Chaminade Univ MBA 754 (Investment Mgmt) Week 3 – Ch 03 Homework (Graded)

Grading SummaryThese
are the automatically computed results of your exam. Grades for essay
questions, and comments from your instructor, are in the “Details”
section below. Date Taken: Time Spent: Points Received:
Question
Type: # Of Questions: True/False 11 Multiple Choice 19

Grade
Details – All QuestionsQuestion 1. Question : The documents signed when a
customer opens a brokerage account
Student
Answer: serve as an informal relationship between the customer and the
stockbroker.
limit
the customer to dealing only through that brokerage firm.
may be
signed by a minor child provided that the money being invested belongs to the
child. establish a legal relationship between the customer and the brokerage
firm.

Question
2. Question : Which one of the following is considered a financial rather than
a general newspaper?
Student
Answer: The New York Times
USA
Today
The
Wall Street Journal
The
Washingtom Post

Question
3. Question : Most brokerage firms will invest surplus cash, dividends and
interest received, proceeds from the sale of stock and the like in
Student
Answer: additional securities of the same type.
certificates
of deposit.
a
non-interest bearing account.
a
money market mutual fund.

Question
4. Question : Assume that the S&P 500 composite stock index is 995.50. This
means that
Student
Answer: the average stock in the index is selling for $99.55.
an
investor would have to pay $995.50 to purchase one share of each of the stocks
represented in the index. the market values of the stocks in the index
increased by a factor of 99.55 since the 1941-1943 base period. the share prices
of the stocks in the index have risen 995.50 times since 1941.

Question
5. Question : Mike bought 200 shares of EG stock two years ago at $16 per
share. The stock has traded in a range of $21 to $44 a share over the past
year. EG is now selling for $43.60 a share. EG announces its earnings today and
Mike feels the stock could go to $60 on good news or fall to $30 on bad. To
protect his profits, the most appropriate order for him to place is
Student
Answer: market order to sell immediately.
a
limit sell order at $60.00.
a stop
loss order at $42.
a
stop-limit order to sell at $45.

Question
6. Question : Earnings on securities held in street name by the brokerage are
not reported to the Internal Revenue Service.
Student
Answer: True False

Question
7. Question : The published analysis and recommendations of an individual
brokerage firm is called a
Student
Answer: prospectus.
comparative
data source.
back-office
research report.
broker’s
subscription report.

Question
8. Question : Commission structures vary with the type of security being
traded, the type of broker involved and the size of the order.
Student
Answer: True False

Question
9. Question : An individual can sort stocks by dividend rates, growth rates,
and price/earnings ratios using screening tools on the Internet.
Student
Answer: True False

Question
10. Question : Trading stocks is much faster and less complicated if an
individual investor has possession of the actual stock certificates.
Student
Answer: True False

Question
11. Question : Which one of the following statements about limit orders is
correct?
Student
Answer: The execution of the trade will occur prior to the close of trading on
the day the trade is placed. The execution will occur at the regular open on
the day following the day the trade is placed. The trade may be executed only
at the limit price or better at any time prior to expiration or cancellation of
the order. The trade will be executed at the market price at the end of the
third business day, if not executed previously at the limit price.

Question
12. Question : Which of the following statements about the Dow Jones Industrial
Average are correct?
Student
Answer: I and III only
II and
IV only
I, III
and IV only
I, II,
III and IV

Question
13. Question : Over-the-counter market activity is reflected in the
Student
Answer: Standard & Poor’s composite index.
Nasdaq
index.
AMEX
composite index.
financials
index.

Question
14. Question : Traders who hold stocks for less than a full day can reduce the
tax burden on their profits.
Student
Answer: True False

Question
15. Question : Individuals can use the Internet to
Student
Answer: I and IV only
II and
III only
I, III
and IV only
I, II,
III and IV

Question
16. Question : Which of the following designations does not have formal
education and testing requirements.
Student
Answer: Chartered Financial Analyst
Certified
Financial Planner
Registered
Investment Adviser
Certified
Public Accountant

Question
17. Question : Which one of the following is the LEAST important when selecting
a stockbroker?
Student
Answer: knowing the stockbroker personally
selecting
a stockbroker who best understands your investment goals
considering
the services offered and the related costs
getting
referrals from personal acquaintances with similar investment objectives

Question
18. Question : An individual investor who wishes to borrow money to buy stocks
must open a
Student
Answer: signature account.
margin
account.
joint
account.
custodial
account.

Question
19. Question : Investors are protected from market losses by the SIPC insurance
offered by some full-service brokers.
Student
Answer: True False

Question
20. Question : The Internet provides
Student
Answer: II and III only
III
and IV only
I, II
and III only
I, II,
III and IV

Question
21. Question : Which one of the following is a measure of the performance of
small companies?
Student
Answer: Russell 2000
Russell
1000
Russell
3000
Value
Line 1700

Question
22. Question : A “pump and dump” scheme involves buying shares of
stock, hyping that stock via the Internet and then quickly selling the shares
at a profit.
Student
Answer: True False

Question
23. Question : Many brokerage firms require that disputes between individual
investors and brokers be settled through arbitration.
Student
Answer: True False

Question
24. Question : The Dow Jones Industrial Average (DJIA) consists of 30 stocks
whose price behavior
Student
Answer: typically has little correlation with the rest of the stock market.
broadly
reflects the overall price behavior of the stock market.
reflects
the changes in value of manufacturing stocks only.
leads
the movements in the general economy by one to two weeks.

Question
25. Question : Which of the following sites is especially valuable for
information concerning international investments?
Student
Answer: http://yahoo.finance.com
www.adr.com
www.moody’s.com
www.bondsonline.com

Question
26. Question : A stop-loss order is activated once the stock reaches the
specified price.
Student
Answer: True False

Question
27. Question : Which one of the following web sites should you utilize to
review the financial information in a company’s 10-K report?
Student
Answer: freeedgar.com
valueline.com
wsj.com
finance.yahoo.com

Question
28. Question : It is generally a good idea to use limit orders when purchasing
IPOs on-line.
Student
Answer: True False

Question
29. Question : Investment advisors are legally responsible for losses incurred
by their clients.
Student
Answer: True False

Question
30. Question : McDonald’s stock is now selling for $57 per share. Kim wants to
buy 100 shares but only if she can do so at $55 or less. She should place a(n)
Student
Answer: stop order.
market
order.
limit
order.
odd-lot
order.