投资学第7版Test Bank答案03

投资学第7版TestBank答案03投资学第7版TestBank答案03投资学第7版TestBank答案03投资学第7版TestBank答案03编制仅供参考审核批准生效日期地址：电话：传真:邮编:MultipleChoiceQuestions 1. Apurchaseofanewissueofstocktakesplace A) inthesecondarymarket. B) intheprimarymarket. C) usuallywiththeassistanceofaninvestmentbanker. D) AandB. E) BandC.Answer:EDifficulty:Easy Rationale:Fundsfromthesaleofnewissuesflowtotheissuingcorporation,makingthisaprimarymarkettransaction.Investmentbankersusuallyassistbypricingtheissueandfindingbuyers. 2. Thefollowingstatementsregardingthespecialistaretrue: A) Specialistsmaintainabooklistingoutstandingunexecutedlimitorders. B) Specialistsearnincomefromcommissionsandspreadsinstockprices. C) Specialistsstandreadytotradeatquotedbidandaskprices. D) Specialistscannottradeintheirownaccounts. E) A,B,andCarealltrue.Answer:EDifficulty:Moderate Rationale:Thespecialists'functionsarealloftheitemslistedinA,B,andC.Inaddition,specialiststradeintheirownaccounts. 3. Investmentbankers A) actasintermediariesbetweenissuersofstocksandinvestors. B) actasadvisorstocompaniesinhelpingthemanalyzetheirfinancialneedsandfindbuyersfornewlyissuedsecurities. C) acceptdepositsfromsaversandlendthemouttocompanies. D) AandB. E) A,B,andC.Answer:DDifficulty:Moderate Rationale:Theroleoftheinvestmentbankeristoassistthefirminissuingnewsecurities,bothinadvisoryandmarketingcapacities.Theinvestmentbankerdoesnothavearolecomparabletoacommercialbank,asindicatedinC.

4. Ina"firmcommitment" A) theinvestmentbankerbuysthestockfromthecompanyandresellstheissuetothepublic. B) theinvestmentbankeragreestohelpthefirmsellthestockatafavorableprice. C) theinvestmentbankerfindsthebestmarketingarrangementfortheinvestmentbankingfirm. D) BandC. E) AandB.Answer:ADifficulty:Moderate 5. Thesecondarymarketconsistsof A) transactionsontheAMEX. B) transactionsintheOTCmarket. C) transactionsthroughtheinvestmentbanker. D) AandB. E) A,B,andC.Answer:DDifficulty:Moderate Rationale:ThesecondarymarketconsistsoftransactionsontheorganizedexchangesandintheOTCmarket.Theinvestmentbankerisinvolvedintheplacementofnewissuesintheprimarymarket. 6. TheuseoftheInternettotradeandunderwritesecurities A) isillegalunderSECregulations. B) isregulatedbytheNewYorkStockExchange. C) decreasesunderwritingcostsforanewsecurityissue. D) increasesunderwritingcostsforanewsecurityissue. E) isregulatedbytheNationalAssociationofSecuritiesDealers.Answer:CDifficulty:Moderate Rationale:TheSECpermitstradingandunderwritingofsecuritiesovertheInternet,buthasrequiredfirmsparticipatinginthisactivitytotakestepstosafeguardinvestmentfunds.Thisformofunderwritingisexpectedtogrowquicklyduetoitslowercost.

7. Initialmarginrequirementsaredeterminedby A) theSecuritiesandExchangeCommission. B) theFederalReserveSystem. C) theNewYorkStockExchange. D) BandC. E) AandBAnswer:BDifficulty:Moderate Rationale:TheBoardofGovernorsoftheFederalReserveSystemdeterminesinitialmarginrequirements.TheNewYorkStockExchangedeterminesmaintenancemarginrequirementsonNYSE-listedstocks;however,brokersusuallysetmaintenancemarginrequirementsabovethoseestablishedbytheNYSE. 8. YoupurchasedXYZstockat$50pershare.Thestockiscurrentlysellingat$65.Yourgainsmaybeprotectedbyplacinga__________ A) stop-buyorder B) limit-buyorder C) marketorder D) limit-sellorder E) noneoftheabove.Answer:DDifficulty:Moderate Rationale:Withalimit-sellorder,yourstockwillbesoldonlyataspecifiedprice,orbetter.Thus,suchanorderwouldprotectyourgains.Noneoftheotherordersareapplicabletothissituation. 9. YousoldABCstockshortat$80pershare.Yourlossescouldbeminimizedbyplacinga__________: A) limit-sellorder B) limit-buyorder C) stop-buyorder D) day-order E) noneoftheabove.Answer:CDifficulty:Moderate Rationale:Withastop-buyorder,thestockwouldbepurchasedifthepriceincreasedtoaspecifiedlevel,thuslimitingyourloss.Noneoftheotherordersareapplicabletothissituation.

