Portfolio Management Quize1

Quize 11. High chroma Detergent is issuing new shargons of birth which will trade on NASDAQ. If Sue buys 300 of these shares, the trade will occur in which iodinness of the adjacent trades? Primary2. Wilson just placed an order with his broker to purchase 500 of the outstanding shares of GE. This purchase will occur in which whizz of the sideline grocerys? Secondary3. Hi-Tek Shoes is a private firm that has trenchant to issue shares of comport to the general public. This run issue will be referred to as a(n) initial public offering4. A firm that specializes in arranging financing for companies is called a(n) enthronisation banking firm5. The process of purchasing pertly issued shares from the issuer and re cheat oning those shares to the general public is called underwriting6. A public offering of securities which are offered eldest to sure shareproprietors is called a(n) rights offer.7. When a group of underwriters jointly work together to sell a new issue of secur ities, the underwriters form a(n) syndicate.8. Which one of the future(a) is the national agency which regulates the monetary markets in the U. S.?Securities and Exchange Commission9.The document that moldiness be prepared in order to receive approval for a stock offering is called a prospectus.10. Which one of the following transactions occurs in the primary market? sale of newly issued shares by the issuer to a shareholder11. Debt securities promise __.I. a fixed stream of incomeII. a stream of income that is unyielding according to a specific formulaIII. a share in the simoleons of the issuing entity I or II only12. A fixed-income protective covering is be as a long-term debt obligation that fees scheduled fixed payments13. Which one of the following is classified as a fixed-income security? - yr U. S. Treasury security14. Riverside Metals recently issued some debt that had an original maturity of nine months. This debt is topper classified as a(n) money market instrument . Treasury bills are financial instruments issued by __to raise funds. the Federal Government15. bullion market securities are sometimes referred to as cash similar because they are safe and marketable.16. Money Market securities are characterized by _. I. maturity less than one yearII. sentry duty of the principal investmentIII. low rates of return I, II and III17. Which of the following is not a money market security?Common stock18. prefer stock is not a money market instrument.18. Money market instruments issued by a corporation are less liquid than those issued by the government.19. Which one of the following represents a residual ownership interest in the issuer? common stock20. An agreement that grants the owner the right, but not the obligation, to buy or sell a specific asset at a admit harm during a specified time period is called a(n) option contract.21. The care for of a differential gear security depends on the value of other cerebrate security.22. option contra ct is a derivative asset.23. An example of a derivative security is a call option on Intel stock23. A futures contract is an agreement to exchange goods on a specified date in the future at a legal injury that is agreed upon today.24. Great Lakes rear agreed this morning to sell General Mills 25,000 bushels of wheat sixsome months from now at a price per bushel of $9. 75. This is an example of afuture contract.25. Uptown Jewelers purchased a futures contract on two hundred ounces of funds to be exchanged 3-months from now. As the contract holder, Uptown Jewelers will earn if the price of gold is higher three months from now.26. Which one of the following is the federal agency which regulates the financial markets in the U. S.? Securities and Exchange Commission27. A securities head is a(n) trader who buys and sells from his or her inventory.28. The SIPC protects investors from missing assets when a brokerage firm closes.29. To be considered liquid, a security mustiness be able to be exchange quickly with little, if any, price concession.30. Which one of the following best describes a broker? intercessor who arranges trades between a buyer and a seller.31 The NASDAQ is the most important dealer market in the U. S. nd the NYSE is the most important auction off market.32. The chalk up dollar return on a share of stock is delimit as the capital receive or loss plus any dividend income33. One year ago, you purchased 400 shares of Southern Cotton at $38. 40 a share. During the past year, you received a total of $480 in dividends. Today, you sold your shares for $41. 10 a share. What is your total return on this investment? $41. 10 $38. 40 + ($480/400)/$38. 40 = 10. 16 percent34. Todd purchased 600 shares of stock at a price of $68. 20 a share and received a dividend of $1. 42 per share. After six months, he resold the stock for $71. 0 a share. What was his total dollar return? 600 ? ($71. 30 $68. 20 + $1. 