Invest. Mang. e1

What would be the profit or loss per share of stock to an investor who bought an October expiration Apple call option with an exercise price of $130 if Apple closed on the expiration date at $120? Assume the option premium was $3.00. $0 $3.00 gain $3.00 lossCorrect $7.00 gain

$3.00 loss

you purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below _______. (Assume the stock pays no dividends, and ignore interest on the margin loan.) $26.55 $35.71 $28.95 $30.77

$35.71 Margin = 200 × P − $5,000) / (200 × P = 0.30

ou sold short 300 shares of common stock at $30 per share. The initial margin is 50%. You must put up _________. $4,500 $6,000 $9,000 $10,000

$4500

You find that the bid and ask prices for a stock are $10.25 and $10.30, respectively. If you purchase or sell the stock, you must pay a flat commission of $25. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars? $50 $25 $30 $55

$55

Management fees for open-end and closed-end funds typically range between _______ and _______.

0.2 - 2.0

Treasury notes have initial maturities between _______ years. 2 n 4 5 n 10 10 n 30 1 n 10

1 n t10 years

BATS advertised average latency times of approximately _______. 100 microseconds 200 microseconds 1 second 5 seconds

100 mircroseconds

Under SEC rules, the managers of certain funds are allowed to deduct charges for advertising, brokerage commissions, and other sales expenses directly from the fund assets rather than billing investors. These fees are known as _______. direct operating expenses back-end loads 12b-1 charges Correct front-end loads

12-b1 charges

As of 2019, approximately _______ of mutual fund assets were invested in money market funds. 5% 17% 44% 66%

17%

According to SEC Rule 415 regarding shelf registration, firms can gradually sell securities to the public for _______ following initial registration. 1 year 2 year 3 year 4 year

2 year

The market share held by the "Other" category (which includes dark pools) constitutes roughly _______% of trading volume in NYSE-listed shares. 5% 10% 30% 50%

30%Correct

More than _______ of all trading is believed to be initiated by computer algorithms 25% 40% 50%

50%

As of 2019, approximately _______ of mutual fund assets were invested in equity funds. 5% 52% 30% 12%52

52%

n his 1970 study, Malkiel found that mutual funds that do well in one period have an approximately _______ chance of doing well in the subsequent-year period. 33% 52% 65% 85%

65%Correct

Most real estate investment trusts (REITs) have a debt ratio of around _______. 10% 30% 50% 70%

70%

Assume that you have recently purchased 100 shares in an investment company. Upon examining the balance sheet, you note that the firm is reporting $225 million in assets, $30 million in liabilities, and 10 million shares outstanding. What is the net asset value (NAV) of these shares?

= $225,000,000 − $30,000,00010,000,000 = $19.50= $225,000,000 - $30,000,00010,000,000 = $19.50

_______ fund is defined as one in which the fund charges a sales commission to either buy into or exit from the fund. A load A no-load An index A specialized-sector

A Load

Mutual funds provide the following for their shareholders. Multiple Choice Diversification Professional management Record keeping and administration All of these choices

All of these choices

Level 3 NASDAQ subscribers ______. a. are registered market makers b. can post bid and ask prices c. have the fastest execution trades d. all of these options

All the above

The CFA Institute Standards of Professional Conduct require that members _______. place their clients' interests before their own disclose conflicts of interest to clients inform their employers that they are obligated to comply with the Standards of Professional Conduct All of the choices are correct

All the above

The NYSE acquired the ECN _______, and NASDAQ recently acquired the ECN _______. Archipelago; Instinet Instinet; Archipelago Island; Instinet LSE; Euronext

Archipelago; Instinet

_______ are partnerships of investors with portfolios that are larger than most individual investors but are still too small to warrant managing on a separate basis. Commingled funds Closed-end funds REITs Mutual funds

Commingled funds

All but which one of the following indices is value weighted? NASDAQ Composite S&P 500 Wilshire 5000 DJIA

DJIA

Net asset value is defined as _______. book value of assets divided by shares outstanding book value of assets minus liabilities divided by shares outstanding market value of assets divided by shares outstanding market value of assets minus liabilities divided by shares outstanding

