Question 1

Decimalization has increased the profitability of market markers and specialists.

Accepted Answer

A) True 
 B)False

Question 2

A difference between the primary market and the secondary market is

Accepted Answer

A)  Liquidity
B)  That primary markets allow corporations,government units,and others to raise needed funds for the expansion of their capital base
C)  Price competition in the secondary markets between different risk-return classes enables the primary market to price new issues at higher prices to reflect existing risk-return relationships
D)  The secondary market is much more competitive than the primary market.

Question 3

Rule 80A was instituted by the New York Stock Exchange and permanently amended by the SEC.The rule attempts to

Accepted Answer

A)  Limit stock price volatility due to program trading
B)  Increase the liquidity of the market
C)  Help investment bankers issue new securities more effectively
D)  Limit short selling by specialists
E)  Increase the volatility of the market.

Question 4

The _______________ the most restrictive listing requirements.

Accepted Answer

A)  Regional exchanges have
B)  ECNs have
C)  Nasdaq Stock market has
D)  New York Stock Exchange has
E)  American Stock Exchange has

Question 5

Which of the following is NOT a characteristic of an organized exchange?

Accepted Answer

A)  It functions as a primary market
B)  Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers in a central location
C)  It may be either national or regional
D)  It has a central location where all trading takes place
E)  If functions as a secondary market

Question 6

Electronic communication networks (ECNs)automatically match buy and sell orders at specified prices and orders are not routed to the floor of an exchange before processing.

Accepted Answer

A) True 
 B)False

Question 7

NASDAQ is directly related to the operations of the NYSE.

Accepted Answer

A) True 
 B)False

Question 8

ECNs provide several advantages to investors.Which of the following is not an advantage?

Accepted Answer

A)  They lower the cost of trading compared to organized exchanges with floor trading
B)  They let everyone know who is making the trade and at what price
C)  They provide the ability to trade after hours when the exchanges are closed
D)  They provide more price transparency than organized exchanges.

Question 9

Full disclosure of all pertinent investment information in the sale of new securities is a provision of the

Accepted Answer

A)  Securities Act of 1933
B)  Securities Exchange Act of 1934
C)  Securities Acts Amendments of 1975
D)  Sarbanes Oxley Act of 2002
E)  More than one of the above

Question 10

Secondary markets are for existing securities.

Accepted Answer

A) True 
 B)False

Question 11

The investment banker's major functions are performed as part of the operations of the secondary market.

Accepted Answer

A) True 
 B)False

Question 12

The New York Stock Exchange measures the performance of specialists based on the following criteria:

Accepted Answer

A)  Price continuity
B)  Price continuity,quotation spreads
C)  Price continuity,quotation spreads,market depth
D)  Price continuity,quotation spreads,market depth,stabilization rate

Question 13

From the investment banker's point of view,the major reason syndicates are formed in the distribution of large issues is for the purpose of

Accepted Answer

A)  Improving the liquidity of the issue
B)  Improving geographic distribution
C)  Reducing the underwriter's risk
D)  Improving brand recognition
E)  All of the above.

Question 14

The largest segment of the Over-the Counter Market in terms of dollar volume is the U.S.government securities markets.

Accepted Answer

A) True 
 B)False

Question 15

A security traded on an exchange must meet listing requirements.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following are exchange-traded funds on the American Stock Exchange?

Accepted Answer

A)  SPDRS
B)  DIAMONDS
C)  Fidelity Mutual Funds
D)  A and B

Question 17

Program trading

Accepted Answer

A)  Means that when a given market indicator reaches a certain point,a large sale or purchase of securities may take place
B)  Has been argued that its effect on the market is to accelerate price movements
C)  Is likely to be voluntarily restricted by the securities exchanges and their member firms
D)  All of the above

Question 18

Underwriters are less concerned with the fees from their activities than simply the amount of dollars underwritten.

Accepted Answer

A) True 
 B)False

Question 19

Rule 80A goes into effect after the Dow Jones Industrial Average has gone up or down at least 50 points in one day.

Accepted Answer

A) True 
 B)False

Question 20

A syndicate is formed to

Accepted Answer

A)  Share the risk between investment bankers
B)  Distribute securities to a wide group of investors
C)  To improve the liquidity/marketability of an offering
D)  All of the above

Exam 2: Security Markets: Present and Future

Decimalization has increased the profitability of market markers and specialists.

Correct AnswerverifiedShow Answer

Full disclosure of all pertinent investment information in the sale of new securities is a provision of the

Correct AnswerverifiedShow Answer

Rule 80A goes into effect after the Dow Jones Industrial Average has gone up or down at least 50 points in one day.

Correct AnswerverifiedShow Answer

Program trading

Correct AnswerverifiedShow Answer

The investment banker's major functions are performed as part of the operations of the secondary market.

Correct AnswerverifiedShow Answer

Rule 80A was instituted by the New York Stock Exchange and permanently amended by the SEC.The rule attempts to

Correct AnswerverifiedShow Answer

From the investment banker's point of view,the major reason syndicates are formed in the distribution of large issues is for the purpose of

Correct AnswerverifiedShow Answer

Electronic communication networks (ECNs)automatically match buy and sell orders at specified prices and orders are not routed to the floor of an exchange before processing.

Correct AnswerverifiedShow Answer

A security traded on an exchange must meet listing requirements.

Correct AnswerverifiedShow Answer

The New York Stock Exchange measures the performance of specialists based on the following criteria:

Correct AnswerverifiedShow Answer

A difference between the primary market and the secondary market is

Correct AnswerverifiedShow Answer

Which of the following are exchange-traded funds on the American Stock Exchange?

Correct AnswerverifiedShow Answer

NASDAQ is directly related to the operations of the NYSE.

Correct AnswerverifiedShow Answer

ECNs provide several advantages to investors.Which of the following is not an advantage?

Correct AnswerverifiedShow Answer

A syndicate is formed to

Correct AnswerverifiedShow Answer

Underwriters are less concerned with the fees from their activities than simply the amount of dollars underwritten.

Correct AnswerverifiedShow Answer

The _______________ the most restrictive listing requirements.

Correct AnswerverifiedShow Answer

The largest segment of the Over-the Counter Market in terms of dollar volume is the U.S.government securities markets.

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of an organized exchange?

Correct AnswerverifiedShow Answer

Secondary markets are for existing securities.

Correct AnswerverifiedShow Answer

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