Jones_Chapter 5 - Study Guide - Chapter 5 HOW SECURITIES...

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Chapter 5 HOW SECURITIES ARE TRADED 1. 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) 2. 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) 3. 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) 4. Direct stock purchase programs (DSPs) are an outgrowth of : a. electronic trading b. dividend reinvestment plans c. increased NASDAQ trading d. decreased regulation (b) 5. The exchange member in charge of limit orders is the: a. commission broker b. floor broker c. specialist d. delegate Chapter Five How Securities Are Traded 53
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(c) 6. 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) 7. If specialists “go against the market,” this means: a. they are acting against exchange orders. b. they are buying securities that have been taken off the exchange. c. they are buying when most others are selling or vice versa. d. they are selling off their inventory and maintaining a strictly cash position. (b) 8. The NYSE now allows brokers to arrange trades of 25,000 shares or more between customers without considering orders at the same price from other investors on the NYSE floor under the : a. block trading rule. b. crossing rule. c. clean-cross rule. d. express rule. (c) 9. Dealers in the over-the-counter market make their profits: a. by commissions charged to customers. b. from the bid-asked spread. c. by fees charged for investment advice. d. All of the above are correct. (b) 10. Open orders, if not cancelled or renewed, remain in effect for: a. one week. b. one month. c. six months d. twelve months. Chapter Five How Securities Are Traded 54
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11. If an investor is attempting to buy a stock that is very volatile, it would be best to use a: a. market order b. limit order c. stop-loss order d. contingency order (b) 12. An order that must be filled immediately in its entirety or must be cancelled is known as: a. an immediate or cancel order. b. an all or none order. c a fill or kill order. d. a full or bust order. (c) 13. The NYSE is: a. a free agent market. b. an agency auction market. c. a negotiated market. d. a dealer market. (b) 14. The move to decimalization of stock prices should lead to: a. larger profits for dealers. b.
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This note was uploaded on 06/02/2011 for the course FINA 3331 taught by Professor Staff during the Spring '08 term at Texas A&M University, Corpus Christi.

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Jones_Chapter 5 - Study Guide - Chapter 5 HOW SECURITIES...

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