Chaminade Univ MBA 754 (Investment Mgmt) Week 2 – Ch. 02 Quiz
Grading SummaryThese are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: Time Spent: Points Received: Question Type: # Of Questions: Multiple Choice 20 Grade Details - All QuestionsQuestion 1. Question : Exchange traded funds are Student Answer: mutual funds that trade on the Big Board. baskets of securities that trade like a single stock. index funds that trade on the NYSE. groups of securities that trade only on regional exchanges. Question 2. Question : Federal laws that control the sale of securities are called blue sky laws. Student Answer: True False Question 3. Question : Margin trading will magnify losses on a percentage basis. Student Answer: True False Question 4. Question : When a person sells a common stock short, she or he is betting on a price increase within a short period of time. Student Answer: True False Question 5. Question : The primary market for futures is the Student Answer: Kansas City Board of Trade. New York Mercantile Exchange. Chicago Board of Trade. Chicago Board Options Exchange. Question 6. Question : Short selling requires the borrowing of securities. Student Answer: True False Question 7. Question : Which one of the following is a major disadvantage of margin trading? Student Answer: reduction in potential diversification reduction in potential profits on a percentage basis possibility of magnified losses on a percentage basis high rate of interest charged on the loans Question 8. Question : Jennifer expects the price of a stock to decrease over the next month. Which one of the following strategies would allow Jennifer to earn a profit if the expected decrease actually occurs? Student Answer: take a long position in the stock today sell the stock short today buy the stock on margin today take a long position in the stock one month from today Question 9. Question : Options are contracts that guarantee the delivery of a specified commodity or financial instrument at a specific future date at an agreed-upon price. Student Answer: True False Question 10. Question : The financial markets are becoming more globally integrated. Student Answer: True False Question 11. Question : A company must observe a quiet period from the time it files a registration statement with the SEC until at least one month after an IPO is complete. Student Answer: True False Question 12. Question : The majority of bonds trade in the OTC market. Student Answer: True False Question 13. Question : The price an individual investor will pay to purchase a stock in the OTC market is the Student Answer: spread. ask price. bid price. broker price. Question 14. Question : Only U.S. corporations can list their stocks on the NYSE. Student Answer: True False Question 15. Question : The automated system for trading highly active OTC securities is the Student Answer: Big Board. Kansas City Board. Chicago Board of Trade. Nasdaq. Question 16. Question : The Sarbanes-Oxley Act of 2002 focuses on Student Answer: insider trading. IPOs. accounting and other public disclosures of information. regulation of the OTC markets. Question 17. Question : Assume the foreign exchange rate for the euro was US $1.00 = 1.13 euro last month. This month, the exchange rate is US $1.00 = 1.09 euro. This information indicates that over the past month the Student Answer: US dollar remained unchanged relative to the euro. US dollar appreciated relative to all foreign currencies. euro appreciated relative to the dollar. euro depreciated relative to the dollar. Question 18. Question : It can be argued that an IPO was underpriced when the IPO produces extraordinarily high rates of return on its first day of trading. Student Answer: True False Question 19. Question : Which one of the following statements about foreign investments is true? Student Answer: In general, major foreign markets always tend to underperform the US market. Investing in foreign markets may involve specific risks not encountered with domestic securities. Investing in foreign markets will always produce higher returns because of exchange rate fluctuations. Foreign markets include equity securities only. Question 20. Question : Margin trading requires the borrowing of securities. Student Answer: True False