Marekt value of assets divided by shares outstanding

The _______ requires full disclosure of relevant information relating to the issue of new securities. nsider Trading Act of 1931 Securities Act of 1933 Securities Exchange Act of 1934 Investment Company Act of 1940

Securities Act of 1933Correct

You short-sell 200 shares of Tuckerton Trading Company, now selling for $50 per share. What is your maximum possible loss? $50 $150 $10,000 Unlimited

Unlimited

A fund that invests in securities worldwide, including the United States of America, is called ______. an international fund an emerging market fund a global fund a regional fund

as global fund

The difference between the price at which a dealer is willing to buy and the price at which a dealer is willing to sell is called the _______. market spread bid-ask spread bid-ask gap market variation

bid-ask spread

The difference between balanced funds and asset allocation funds is that _______. balanced funds invest in bonds while asset allocation funds do not asset allocation funds invest in bonds while balanced funds do not balanced funds have relatively stable proportions of stocks and bonds while the proportions may vary dramatically for asset allocation funds balanced funds make no capital gain distributions and asset allocation funds make both dividend and capital gain distributions

bonds while the proportions may vary dramatically for asset allocation funds

If a mutual fund has multiple-class shares, which class typically has a front-end load? Class A Class B Class C Class I

class a

All major stock markets today are effectively _______ specialist trading systems electronic trading systems continuous auction markets direct search markets

electronic trading systemsCorrect

ou are considering investing in a no-load mutual fund with an annual expense ratio of 0.60% and an annual 12b-1 fee of 0.75%. You could also invest in a bank CD paying 6.50% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD? 7.10% 7.45% 7.25% 7.85%

r > 0.065 + 0.006 + 0.0075 = 0.0785 = 7.85%

Ownership of a put option entitles the owner to the _______ to _______ a specific stock, on or before a specific date, at a specific price.

right; sell

Which of the following ETFs tracks the S&P 500 Index?

spiders

If an investor places a _______ order, the stock will be sold if its price falls to the stipulated level. If an investor places a _______ order, the stock will be bought if its price rises above the stipulated level. buy stop; stop-loss market; limit stop-loss; buy stop limit; market

stop-loss; buy stop

initial margin requirements on stocks are set by _______. the Federal Deposit Insurance Corporation the Federal Reserve the New York Stock Exchange the Securities and Exchange Commission

the Federal Reserve

Initial margin requirements on stocks are set by _______ the Federal Deposit Insurance Corporation the Federal Reserve the New York Stock Exchange the Securities and Exchange Commission

the Federal ReserveCorrect

he largest nongovernmental regulator of securities firms in the United States is _______. the CFA Institute the Public Company Accounting Oversight Board the Financial Industry Regulatory Authority the Board of Directors of NYSE Euronext

the Financial Industry Regulatory Authority

In a _______ index, changes in the value of the stock with the greatest market value will move the index value the most, everything else equal. value-weighted index equal-weighted index price-weighted index bond price index

value-weighted index

n a recent study, Malkiel found that evidence of persistence in the performance of mutual funds _______ in the 1980s. grew stronger remained about the same became slightly weaker virtually disappeared

virtuall disapperared

The term latency refers to _____. A. the lag between when an order is placed on the NYSE and when it is executed. B. the amount of time it takes to accept, process, and deliver a trading order. C. the time it takes to implement new rules and procedures for stock exchanges and computer trading systems. D. the lag between when an order is executed and when the investor takes possession of the securities.

B. the amount of time it takes to accept, process, and deliver a trading order.

Which of the following is used to back international sales of goods and services? Certificate of deposit Bankers' acceptance Eurodollar deposits Commercial paper

Bankers Acceptance

An index computed from a simple average of returns is a/an ______. equal weighted index value weighted index price weighted index share weighted index

Equal Weighted index

Purchases of new issues of stock take place _______. at the desk of the Fed in the primary market in the secondary market in the tertiary markets

in the primary market

The two principal types of REITs are equity trusts, which _______, and mortgage trusts, which _______. invest directly in real estate; invest in mortgage and construction loans invest in mortgage and construction loans; invest directly in real estate use extensive leverage; distribute less than 95% of income to shareholders distribute less than 95% of income to shareholders; use extensive leverage

invest directly in real estate; invest in mortgage and construction loans