1. Which of the following is a federally insured investment?
A. A certificate of deposit in excess of $100,000
B. Commercial bank assets
C. A savings account in a national commercial bank
D. A life insurance policy
2. Which of the following best explains a potential disadvantage of leaving securities in street name?
A. Correspondence sent by securities issuers may not be forwarded to brokerage clients who own securities held in street name.
B. Securities held in street name become the property of the custodian and the customer is only beneficiary of the securities.
C. In the event of class action suits against securities issuers, the custodian, not the beneficial owner (customer), is the only party
that may benefit from court orders.
D. Securities held in street name can't be quickly purchased or sold.
3. The minimum margin requirement is established by
A. the Federal Reserve.
B. brokerage firms.
C. the SEC.
D. Congress.
4. The Securities and Exchange Commission regulates
A. the margin requirement.
B. the amount a stock's price may change.
C. trading in publicly held securities.
D. trading in privately held securities.
5. A financial intermediary transfers
A. new stock issues to buyers.
B. savings to households.
C. stocks to brokers.
D. savings to borrowers.
6. What is a nation's cash inflow or outflow on its capital account given the following information?
Imports $145
Direct investments abroad $72
Foreign purchase of domestic securities $86
Net income from foreign investments $37
Exports $211
Foreign investments in country $143
Purchase of foreign securities $29
Government spending abroad $22
A. Outflow of $81
B. Outflow of $128
C. Inflow of $128
D. Inflow of $81
7. If an investor sells short, then he or she
A. anticipates a price increase.
B. buys an odd lot of a security.
C. anticipates a price decrease.
D. sells securities from his or her portfolio.
8. The reserves of commercial banks must be held against
A. the bank as equity.
B. commercial loans.
C. savings deposits.
D. losses.
9. Which of the following is indicated by an upward-sloping yield curve?
A. Lower prices for short-term maturity
B. Lower interest rates for long-term maturity
C. Higher prices for long-term maturity
D. Higher interest rates for long-term maturity
10. When investing in securities, an investor may place a limit order that
A. establishes the exchange on which the security is to be bought or sold.
B. limits the amount of commissions.
C. states a price at which the investor seeks to buy or sell the stock.
D. specifies when the stock will be purchased.
11. Which of the following statements about organized security markets is correct?
A. Organized security markets are examples of financial intermediaries.
B. Organized security markets aren't subject to regulation.
C. Organized security markets provide secondary markets.
D. Organized security markets transfer resources from savers to borrowers.
12. Foreign investments may be financed by issuing
A. Eurobonds.
B. Euro dollars.
C. London Interbank Bonds.
D. IMF reserve securities.
13. If an individual buys stock on margin and its price rises, the investor
A. must pay tax on the unrealized gain.
B. must pay interest on the borrowed funds.
C. must put up additional collateral.
D. may take delivery of the stock.
14. If a nation exports fewer goods than it imports, it experiences
A. an inflow of currency.
B. an outflow of currency.
C. a surplus in current account.
D. no change to currency.
15. In an efficient market, security prices
A. adjust slowly to new information.
B. indicate that the firm is overvalued.
C. poorly value a firm's future prospects.
D. adjust rapidly to new information.
16. The Securities Investor Protection Corporation protects individuals from
A. other investors who fail to make delivery.
B. making poor investment decisions.
C. brokerage firm failures.
D. fraud by corporations
17. A stock is currently selling for $45 a share. What is your gain/loss if you sell the stock short and the price rises to $62?
A. You would lose $17 per share.
B. You would gain $13 per share.
C. You would gain $17 per share.
D. You would lose $0 per share.
18. The term structure of interest rates involves the relationship between
A. stock and bond yields.
B. yields and bond ratings.
C. risk and yields.
D. term and yields.
19. Which of the following assets is the most liquid?
A. Money and antiques
B. Stocks and bonds
C. Savings accounts and checking accounts
D. Bonds and real estate
20. Money market mutual funds invest in
A. federal government bonds.
B. corporate stock.
C. corporate bonds.
D. federal government treasury bills.