10. Whichoneofthefollowingstatementsregardingordersisfalse A) Amarketorderissimplyanordertobuyorsellastockimmediatelyattheprevailingmarketprice. B) Alimitsellorderiswhereinvestorsspecifypricesatwhichtheyarewillingtosellasecurity. C) IfstockABCissellingat$50,alimit-buyordermayinstructthebrokertobuythestockifandwhenthesharepricefallsbelow$45. D) Adayorderexpiresatthecloseofthetradingday. E) Noneoftheabove.Answer:EDifficulty:Moderate Rationale:Alloftheorderdescriptionsabovearecorrect. 11. Restrictionsontradinginvolvinginsiderinformationapplytothefollowingexcept A) corporateofficersanddirectors. B) relativesofcorporatedirectorsandofficers. C) majorstockholders. D) Alloftheabovearesubjecttoinsidertradingrestrictions. E) Noneoftheaboveissubjecttoinsidertradingrestrictions.Answer:DDifficulty:Moderate Rationale:A,B,andCarecorporateinsidersandaresubjecttorestrictionsontradingoninsideinformation.Further,theSupremeCourtheldthattradersmaynottradeonnonpublicinformationeveniftheyarenotinsiders. 12. Thecostofbuyingandsellingastockconsistsof__________. A) broker'scommissions B) dealer'sbid-askedspread C) apriceconcessionaninvestormaybeforcedtomake. D) AandB. E) A,B,andC.Answer:EDifficulty:Moderate Rationale:Alloftheabovearepossiblecostsofbuyingandsellingastock.

13. Assumeyoupurchased200sharesofXYZcommonstockonmarginat$70persharefromyourbroker.Iftheinitialmarginis55%,howmuchdidyouborrowfromthebroker A) $6,000 B) $4,000 C) $7,700 D) $7,000 E) $6,300Answer:EDifficulty:Moderate Rationale:200shares*$70/share*=$14,000*=$6,300. 14. Yousoldshort200sharesofcommonstockat$60pershare.Theinitialmarginis60%.Yourinitialinvestmentwas A) $4,800. B) $12,000. C) $5,600. D) $7,200. E) noneoftheabove.Answer:DDifficulty:Moderate Rationale:200shares*$60/share*=$12,000*=$7,200 15. Youpurchased100sharesofABCcommonstockonmarginat$70pershare.Assumetheinitialmarginis50%andthemaintenancemarginis30%.BelowwhatstockpricelevelwouldyougetamargincallAssumethestockpaysnodividend;ignoreinterestonmargin. A) $21 B) $50 C) $49 D) $80 E) noneoftheaboveAnswer:BDifficulty:Difficult Rationale:100shares*$70*.5=$7,000*=$3,500(loanamount);=(100P-$3,500)/100P;30P=100P-$3,500;-70P=-$3,500;P=$50.

