CHAPTERS 11-15 - Chapter 11 Review Questions True/False 1....

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Chapter 11 Review Questions True/False 1. Two prerequisites to investing are adequate insurance and liquidity. 2. Newly issued securities are sold to the public in the secondary market. 3. An individual is more likely to use the secondary markets than the primary market. 4. The New York Stock Exchange is the largest stock exchange in the world. 5. Prices are rising in bear markets, indicating economic optimism. 6. Brokers charge a commission on security purchases as well as on security sales. 7. Buying on margin would allow you to purchase securities using borrowed funds. 8. The Standard and Poor’s Index includes 30 industrial stocks. 9. On-line trading is the only valuable investment service available through the Internet. 10. A portfolio is a collection of investment assets assembled to meet your investment objectives. Multiple Choice 1. is a short-term investment activity. a. Buying life insurance d. Speculating in common stock b. Buying bonds e. Saving c. Investing in common stock 2. The most common reason for investing is a. enhancing current income. d. paying for an expensive vacation. b. saving for retirement. e. saving for college education. c. sheltering earnings from taxes. 3. You have been offered an opportunity to buy shares of a diversified collection of securities. You will be investing in a. bonds. d. real estate. b. common stock. e. stock options. c. mutual funds. 4. The SEC requires corporations to issue describing the firm and the security issue it wishes to sell. a. an advertisement d. a dealer newsletter b. a prospectus e. none of these c. an underwriting journal
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5. The most stringent listing requirements would be found on the a. American Stock Exchange. d. New York Stock Exchange. b. Boston Stock Exchange. e. Pacific Stock Exchange. c. Midwest Stock Exchange. 6. The federal government regulates securities markets through the a. Department of Commerce. b. Federal Reserve System. c. National Association of Securities Dealers. d. Securities and Exchange Commission. e. Federal Securities Agency. 7. A bull market is characterized by a. investor optimism. d. falling stock prices. b. governmental stimulus. e. investor pessimism. c. economic slowdown. 8. is not a normal brokerage service. a. Providing investment information d. Storing security certificates b. Buying and selling securities e. Providing market quotations c. Managing your portfolio 9. Discount brokers will a. execute orders. d. do all of these. b. give advice. e. do none of these. c. watch portfolios. 10. A market order would be transacted at the a. lowest price. d. limit price. b. highest price. e. none of these. c. best price. 11. Instructing your broker to buy or sell a stock at a particular price is a a. limit order. d. regular order. b.
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This note was uploaded on 06/02/2011 for the course FINA 1307 taught by Professor Friday during the Spring '11 term at Texas A&M University, Corpus Christi.

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CHAPTERS 11-15 - Chapter 11 Review Questions True/False 1....

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