Question 1
1. Michael purchased 1000 shares of stock at a price of $16 a share. He utilized his 50% margin account to make the purchase. What is Michael's initial equity in this investment?
-$16,000
$16,000
$8.000
-$8,000
4.5 points
Question 2
1. A restricted account is defined as a margin account wherein the equity is
less than the initial margin amount.
greater than the initial margin amount.
less than the maintenance margin amount.
greater than the maintenance margin amount.
4.5 points
Question 3
1. Current price information on shares of a company's stock is often accompanied by statistics on the recent price behavior of that stock.
True
False
4.5 points
Question 4
1. Assume the foreign exchange rate for the euro was U.S. $1.00 = .70 euro last month. This month, the exchange rate is U.S. $1.00 = .72 euro. This information indicates that over the past month the
U.S. dollar remained unchanged relative to the euro.
U.S. dollar appreciated relative to all foreign currencies.
euro appreciated relative to the dollar.
euro depreciated relative to the dollar.
4.5 points
Question 5
1. Investors who are aware of current economic, political, and market events tend to make better investment decisions.
True
False
4.5 points
Question 6
1. Which is the correct order of events when an individual buys a stock through a brokerage firm?
I, II, III, IV
II, I, III, IV
II, IV, I, III
II, I, IV, III
4.5 points
Question 7
1. Ryan bought a stock three years ago for $6 a share. Today, June 22, the stock is selling for $72 a share. Ryan is afraid that the price will fall and does not want to lose his profits so he places a stop-loss order to sell at $70. The stock sells between $71 and $75 throughout the remainder of the day on June 22. On the morning of June 23, the stock opens at $9 a share based on rumors of a possible bankruptcy due to inappropriate accounting procedures. Which one of the following statements is true concerning this situation?
Ryan was able to sell his stock for $70 a share thereby protecting his profits.
Ryan's stock was sold for $9 a share causing him to lose most of his profits.
Ryan still owns his shares of stock since his order was never executed at the $70 price.
Ryan received a call from the specialist asking him what he wanted to do about his order.
4.5 points
Question 8
1. The Securities Investor Protection Corporation insures individual investors against
the loss of up to $500,000 in securities or $100,000 in cash held by a broker.
market losses of $500,000 total or $100,000 per transaction.
losses of up to $100,000 incurred due to innocent online trading errors.
losses incurred up to $500,000 due to churning by a broker.
4.5 points
Question 9
1. Three years ago, Emily bought 200 shares of HQ at $27.00 per share. HQ shares have risen to $57.50 per share. If the stock continues to rise, she wants to hold it, but she fears that the price could fall quickly and she will lose most of her profit. Which of the following decisions would be best?
Place a limit order to sell at $60.00.
Place a stop-limit order at $55.00.
Place a stop-loss order at $27.00.
Place a stop-loss order at $55.00.
4.5 points
Question 10
1. On October 12, Kevin placed a day order to purchase 100 shares of ABC stock at $21 a share. During the day, the stock sold at prices ranging from $21.01 to $22.49. Over the following month the stock sold in a range of $21.60 to $23.05. On December 2, the market declined radically and the price of ABC stock dropped to $19.94. Which one of the following statements is correct concerning Allen's order?
The order was never executed.
The order was executed at $21.01 per share.
The order was executed at $22.49.
The order was executed at $19.94.
