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| 1 | |
Trusted Securities is taking an order from Paul, who wants to acquire 300 shares of General Electric stock. Trusted Securities is acting in the capacity of a/an: |
| | A) | private placement agent |
| | B) | broker-dealer |
| | C) | underwriter |
| | D) | position trader |
| | E) | principal |
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| 2 | |
Gleason Investments is trying to sell some GM bonds from its own holdings. It bought them two years ago, hoping to profit from a bond price increase. Here, Gleason Investments is clearly involved in a/an: |
| | A) | private placement |
| | B) | program trade |
| | C) | agency transaction |
| | D) | best efforts transaction |
| | E) | principal transaction |
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| 3 | |
_____________ refers to a professionally managed pool of money directed to the financing of newer, often higher-risk firms. The investors are taking an equity position, and are not passive investors. |
| | A) | Program trading |
| | B) | Arbitrage |
| | C) | Market making |
| | D) | Venture capital |
| | E) | Discount brokerage |
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| 4 | |
Darlene tries to spot situations where the same basic security is selling for two different prices in two different markets. She wants to buy at the cheaper price and immediately sell at the more expensive Darlene is trying to engage in: |
| | A) | program trading |
| | B) | market making |
| | C) | pure arbitrage |
| | D) | investment banking |
| | E) | electronic brokerage |
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| 5 | |
A __________________ is an account offered by a securities firm, much like a bank deposit. |
| | A) | negotiable CD |
| | B) | NSMIA account |
| | C) | cash management account |
| | D) | underwriting account |
| | E) | agency account |
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| 6 | |
The ____________________ is the key Federal regulator of securities transactions. |
| | A) | U.S. Treasury |
| | B) | SEC |
| | C) | OTS |
| | D) | Federal Reserve |
| | E) | OMB |
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| 7 | |
With __________________, corporations can register new securities with the SEC up to two years in advance, and be prepared to issue them on relatively short notice. |
| | A) | Rule 144A |
| | B) | a best efforts underwriting |
| | C) | shelf registration |
| | D) | a firm commitment underwriting |
| | E) | electronic underwriting |
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| 8 | |
A/an __________________ places securities orders for his/her customers, but does not provide investment advice. |
| | A) | discount broker |
| | B) | position trader |
| | C) | market maker |
| | D) | full service broker |
| | E) | program trader |
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| 9 | |
Suppose an investment bank promises an issuing firm a fixed amount for a new issue of stock. Then, the investment bank intends to sell the stock to the public. This exemplifies a/an _________________ arrangement. |
| | A) | risk arbitrage |
| | B) | pure arbitrage |
| | C) | firm commitment underwriting |
| | D) | best efforts underwriting |
| | E) | position trading |
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| 10 | |
________________ has had an important influence on types of merger and acquisition transactions involving securities firms in recent years. In particular, we've observed a number of securities firm combinations involving other financial firms, like insurance companies and banks. |
| | A) | The Financial Services Modernization Act |
| | B) | The Federal Reserve Act |
| | C) | The Glass Steagall Act |
| | D) | SEC Rule 144A |
| | E) | SEC Rule 415 |
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| 11 | |
Benjamin Investments is actively acquiring the stock of Android Corp., after concluding that Android is a likely candidate for a buyout by another firm. If a buyout is, in fact, announced, Benjamin feels that Android's stock price will rise significantly. This kind of activity would be categorized as _____________ by Benjamin Investments. |
| | A) | shelf registration |
| | B) | market making |
| | C) | firm commitment underwriting |
| | D) | risk arbitrage |
| | E) | a best efforts underwriting |
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| 12 | |
The _______________ protects investors against losses of up to $500,000, resulting from securities firm failures. |
| | A) | SIPC |
| | B) | FDIC |
| | C) | Federal Reserve |
| | D) | NYSE |
| | E) | Chicago Board of Trade |
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| 13 | |
_____________________ prevented the various state governments in the U.S. from requiring their own registration of securities that were registered at the Federal level. |
| | A) | The Financial Institution Modernization Act |
| | B) | SEC Rule 144A |
| | C) | The Federal Reserve Act |
| | D) | SEC Rule 415 |
| | E) | The National Securities Market Improvement Act |
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| 14 | |
The merger and acquisition activity of securities firms, as measured by their total dollar value: |
| | A) | fell off in 2001, and rose again in the mid-2000s. |
| | B) | fell off dramatically in the late 1990s. |
| | C) | rose steadily, throughout the 1990s, and on through 2007. |
| | D) | declined steadily, throughout the 1990s, and on through 2007. |
| | E) | has remained virtually "flat" from the early 1990s, through 2007. |
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| 15 | |
When a securities firm helps support a secondary market for an asset, it is involved in: |
| | A) | underwriting, in a firm commitment |
| | B) | underwriting, in a best efforts offering |
| | C) | market making |
| | D) | pure arbitrage |
| | E) | risk arbitrage |
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