1 Market Averages and Indexes are used to Chapter 9 Gauge General Market Conditions Calculate Business Risk Compare your portfolio performance to a large diversified portfolio Study Market cycles trends and behaviors to forecast future market behavior All of the above None of the Above A and B B and C A B and C A B and D A C and D 2 When bigger stocks are measured by the number of shares outstanding times the price and generally have greater influence this is called Equal Weight Value Weight Stock Index Measurement Stock Weight Behavior All of the above None of the Above A and B B and C A B and C A B and D A C and D 3 Which of the following are true about Stockbrokers and Brokerage Services They Act as intermediaries between buyers and sellers of securities They are only paid based off of the performance of a customer s account Must be licensed by SEC and securities exchanges where they place orders Statements showing detailed account transactions are provided All of the above None of the Above A and B B and C A B and C A B and D A C and D a b c d e f g h i j k a b c d e f g h i j k a b c d e f g h i j k 4 A Brokerage Firm that has low commissions and provides limited research and investment advice is referred to as a Full Service Broker b Money Market Manager c Basic Discount Broker d Premium Discount Broker e None of the above 5 A Stock held in Street Name a Is completely controlled by the brokerage firm without any say by the investor b Is held by a brokerage firm or trust but consent must be made by the investor in investment decisions c Are stocks held for the population who do not own a residence or are in prison d Stock certificates that are issued in the investors name so a brokerage firm can raise capital gains and income e none of the above 6 Sally is an investor that puts a GTC order on 1000 shares Wal Mart s stock in November she only wants to buy the stock if it dips below 100 dollars in July Wal Mart s stock drops to the price of 98 dollars what happens a Sally purchases 1000 shares of Wal Mart s stock b Nothing Happens c Sally doesn t buy Wal Mart s stock because the GTC order was only good for a day d Sally would have purchased the stock before it dropped to 98 dollars e none of the above 7 Jim has a argument with his broker and thinks that his broker wronged him because of this Jim files a formal dispute and goes through a process where he and his broker both present arguments to a panel when the dispute is resolved Jim gives up his right to sue his broker and accepts the panel s decision this is called a Dispute Resolution b Meditation c Alleviation d Brokerage Risk e None of the Above The answer is Arbitration 8 A Stock Broker is trying to convince an investor to buy and sell their stocks nearly every day and the investor is seeing little to no return The investor is seeing little growth in his portfolio and is losing money due to major commission and transaction fees What should the investor do a The broker is churning therefore the investor should go through arbitration or mediation then find a new investor b Ask for referrals from business associates and friends for a new broker c Keep the broker and wait for long term investments to haul in major returns d Offer the broker a larger commission in order to more effectively manage the portfolio and get more advice on better investments e None of the Above f All of the Above g A and B h A B and D i B C and D 9 Stop Loss Orders have which of the following features a b c d e f g h i j k Typically used to protect investors from stock price declines Orders can last no longer than 6 months Once activated becomes a market order Can use Stop Loss orders to buy stocks such as to limit risk on short sales All of the above None of the Above A and B B and C A B and C A B and D A C and D 10 What are different type of brokerage accounts AND what are their functions a Custodial Account Brokerage Account for a minor that requires parent or guardian to handle transactions b Margin Account A Brokerage Account that can only make cash transactions c Cash Account Brokerage Account in which the brokerage firm extends borrowing priveleges d Wrap Account Account that shifts investment decisions to a professional money manager and charges a flat annual fee e All of the Above f None of the Above g A and B h A and D i B and C j B C and D 11 A 250 Share Unit is A A Round Lot Order b A combination of both a round lot order and an odd lot order c an Odd Lot Order d An Even Lot Order e None of the Above 12 Which of the following are usually good methods to avoid online scams a Beware of stock manipulators posting false news or overly optimistic opinions b Always know your source c Beware of pump and dump promoters who hype a stock and sell out on the inflated prices d Beware of get rich quick promoters selling worthless investments to na ve buyers e All of the Above f None of the Above g A B and C h B and D i C and D 1 Total Return is made up of which of the following components Chapter 10 Income a b Capital Gains Interest Return c d Investment Yield e All of the Above f None of Above g A and B h A and C i A B and C j B C and D a 2 000 or 200 b 2 120 or 212 c 120 or 12 d 2 060 or 206 2 I buy 1 share of stock for 1 000 that pays 10 dividends bi monthly I sell the stock for 3 000 What is the Total Return for a period beginning January 1 2012 and ending June 31st 2012 3 Why is Expected Return important It is the Return an investor thinks an investment will earn in the future a b Expected Return guarentees future performance c Expected Return determines what an investor is willing to pay for an investment or if they are willing to make an investment d Expected Return is not predicted based on historical performance e All of the Above f None of the Above g A and B h A and C i A B and C 4 Which of the following statements are true in relation to Time …
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