session 14 quiz

What is true of the Dow Jones Industrial Average?

It is price weighted

The S&P 500 is a market value weighted index

True

A trader who makes a market in one or more securities and is charged with maintaining a fair and orderly market is know as

Designated market maker

A designated market maker (DMM) is in charge of

- Maintaining limit orders - Making the market in one of more securities - Maintaining an orderly market

Dealers make money by maximizing the bid-ask spread while brokers make money on commissions per brokered deal.

true

Most of the trading on the market is now done electronically.

true

Shares of Apple are currently trading at approximately $129. Placing an order to buying 1000 shared BUT only when the stock price hits $125 is know as a

Limit Order

Which of the following is NOT true about high frequency trading?

Positions are still long term

A stock in the DJIA has a price of $30 and increases 10%, how many points would this add to the DJIA index?

3.0 points

Approximately what percentage of stocks listed on the NYSE are still traded on the physical exchange?

40%

which of the following is the largest options exchange?

CME group

Which of the following is true about a dealer?

Earns the spread between Bid and Ask price

What is the primary difference between Over the Counter markets and Organized Exchanges?

Over the Counter markets operate a competitive market maker model

What is the role of a designated market maker?

To ensure that there is a continuous market for shares

An order to buy or sell at the best available price as soon as the order reaches the exchange is known as a limit orders/

false

Floor trading is considerably more profitable and efficient than electronic trading

false

The majority of transactions take place in primary markets

false

The following statement would be considered which of the following choices? Sell 1000 shares of Ford stock at $20

limit order

Which state is true when evaluation the bid/ ask spreads?

sellers of the shares look for the highest bid price

which of the following is true about a broker?

serves as an agent to bring together buyers and sellers