16. Youpurchased100sharesofcommonstockonmarginat$45pershare.Assumetheinitialmarginis50%andthestockpaysnodividend.Whatwouldthemaintenancemarginbeifamargincallismadeatastockpriceof$30Ignoreinterestonmargin. A) B) C) D) E) Answer:EDifficulty:Difficult Rationale:100shares*$45/share*=$4,500*=$2,250(loanamount);X=[100($30)-$2,250]/100($30);X=. 17. Youpurchased300sharesofcommonstockonmarginfor$60pershare.Theinitialmarginis60%andthestockpaysnodividend.Whatwouldyourrateofreturnbeifyousellthestockat$45pershareIgnoreinterestonmargin. A) 25% B) -33% C) 44% D) -42% E) –54%Answer:DDifficulty:Difficult Rationale:300($60)=$10,800investment;300($60)=$18,000X=$7,200loan;Proceedsaftersellingstockandrepayingloan:$13,500-$7,200=$6,300;Return=($6,300-$10,800)/$10,800=-%. 18. Assumeyousellshort100sharesofcommonstockat$45pershare,withinitialmarginat50%.Whatwouldbeyourrateofreturnifyourepurchasethestockat$40/shareThestockpaidnodividendsduringtheperiod,andyoudidnotremoveanymoneyfromtheaccountbeforemakingtheoffsettingtransaction. A) 20% B) 25% C) 22% D) 77% E) noneoftheaboveAnswer:CDifficulty:Moderate Rationale:Profitonstock=($45-$40)*100=$500,$500/$2,250(initialinvestment)=%.

19. Yousoldshort300sharesofcommonstockat$55pershare.Theinitialmarginis60%.Atwhatstockpricewouldyoureceiveamargincallifthemaintenancemarginis35% A) $51 B) $65 C) $35 D) $40 E) noneoftheaboveAnswer:BDifficulty:Difficult Rationale:Equity=300($55)*=$26,400;=($26,400-300P)/300P;105P=26,400-300P;405P=26,400;P=$ 20. Assumeyousoldshort100sharesofcommonstockat$50pershare.Theinitialmarginis60%.Whatwouldbethemaintenancemarginifamargincallismadeatastockpriceof$60 A) 40% B) 33% C) 35% D) 25% E) noneoftheaboveAnswer:BDifficulty:Difficult Rationale:$5,000X=$8,000;[$8,000-100($60)]/100($60)=33%. 21. Specialistsonstockexchangesperformthefollowingfunctions A) Actasdealersintheirownaccounts. B) Analyzethesecuritiesinwhichtheyspecialize. C) Provideliquiditytothemarket. D) AandB. E) AandC.Answer:EDifficulty:Moderate Rationale:Specialistsarebothbrokersanddealersandprovideliquiditytothemarket;theyarenotanalysts.

22. Sharesforshorttransactions A) areusuallyborrowedfromotherbrokers. B) aretypicallysharesheldbytheshortseller'sbrokerinstreetname. C) areborrowedfromcommercialbanks. D) BandC. E) noneoftheabove.Answer:BDifficulty:Moderate Rationale:Typically,theonlysourceofsharesforshorttransactionsisthoseheldbytheshortseller'sbrokerinstreetname;oftenthesearemarginedshares. 23. Whichofthefollowingordersismostusefultoshortsellerswhowanttolimittheirpotentiallosses A) Limitorder B) Discretionaryorder C) Limit-lossorder D) Stop-buyorder E) NoneoftheaboveAnswer:DDifficulty:Moderate Rationale:Byissuingastop-buyorder,theshortsellercanlimitpotentiallossesbyassuringthatthestockwillbepurchased(andtheshortpositionclosed)ifthepriceincreasestoacertainlevel. 24. Shelfregistration A) isawayofplacingissuesintheprimarymarket. B) allowsfirmstoregistersecuritiesforsaleoveratwo-yearperiod. C) increasestransactioncoststotheissuingfirm. D) AandB. E) AandC.Answer:DDifficulty:Easy Rationale:Shelfregistrationlowerstransactionscoststothefirmasthefirmmayregisterissuesforalongerperiodthaninthepast,andthusrequirestheservicesoftheinvestmentbankerlessfrequently.

