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64. Regulation NMS:
I. Supports the goal of integrating financial markets
II. Requires the use of specialists to execute trades
III. Requires that exchanges honor quotes of other exchanges when they can be executed
automatically
65. The commission structure on a stock purchase is $50 plus $.03 per share. If you purchase
600 shares of a stock selling for $65, what is your commission?
66. All major stock markets today are effectively _______________.
67. In 2008, the NASDAQ stock market merged with _____.
68. You hold 5,000 shares of the 1 million outstanding shares of Wealthy Wranglers common
stock. You've just learned that the company plans to issue more shares, so that 2 million shares
will be outstanding. This is called _____.
69. If an investor uses the full amount of margin available, the equity in a margin account
used for a stock purchase can be found as ________.
70. The average depth of the limit order book is _____.
71. The CFA Institute Standards of Professional Conduct require that members _____.
72. Trading on inside information is:
I. Prohibited by federal law
II. Prohibited by the CFA Institute Standards of Professional Conduct
III. Monitored by the SEC
73. The ____ requires full disclosure of relevant information relating to the issue of new
securities.
74. The SIPC was established by the ____.
75. Maintenance requirements for margin accounts are set by ____.
76. Which of the following are true concerning short sales of exchange-listed stocks?
I. Proceeds from the short sale must be kept on deposit with the broker.
II. Short-sellers must post margin with their broker to cover potential losses on the position.
III. The short-seller earns interest on any cash deposited with the broker that is used to meet the
margin requirement.
77. The largest nongovernmental regulator of securities firms in the United States is
________.
78. In ________ markets, participants post bid and ask prices at which they are willing to trade,
but orders are not automatically executed by computer. ____________ execute trades for people
other than themselves, and in _______________ markets a computer matches orders with an
existing limit order book and executes the trades automatically.
79. An investor puts up $5,000 but borrows an equal amount of money from his broker to
double the amount invested to $10,000. The broker charges 7% on the loan. The stock was
originally purchased at $25 per share, and in 1 year the investor sells the stock for $28. The
investor's rate of return was ____.
80. An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin.
The broker charges 6% on the margin loan and requires a 30% maintenance margin. In 1 year the
investor has interest payable and gets a margin call. At the time of the margin call the stock's
price must have been ____.
81. The New York Stock Exchange is a good example of _________.
82. The primary market where new security issues are offered to the public is a good example
of _________.
83. The over-the-counter securities market is a good example of _________.
84. An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin.
The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock
pays a $.50-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was
the investor's rate of return?
85. Level 3 NASDAQ subscribers _____.
86. You sell short 300 shares of Microsoft that are currently selling at $30 per share. You post
the 50% margin required on the short sale. If you earn no interest on the funds in your margin
account, what will be your rate of return after 1 year if Microsoft is selling at $27? (Ignore any
dividends.)
87. The commission structure on a stock purchase is $20 plus $.02 per share. If you purchase
four round lots of a stock selling for $56, what is your commission?
