Question 1

A best efforts IPO underwriting consisted of 1.5 million shares at an offer price of $25 a share.The underwriter's fee was set at 6.65 percent.How many shares were sold if the issuer received $42,900,000?

Accepted Answer

A)   2,011,800 shares
B)   1,838,243 shares
C)   1,760,915 shares
D)   2,346,300 shares
E)   2,053,700 sharesF) C) and D)
G) All of the above

Question 2

You have the following information:  You want the beginning price-weighted index of these two stocks to be 100.Given this,what is the ending index value?

Accepted Answer

A)   93.44
B)   98.10
C)   107.02
D)   108.36
E)   110.40F) None of the above
G) B) and D)

Question 3

When a group of underwriters jointly work together to sell a new issue of securities,the underwriters form a(n) :

Accepted Answer

A)   underwriting cartel.
B)   market union.
C)   venture capital association.
D)   Dutch market.
E)   syndicate.F) C) and D)
G) A) and B)

Question 4

Which one of the following orders is frequently used as a means to limit losses resulting from a short sale?

Accepted Answer

A)   limit
B)   market
C)   day
D)   stop-sell
E)   stop-buyF) A) and C)
G) B) and D)

Question 5

Assume the DJIA closed at 15,150 last night.The divisor is 0.123017848.Assume that 29 of the stocks in the index were unchanged today.One stock increased in value from $44.80 a share yesterday to $47.90 a share today.What is the DJIA index value at the close of trading today?

Accepted Answer

A)   15,175.20
B)   15,208.30
C)   15,365.60
D)   15,412.20
E)   15,524.10F) A) and C)
G) A) and D)

Question 6

An order book displays the following information:  You place an order to sell 100 shares.At what price will your order be executed?

Accepted Answer

A)   $18.05
B)   $18.06
C)   $18.07
D)   $18.11
E)   $18.12F) A) and E)
G) A) and B)

Question 7

When an underwriting syndicate purchases an entire issue of new securities and accepts the risk of unsold shares,the underwriting is known as a ________ underwriting.

Accepted Answer

A)   Dutch auction
B)   full-fledge
C)   firm commitment
D)   best efforts
E)   guaranteed saleF) None of the above
G) C) and E)

Question 8

To be listed on the NYSE,a firm must have at least:

Accepted Answer

A)   2,500 shareholders.
B)   100,000 shares traded on an average day.
C)   1.5 million shares held by the public.
D)   $75 million in market value for an IPO.
E)   pre-tax aggregate earnings of $10 million in the previous 3 years.F) A) and B)
G) B) and E)

Question 9

ML Underwriters paid an issuer $37,694,528 as IPO proceeds.The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share.The underwriting spread was 7.25 percent.What type of underwriting was this?

Accepted Answer

A)   best efforts
B)   variable
C)   firm commitment
D)   plain vanilla
E)   stand-byF) A) and C)
G) D) and E)

Question 10

Which one of the following statements related to the NYSE Hybrid market is correct?

Accepted Answer

A)   Floor brokers operate both electronically and in person.
B)   The Hybrid system replaces the market specialists.
C)   The automated system works better than the specialist for stocks with minimal liquidity.
D)   The automated system will only replace the specialist in times of market duress.
E)   Investors can automatically trade an unlimited number of shares.F) C) and D)
G) All of the above

Question 11

Which of the following are common characteristic of the OTCBB market?
I.low stock prices
II.dual listings with NASDAQ
II.high percentage price changes
IV.thinly traded securities

Accepted Answer

A)   I and III only
B)   I, II, and III only
C)   I, III, and IV only
D)   II, II, and IV only
E)   I, II, III, and IVF) A) and D)
G) A) and C)

Question 12

Aurora Metals just sold 2 million shares through an IPO offering.The shares were offered at $23.50 a share and all shares were sold.The firm received a total of $50,200,000 for this issue.What was the spread?

Accepted Answer

A)   5.49 percent
B)   6.24 percent
C)   6.40 percent
D)   6.81 percent
E)   7.01 percentF) All of the above
G) A) and B)

Question 13

The DJIA is an index of the stock prices of ________ firms.

Accepted Answer

A)   25
B)   30
C)   50
D)   100
E)   500F) A) and D)
G) A) and E)

Question 14

Which one of the following transactions occurs in the primary market?