25. NASDAQsubscriberlevels A) permitthosewiththehighestlevel,3,to"makeamarket"inthesecurity. B) permitthosewithalevel2subscriptiontoreceiveallbidandaskquotes,butnottoentertheirownquotes. C) permitlevel1subscriberstoreceivegeneralinformationaboutprices. D) includeallOTCstocks. E) A,B,andC.Answer:EDifficulty:Easy Rationale:NASDAQlinksdealersinalooselyorganizednetworkwithdifferentlevelsofaccesstomeetdifferentneeds. 26. Youwanttobuy100sharesofHotstockInc.atthebestpossiblepriceasquicklyaspossible.Youwouldmostlikelyplacea A) stop-lossorder B) stop-buyorder C) marketorder D) limit-sellorder E) limit-buyorderAnswer:CDifficulty:Easy Rationale:Amarketorderisforimmediateexecutionatthebestpossibleprice. 27. YouwanttopurchaseXYZstockat$60fromyourbrokerusingaslittleofyourownmoneyaspossible.Ifinitialmarginis50%andyouhave$3000toinvest,howmanysharescanyoubuy A) 100shares B) 200shares C) 50shares D) 500shares E) 25sharesAnswer:ADifficulty:Moderate Rationale:.5=[(Q*$60)-$3,000]/(Q*$60);$30Q=$60Q-$3,000;$30Q=$3,000;Q=100.

28. AsalebyIBMofnewstocktothepublicwouldbea(n) A) shortsale. B) seasonednewissueoffering. C) privateplacement. D) secondarymarkettransaction. E) initialpublicoffering.Answer:BDifficulty:Easy Rationale:Whenafirmwhosestockalreadytradesinthesecondarymarketissuesnewsharestothepublicthisisreferredtoasaseasonednewissue. 29. ThefinalizedregistrationstatementfornewsecuritiesapprovedbytheSECiscalled A) aredherring B) thepreliminarystatement C) theprospectus D) abest-effortsagreement E) afirmcommitmentAnswer:CDifficulty:Moderate Rationale:TheprospectusisthefinalizedregistrationstatementapprovedbytheSEC. 30. TheminimummarketvaluerequiredforaninitiallistingontheNewYorkStockExchangeis A) $2,000,000 B) $2,500,000 C) $1,100,000 D) $60,000,000 E) 100,000,000Answer:EDifficulty:Moderate Rationale:SeeTable. 31. In2005,thepriceofaseatontheNYSEreachedahighof A) $1,000,000 B) $4,000,000 C) $1,750,000 D) $2,225,000 E) $3,000,000Answer:BDifficulty:Moderate Rationale:SeeTable.

32. Thefloorbrokerisbestdescribedas A) anindependentmemberoftheexchangewhoownsaseatandhandlesoverloadworkforcommissionbrokers. B) someonewhomakesamarketinoneormoresecurities. C) arepresentativeofabrokeragefirmwhoisontheflooroftheexchangetoexecutetrade. D) afrequenttraderwhoperformsnopublicfunctionbutexecutestradesforhimself. E) anycounterpartytoatradeexecutedontheflooroftheexchange.Answer:ADifficulty:Easy Rationale:Thefloorbrokerisanindependentmemberoftheexchangewhohandlesworkforcommissionbrokerswhentheyhavetoomanyorderstohandle. 33. Yousellshort100sharesofLoserCo.atamarketpriceof$45pershare.Yourmaximumpossiblelossis A) $4500 B) unlimited C) zero D) $9000 E) cannottellfromtheinformationgivenAnswer:BDifficulty:Moderate Rationale:Ashortsellerlosesmoneywhenthestockpricerises.Sincethereisnoupperlimitonthestockprice,themaximumtheoreticallossisunlimited. 34. Youbuy300sharesofQualitycorpfor$30pershareanddepositinitialmarginof50%.ThenextdayQualitycorp'spricedropsto$25pershare.Whatisyouractualmargin A) 50% B) 40% C) 33% D) 60% E) 25%Answer:BDifficulty:Moderate Rationale:AM=[300($25)-.5(300)($30)]/[300($25)]=.40

