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Broker-dealers provide a bid and offer price when functioning as market makers. In this context A. the bid price represents the price the market maker is willing to pay for the stock and the offer price is the market maker's selling price. B. the bid price represents market maker's selling price and the offer price is the price the market maker is willing to pay for the stock. C. the bid and offer price refer to the price the market maker is willing to pay for the stock. D. the bid and offer prices refer to the market maker's buying and selling prices including commissions.
A. the bid price represents the price the market maker is willing to pay for the stock and the offer price is the market maker's selling price. Marker makers provide a two-sided quote. Because market makers stand ready to buy and sell the specific security, they provide a bid price, the price the firm is willing to pay for the stock, and the offer price, the price they are asking to receive when selling the stock. Market makers do not earn a commission; they charge a markup or markdown.
What can you tell about these investment companies from the information below? - company A: NAV 12.34; ASK 12.85 - company B: NAV 15.45; ASK 14.90 a. Company A can be either open-end or closed-end; Company B must be closed-end b. Company A must be open-end; Company B must be closed-end. c. Company A and Company B can be either open-end or closed-end. d. Company A is closed-end and Company B is open-end.
a. Company A can be either open-end or closed-end; Company B must be closed-end All open-end investment companies sell at NAV plus sales charge (if any). Therefore, the asking price can never be lower than the NAV. Closed-end company asking prices are determined by supply and demand, so their prices are independent of the fund's NAV
As a fiduciary, the investment advisor representative owes his clients good faith and disclosure of all material facts. this affirmative duty of disclosure is required by the IAR in all of the following situations EXCEPT A. he has donated funds to a nonprofit medical research institute that owns securities that the investment advisor representative has recommended B. he receives compensation from his employing broker for transactions that are executed through the brokerage house C. his family has a beneficial interest in a private medical equipment firm that he recommends to the client D. the advice he is providing is outside the scope of his brokerage employment and is not under the control or supervision of his employer
a. he has donated funds to a nonprofit medical research institute that owns securities that the investment advisor representative has recommended The IAR needs not disclose that he donated funds to a nonprofit research institute. no conflict of interest is present that requires an affirmative duty to disclose.
transactions meeting certain conditions are exempt from the USA registration and advertising filing requirements. which of the following transactions does NOT meet those conditions to qualify as an exempt transaction? a. the sale of U.S government securities to a retail client's IRA by a registered government securities dealer. b. A sale of stock through a rights offering to existing shareholders of the issuing corporation if no commission is paid c. A sale of securities by the executor of an estate d. An offer of a security for which a registration statement has been filed but has not yet become effective
a. the sale of U.S government securities to a retail client's IRA by a registered government securities dealer. In the sale of U.S gov't securities to a retail client, the security is exempt, but the transaction is not. Had the sale been to an institutional client, it would have been exempt. An offer is not a transaction.
A primary issue is a. the first transaction between two parties in the over-the-counter market b. a new offering of an issuer sold to investors. c. a secondary market transaction in a security recently offered to the public d. a sale between investors of securities traded on the New York Stock Exchange
b. a new offering of an issuer sold to investors. A primary issue if a new offering of securities by an issuer sold to investors. transactions between two investors in the over-the-counter market refer to secondary transactions (the market between investors). a sale between investors of securities traded on the NYSE is another example of a secondary transaction
DERP Corporation's 5% convertible debentures maturing in 2030 are currently selling for 120. the conversion price is $40. one would expect the DERP common stock to be selling a. somewhat below $30 per share b. somewhat below $48 per share c. somewhat above $30 per share d. somewhat above $48 per share
b. somewhat below $48 per share First step is to find the parity price. A conversion price of $40 mean the debenture is convertible into 25 shares of the common stock (par of $1,000/$40=25). with the current market price of $1,200, the parity price of the stock would be $48. Because convertible securities generally sell at a slight premium over their parity price, the stock should have a current market value a bit less than $48 share
all of the following securities are issued at a discount EXCEPT a. zero-coupon bonds b. T-bills c. CDs d. commercial paper
c. CDs CDs are interest bearing debt instruments issued by banks at their face value.
which of the following most accurately identifies a private equity investment in income- producing real estate? a. Investment in a real estate mutual fund b. Investment in a real estate investment trust (REIT) c. Direct ownership of real estate properties d. Private market mortgage lending by an insurance company
c. Direct owner of real estate properties Real estate investments take four major forms: private equity, publicly traded equity, private debt, and publicly traded debt. Private equity refers to direct ownership. mortgage lending is best described as private debt. REITs are examples of indirect ownership of real estate through equity securities
which of the following statements regarding the properties of duration is NOT true? a. duration measures a bond's price volatility by weighting the length of time it takes for a bond to pay for itself b. duration is a weighted-average term to maturity of a bond's cash flows c. duration measures the holding period return on a bond d. duration measures the effect of an interest rate change on the price of a bond or bond portfolio
c. duration measures the holding period of a return on a bond. Duration measures the effect of an interest rate change on the price of a bond or bond portfolio.
Twenty-five individuals have formed an investment company. They have heard wonderful things about you as an investment adviser and ask if you would be interested in managing their portfolio. You reply that you would be interested but will only take the account if you can structure a compensation arrangement that calls for you to receive a base fee plus 18% of the profits to the extent that the account's performance exceeds a standard benchmark. Under the Uniform Securities Act, this type of agreement is allowable if a. a majority of the shareholder in the investment company are qualified investors b. the contract is signed by one of the investors who is an accredited investor c. the investment company has a net worth of at least in excess of $2.1 million or will place at least $1 million in assets under management with the IA d. the individual in charge of the investment company is a qualified investor
c. the investment company has a net worth of at least in excess of $2.1 million or will place at least $1 million in assets under management with the IA An IA may enter into, extend, or renew a contract that provides compensation to the IA on the basis of capital gains or capital appreciation of funds if the client entering into the contract is: - a person or company who immediately has at least $1 million of AUM - a person who the IA and its IAR believe with good reason that the client has a net worth of at least $2.1 million.
A sales assistant employed by a full-service broker dealer would be required to register as an agent when accepting orders for a. fixed annuities. b. gold coins c. commodity futures contracts. d. Direct participation programs
d. direct participation programs An individual employed by a BD who is involved in the sale of securities must register as an agent. the security here is the DPP
Under the USA, a guaranteed security is protected by someone other than the issuer against loss of all of these EXCEPT a. principal repayment at maturity on debt securities b. dividends on equity securities c. interest on debt securities d. principal on equity issues
d. principal on equity issues Guarantees generally apply to income from the security (dividends or interest) and to payment of the principal amount at maturity. third-party guarantees do not provide against market loss.