Accepted Answer

A)   sale of stock by Shareholder A to Shareholder B
B)   gift of shares from a grandmother to her granddaughter
C)   sale of newly issued shares by the issuer to a shareholder
D)   sale of shares in the third market
E)   purchase of shares by a dealer from a shareholderF) A) and B)
G) A) and C)

Question 15

A market centered on dealers buying and selling for their own inventories is called a(n) :

Accepted Answer

A)   exchange floor.
B)   SuperDot.
C)   OTC market.
D)   subscriber market.
E)   Big Board.F) B) and E)
G) All of the above

Question 16

Alexis is an individual investor.She purchases shares at the ________ price and sells at the ________ price.

Accepted Answer

A)   asked; bid
B)   average; asked
C)   bid; asked
D)   bid; average
E)   asked; averageF) B) and C)
G) A) and E)

Question 17

An index consists of the following securities.What is the value-weighted index return?

Accepted Answer

A)   3.72 percent
B)   5.09 percent
C)   6.61 percent
D)   7.07 percent
E)   8.40 percentF) A) and B)
G) C) and D)

Question 18

Stocks which are listed on the NYSE can:

Accepted Answer

A)   not be listed on any other exchange.
B)   only be dual listed on a regional exchange.
C)   only be dual listed on Instinet.
D)   only be dual listed on the Archipelago Exchange.
E)   also be listed on NASDAQ.F) B) and C)
G) A) and B)

Question 19

A preliminary document provided to investors who are interested in a stock offering is called a(n) :

Accepted Answer

A)   prospectus.
B)   inquiry form.
C)   draft offer.
D)   green shoe.
E)   red herring.F) A) and C)
G) B) and D)

Question 20

A NYSE member who trades only for his or her own account is called a(n) :

Accepted Answer

A)   floor trader.
B)   specialist.
C)   individual broker.
D)   floor broker.
E)   house broker.F) B) and C)
G) A) and E)

Exam 5: The Stock Market

You have the following information: You want the beginning price-weighted index of these two stocks to be 100.Given this,what is the ending index value?

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When a group of underwriters jointly work together to sell a new issue of securities,the underwriters form a(n) :

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Assume the DJIA closed at 15,150 last night.The divisor is 0.123017848.Assume that 29 of the stocks in the index were unchanged today.One stock increased in value from $44.80 a share yesterday to $47.90 a share today.What is the DJIA index value at the close of trading today?

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An index consists of the following securities.What is the value-weighted index return?

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A NYSE member who trades only for his or her own account is called a(n) :

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To be listed on the NYSE,a firm must have at least:

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Aurora Metals just sold 2 million shares through an IPO offering.The shares were offered at $23.50 a share and all shares were sold.The firm received a total of $50,200,000 for this issue.What was the spread?

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Alexis is an individual investor.She purchases shares at the ________ price and sells at the ________ price.

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Stocks which are listed on the NYSE can:

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Which one of the following statements related to the NYSE Hybrid market is correct?

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Which of the following are common characteristic of the OTCBB market? I.low stock prices II.dual listings with NASDAQ II.high percentage price changes IV.thinly traded securities

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A market centered on dealers buying and selling for their own inventories is called a(n) :

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ML Underwriters paid an issuer $37,694,528 as IPO proceeds.The IPO offered 1.86 million shares of which 1.835 million were sold at an offer price of $21.85 a share.The underwriting spread was 7.25 percent.What type of underwriting was this?

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Which one of the following transactions occurs in the primary market?

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An order book displays the following information: You place an order to sell 100 shares.At what price will your order be executed?

Correct AnswerverifiedShow Answer

A best efforts IPO underwriting consisted of 1.5 million shares at an offer price of $25 a share.The underwriter's fee was set at 6.65 percent.How many shares were sold if the issuer received $42,900,000?

Correct AnswerverifiedShow Answer

When an underwriting syndicate purchases an entire issue of new securities and accepts the risk of unsold shares,the underwriting is known as a ________ underwriting.

Correct AnswerverifiedShow Answer

The DJIA is an index of the stock prices of ________ firms.

Correct AnswerverifiedShow Answer

A preliminary document provided to investors who are interested in a stock offering is called a(n) :

Correct AnswerverifiedShow Answer

Which one of the following orders is frequently used as a means to limit losses resulting from a short sale?

Correct AnswerverifiedShow Answer

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Alexis is an individual investor.She purchases shares at the price and sells at the price.

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