35. Whenafirmmarketsnewsecurities,apreliminaryregistrationstatementmustbefiledwith A) theexchangeonwhichthesecuritywillbelisted. B) theSecuritiesandExchangeCommission. C) theFederalReserve. D) allothercompaniesinthesamelineofbusiness. E) theFederalDepositInsuranceCorporation.Answer:BDifficulty:Easy Rationale:TheSECrequirestheregistrationstatementandmustapproveitbeforetheissuecantakeplace. 36. Inatypicalunderwritingarrangementtheinvestmentbankingfirm sellssharestothepublicviaanunderwritingsyndicate.purchasesthesecuritiesfromtheissuingcompany.assumesthefullriskthatthesharesmaynotbesoldattheofferingprice.agreestohelpthefirmselltheissuetothepublicbutdoesnotactuallypurchasethesecurities. A) I,II,andIII B) I,III,andIV C) IandIV D) IIandIII E) IandIIAnswer:ADifficulty:Moderate Rationale:Atypicalunderwritingarrangementismadeonafirmcommitmentbasis. 37. Whichofthefollowingistrueregardingprivateplacementsofprimarysecurityofferings A) ExtensiveandcostlyregistrationstatementsarerequiredbytheSEC. B) Forverylargeissues,theyarebettersuitedthanpublicofferings. C) Theytradeinsecondarymarkets. D) Thesharesaresolddirectlytoasmallgroupofinstitutionalorwealthyinvestors. E) Theyhavegreaterliquiditythanpublicofferings.Answer:DDifficulty:Moderate Rationale:Firmscansaveonregistrationcosts,buttheresultisthatthesecuritiescannottradeinthesecondarymarketsandthereforearelessliquid.Publicofferingsarebettersuitedforverylargeissues.

38. AspecialistontheAMEXStockExchangeisofferingtobuyasecurityfor$.AbrokerinOklahomaCitywantstosellthesecurityforhisclient.TheIntermarketTradingSystemshowsabidpriceof$ontheNYSE.Whatshouldthebrokerdo A) RoutetheordertotheAMEXStockExchange. B) RoutetheordertotheNYSE. C) Calltheclienttoseeifshehasapreference. D) RoutehalfoftheordertoAMEXandtheotherhalftotheNYSE. E) Itdoesn'tmatter-heshouldflipacoinandgowithit.Answer:ADifficulty:Moderate Rationale:Thebrokershouldtrytoobtainthebestpriceforhisclient.SincetheclientwantstosellsharesandthebidpriceishigherontheAMEX,heshouldroutetheorderthere. 39. Yousoldshort100sharesofcommonstockat$45pershare.Theinitialmarginis50%.Yourinitialinvestmentwas A) $4,800. B) $12,000. C) $2,250. D) $7,200. E) noneoftheabove.Answer:CDifficulty:Moderate Rationale:100shares*$45/share*=$4,500*=$2,250 40. Yousoldshort150sharesofcommonstockat$27pershare.Theinitialmarginis45%.Yourinitialinvestmentwas A) $4,. B) $12,. C) $2,. D) $1,. E) noneoftheabove.Answer:DDifficulty:Moderate Rationale:150shares*$27/share*=$4,050*=$1,

41. Youpurchased100sharesofXONcommonstockonmarginat$60pershare.Assumetheinitialmarginis50%andthemaintenancemarginis30%.BelowwhatstockpricelevelwouldyougetamargincallAssumethestockpaysnodividend;ignoreinterestonmargin. A) $ B) $ C) $ D) $ E) noneoftheaboveAnswer:ADifficulty:Difficult Rationale:100shares*$60*.5=$6,000*=$3,000(loanamount);=(100P-$3,000)/100P;30P=100P-$3,000;-70P=-$3,000;P=$ 42. Youpurchased1000sharesofCSCOcommonstockonmarginat$19pershare.Assumetheinitialmarginis50%andthemaintenancemarginis30%.BelowwhatstockpricelevelwouldyougetamargincallAssumethestockpaysnodividend;ignoreinterestonmargin A) $ B) $ C) $ D) $ E) noneoftheaboveAnswer:DDifficulty:Difficult Rationale:1000shares*$19*.5=$19,000*=$9,500(loanamount);=(1000P-$9,500)/1000P;300P=1000P-$9,500;-700P=-$9,500;P=$ 43. Youpurchased100sharesofcommonstockonmarginat$40pershare.Assumetheinitialmarginis50%andthestockpaysnodividend.Whatwouldthemaintenancemarginbeifamargincallismadeatastockpriceof$25Ignoreinterestonmargin. A) B) C) D) E) Answer:CDifficulty:Difficult Rationale:100shares*$40/share*=$4,000*=$2,000(loanamount);X=[100($25)-$2,000]/100($25);X=.