42) = $2,712 35. Which one of the followi ng is generally true concerning securities held in street name? The brokerage firm is the owner of record.36. The bid price is the price at which a dealer is unforced to purchase a security.37. The ask price is the price at which a dealer is willing to sell a security.38. The difference between the price at which a dealer is willing to buy, and the price at which a dealer is willing to sell, is called the bid-ask spread.39. You want to sell shares of stock at the underway price.Which type of order should you place? Market40. You purchased XYZ stock at $50 per share. The stock is currently selling at $65. Your gains could be protected by placing a stop-loss order41. An order to sell that involves a preset trigger point is called a stop order.42. If an investor places a stop-loss order the stock will be sold if its price falls to the stipulated level. If an investor places a stop-buy order the stock will be bought if its price rises above the stipulated level.43. An order to buy sh ares of stock at a stated price or less is called a limit order.44. This morning, jolly sold 800 shares of stock that he did not own. This sale is referred to as a short sale45. Which one of the following describes a short military position? change a security that you do not own46. An investor with a long position in a security will make money if the price of the security increases47. You short-sell 200 shares of Tuckerton Trading Co. , now selling for $50 per share. What is your upper limit possible loss? Unlimited48. You short-sell 200 shares of Tuckerton Trading Co. , now selling for $50 per share. What is your maximum possible gain ignoring transactions cost?Maximum gain=proceeds- beachal possible replacement cost=200($50)-200($0)=$10,00049. The minimum virtue that must be maintained at all times in a mete grade is called the maintenance marge50. Staci just used $6,000 of cash plus a $3,000 shore loan to purchase $9,000 worth of stock. This is the only transaction in her brokerage account. According to her account balance sheet, she now has account rectitude of $6,00051. Anita wants to buy $10,000 of securities in her allowance account account. Her advisor has informed her that she must pay a minimum of $7,000 in cash and maintain a minimum equity position of 30 percent.The initial margin fatality is 70 percent and the maintenance margin is 30 percent.52. What is the purpose of a margin call? to demand funds to increase your margin position53. Sun lee side purchased 1, coke shares of Franklin Metals stock for $16. 80 a share. The stock was purchased with an initial margin of 65 percent. The maintenance margin is 30 percent. The stock is currently selling for $17. 60 a share. What is the minimum dollar amount of equity that he must have in this stock today to avoid a margin call? Minimum equity = 1,100 ? $17. 60 ? .30 = $5,80854. You recently purchased 100 shares of stock at a cost per share of $23. 0. The initial margin requirement on this stoc k is 80 percent and the maintenance margin is 50 percent. The stock is currently valued at $17. 90 a share. What is your current margin position? Ignore margin interest. Margin loan = 100 ? $23. 80 ? (1 . 80) = $476 Current stock value = 100 ? $17. 90 = $1,790Current equity = $1,790 $476 = $1,314 Current margin = $1,314/$1,790 = 73. 41 percent55. Ted is an engineer for True technical school and has just discovered a revolutionary method for strengthening metals. He knows this knowledge will add value to True Techs stock. Ted happens to mention this baring and its value to his neighbor, Fred.Fred can be charged with insider trading if he provides this development to a friend who will trade the stock and split the wage with him.56. Which one of the following had the highest average return for the period 1926 2009? small-company stocks57. Youve borrowed $14,000 on margin to buy shares in Disney, which is now selling at $40 per share. Your account starts at the initial margin requ irement of 50%. The maintenance margin is 46%. Two days later, the stock price falls to $38 per share Will you receive a margin call? NO How low can the price of Disney shares fall before you receive a margin call? (700P-$14000)/700P=0. 6 when P=$37. 04or lower ,58. Which one of the following is the federal agency which regulates the financial markets in the U. S.? Securities and Exchange Commission (SEC)59. everyplace the long term, which one of the following has historically had the LOWEST average yearly rate of return? Long Term Government Bonds60. Which one of the following is the best definition of a money market instrument? debt issued by the government or a corporation that matures in one year or less61. Preferred stock is not a money market instrument62. Money market securities are sometimes referred to as cash equivalent because they are safe and marketable63. A fixed-income security is defined as a long-term debt obligation that pays scheduled fixed payments.64. Liquidity RISK is defined as Not being able to sell an investment handily and at a reasonable price. 6565. A financial asset that represents a claim on another financial asset is classified as a derivative asset.66. Uptown Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3-months from now. As the contract holder, Uptown Jewelerswill bring in if the price of gold is higher three months from now.