3 Investments: Module 1: Securities Markets and Money Market Instruments

Formulas (2) for a margin call

= debit balance / (1-maintenance margin) = [(1-initial margin)*purchase price of stock] / (1-maintenance margin)

Identify which of the following statements regarding money market deposit accounts (MMDAs) are NOT correct: I. They are FDIC insured. II. They offer unlimited check writing privileges. III. They are primarily offered by open-end investment companies. IV. They require a minimum balance. A) II and III B) III IV C) I and IV D) I II

A) II and III

Which of the following statements regarding wash sales is CORRECT? I. Occurs if the taxpayer sells or exchanges stock or securities for a loss and, within 30 days before or after the date of the sale or exchange, acquires similar securities. II .The wash sale rules are easily avoided in the case of fixed-income securities by submitting a bond with the same or similar characteristics as long as it is issued by a different company.

Both I and II

Identify the incorrect statement regarding savings accounts: A) accounts are established with a commercial bank or savings and loan B) they offer a relatively low interest rate C) they require a minimum balance of $500 D) deposits are permitted to withdraw their savings at any time without penalty

C) They require a minimum balance

Equity investments made for the launch, early development, or expansion of a business are known as:

venture capital