44. Youpurchased1000sharesofcommonstockonmarginat$30pershare.Assumetheinitialmarginis50%andthestockpaysnodividend.Whatwouldthemaintenancemarginbeifamargincallismadeatastockpriceof$24Ignoreinterestonmargin. A) B) C) D) E) Answer:BDifficulty:Difficult Rationale:1000shares*$30/share*=$30,000*=$15,000(loanamount);X=[1000($24)-$15,000]/1000($24);X=. 45. Youpurchased100sharesofcommonstockonmarginfor$50pershare.Theinitialmarginis50%andthestockpaysnodividend.Whatwouldyourrateofreturnbeifyousellthestockat$56pershareIgnoreinterestonmargin. A) 28% B) 33% C) 14% D) 42% E) 24%Answer:EDifficulty:Difficult Rationale:100($50)=$2,500investment;gainonstocksale=(56-50)(100)=$600;Return=($600/$2,500)=24%. 46. Youpurchased100sharesofcommonstockonmarginfor$35pershare.Theinitialmarginis50%andthestockpaysnodividend.Whatwouldyourrateofreturnbeifyousellthestockat$42pershareIgnoreinterestonmargin. A) 28% B) 33% C) 14% D) 40% E) 24%Answer:DDifficulty:Difficult Rationale:100($35)=$1,750investment;gainonstocksale=(42-35)(100)=$700;Return=($700/$1,750)=40%.

47. Assumeyousellshort1000sharesofcommonstockat$35pershare,withinitialmarginat50%.Whatwouldbeyourrateofreturnifyourepurchasethestockat$25/shareThestockpaidnodividendsduringtheperiod,andyoudidnotremoveanymoneyfromtheaccountbeforemakingtheoffsettingtransaction. A) % B) % C) % D) % E) noneoftheaboveAnswer:CDifficulty:Moderate Rationale:Profitonstock=($35-$25)(1,000)=$10,000;initialinvestment=($35)(1,000)(.5)=$17,500;return=$10,000/$17,500=%. 48. Assumeyousellshort100sharesofcommonstockat$30pershare,withinitialmarginat50%.Whatwouldbeyourrateofreturnifyourepurchasethestockat$35/shareThestockpaidnodividendsduringtheperiod,andyoudidnotremoveanymoneyfromtheaccountbeforemakingtheoffsettingtransaction. A) % B) % C) % D) % E) noneoftheaboveAnswer:ADifficulty:Moderate Rationale:Profitonstock=($30-$35)(100)=-500;initialinvestment=($30)(100)(.5)=$1,500;return=$-500/$1,500=%. 49. YouwanttopurchaseGMstockat$40fromyourbrokerusingaslittleofyourownmoneyaspossible.Ifinitialmarginis50%andyouhave$4000toinvest,howmanysharescanyoubuy A) 100shares B) 200shares C) 50shares D) 500shares E) 25sharesAnswer:BDifficulty:Moderate Rationale:youcanbuy($4000/$40)=100sharesoutrightandyoucanborrow$4,000tobuyanother100shares.

50. YouwanttopurchaseIBMstockat$80fromyourbrokerusingaslittleofyourownmoneyaspossible.Ifinitialmarginis50%andyouhave$2000toinvest,howmanysharescanyoubuy A) 100shares B) 200shares C) 50shares D) 500shares E) 25sharesAnswer:CDifficulty:Moderate Rationale:Youcanbuy($2000/$80)=25sharesoutrightandyoucanborrow$2,000tobuyanother25shares. 51. Assumeyousoldshort100sharesofcommonstockat$40pershare.Theinitialmarginis50%.Whatwouldbethemaintenancemarginifamargincallismadeatastockpriceof$50 A) 40% B) 20% C) 35% D) 25% E) noneoftheaboveAnswer:BDifficulty:Difficult Rationale:$4,000X=$6,000;[$6,000-100($50)]/100($50)=20%. 52. Assumeyousoldshort100sharesofcommonstockat$70pershare.Theinitialmarginis50%.Whatwouldbethemaintenancemarginifamargincallismadeatastockpriceof$85 A) % B) % C) % D) % E) noneoftheaboveAnswer:DDifficulty:Difficult Rationale:$7,000X=$10,500;[$10,500-100($85)]/100($85)=%.

