direct stock purchase programs (DSPs) are an outgrowth of : a. electronic trading b. dividend reinvestment plans c. increased NASDAQ trading d. decreased regulation (b, easy) Chapter Five How Securities Are Traded 54
Background image of page 2
How Orders Work 10. The exchange member in charge of limit orders is the: a. commission broker b. floor broker c. specialist d. delegate (c, easy) 11. The specialist is allowed to act as both a broker and dealer in order a. to give commission brokers more competition. b. to maintain a liquid and orderly market. c. to give them more power. d. to follow SEC regulations. (b, moderate) 12. If specialists “go against the market,” this means: a. they are acting against exchange orders.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 17

ch05 - Chapter 5 HOW SECURITIES ARE TRADED Multiple Choice...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online