53. Yousoldshort100sharesofcommonstockat$45pershare.Theinitialmarginis50%.Atwhatstockpricewouldyoureceiveamargincallifthemaintenancemarginis35% A) $50 B) $65 C) $35 D) $40 E) noneoftheaboveAnswer:ADifficulty:Difficult Rationale:Equity=100($45)*=$6,750;=($6,750-100P)/100P;35P=6,750-100P;135P=6,750;P=$ 54. Yousoldshort100sharesofcommonstockat$75pershare.Theinitialmarginis50%.Atwhatstockpricewouldyoureceiveamargincallifthemaintenancemarginis30% A) $ B) $ C) $ D) $ E) noneoftheaboveAnswer:CDifficulty:Difficult Rationale:Equity=100($75)*=$11,250;=($11,250-100P)/100P;30P=11,250-100P;130P=11,250;P=$ 55. IPOaveragefirst-dayreturnsarelargestin____________. A) TheUnitedStates B) Denmark C) Japan D) China E) FranceAnswer:DDifficulty:Easy Rationale:SeeFigure.

56. Despitelargefirst-dayIPOreturns,averagefirst-yearreturnsintheUSareapproximately____________percent. A) B) C) D) E) Answer:ADifficulty:Easy Rationale:SeeFigure. 57. Averagesecond-yearIPOreturnsintheUSareapproximately____________percent. A) B) C) D) E) Answer:DDifficulty:Easy Rationale:SeeFigure. 58. Averagethird-yearIPOreturnsintheUSareapproximately____________percent. A) B) C) D) E) Answer:EDifficulty:Easy Rationale:SeeFigure. 59. Theadvertisementbytheunderwritingsyndicatetoannounceannewsecurityissueisreferredtoasthe____________. A) redherring B) preliminaryprospectus C) prospectus D) tombstone E) headstoneAnswer:DDifficulty:Easy

60. Thepreliminaryprospectusisreferredtoasa____________. A) redherring B) indenture C) greenmail D) tombstone E) headstoneAnswer:ADifficulty:Easy 61. TheminimumrevenuerequiredforaninitiallistingontheNewYorkStockExchangeis A) $2,000,000 B) $25,000,000 C) $50,000,000 D) $75,000,000 E) 100,000,000Answer:DDifficulty:Moderate Rationale:SeeTable. 62. TheannualdollarvolumeoftradingontheNYSEin2004wasapproximately____________dollars. A) 12trillion B) 4trillion C) 12billion D) 4billion E) noneoftheaboveAnswer:ADifficulty:Easy Rationale:SeeFigure. 63. The____________hadthelargesttradingvolumeofsecuritiesin2004. A) NASDAQ B) NYSE C) London D) Tokyo E) HongKongAnswer:BDifficulty:Easy Rationale:SeeFigure.

64. Thesecuritiesactof1933____________. requiresfulldisclosureofrelevantinformationrelatingtotheissueofnewsecuritiesrequiresregistrationofnewsecuritiesrequiresissuanceofaprospectusdetailingfinancialprospectsofthefirmestablishedtheSECrequiresperiodicdisclosureofrelevantfinancialinformationempowersSECtoregulateexchanges,OTCtrading,brokers,anddealers A) I,IIandIII B) I,II,III,IV,V,andVI C) I,IIandV D) I,IIandIV E) IVonlyAnswer:ADifficulty:Easy 65. Thesecuritiesactof1934____________. requiresfulldisclosureofrelevantinformationrelatingtotheissueofnewsecuritiesrequiresregistrationofnewsecuritiesrequiresissuanceofaprospectusdetailingfinancialprospectsofthefirmestablishedtheSECrequiresperiodicdisclosureofrelevantfinancialinformationempowersSECtoregulateexchanges,OTCtrading,brokers,anddealers A) I,IIandIII B) I,II,III,IV,V,andVI C) I,IIandV D) I,IIandIV E) IV,V,andVIAnswer:EDifficulty:Easy

66. WhichofthefollowingisnotrequiredundertheCFAInstitutestandardsofprofessionalconduct A) knowledgeofallapplicablelaws,rulesandregulations B) disclosureofallpersonalinvestmentswhetherornottheymayconflictwithaclient'sinvestments C) disclosureofallconflictstoclientsa