QUESTION In the securities market, what is a capital gain? What will be an ideal response? ANSWER Answer: A capital gain occurs when an investor buys a security for a certain price and sells it at a higher price. The profit made from the sale is the capital gain. Explanation: Capital gain is the […]
Date: September 3rd, 2020
QUESTION Explain the difference between a stock and a bond. What will be an ideal response? ANSWER Answer: A stock represents a share of ownership in a company. A bond is a certificate that shows the owner has lent money to a company or government agency. Explanation: Stocks represent shares of ownership in a […]
Date: September 3rd, 2020
QUESTION Within the securities market, what is considered a “short-term IOU,” what is considered a “long-term IOU,” and which offers lower risk for investors? What will be an ideal response? ANSWER Answer: Short-term IOUs are money market instruments, such as U.S. treasury bills or bank CDs, that mature within one year. Long-term IOUs are […]
Date: September 3rd, 2020
QUESTION Investment banks can take a financial loss when new issues of stocks they purchase are sold to investors at a lower price. How can they decrease their risk? What will be an ideal response? ANSWER Answer: Investment banks can form a syndicate to purchase and sell a particular stock issue. Rather than one […]
Date: September 3rd, 2020
QUESTION Marta has an extensive securities portfolio and has been working with the same full-service broker for over ten years. Based on this relationship, what type of security orders would Marta place? A) discretionary order B) secured order C) limit order D) market order E) indexed order ANSWER Answer: A Explanation: A) Given Marta’s […]
Date: September 3rd, 2020
QUESTION After 36 years with the same engineering firm, Leonard retired last month. After making sure his investments grew to a substantial nest egg, now he needs to shift strategies so his savings provide living expenses. What type of fund should Leonard shift his retirement money into? A) money market B) balanced C) index D) […]
Date: September 3rd, 2020
QUESTION Alison has just opened an account with ClickVest, an online discount broker. What is ClickVest best suited to provide Alison? A) optimized returns on discretionary orders B) customized tax planning advice C) low fees on three-day limit orders D) fast execution of market orders E) reduced commission fees on common stock ANSWER Answer: […]
Date: September 3rd, 2020
QUESTION Which type of mutual fund reflects more than financial considerations in its portfolio of investments? A) balanced B) socially responsible C) global D) index E) growth ANSWER Answer: B Explanation: B) Socially responsible funds invest in companies that meet certain standards, such as ethical behavior and environmental protection. Like all mutual funds, it […]
Date: September 3rd, 2020
QUESTION On September 16, Marya places a limit order to buy 3,000 shares of Dairy Deelite Inc. stock with a threshold price of $9.00. Which of the following describes the trade made by her broker? A) 3,000 shares of Dairy Deelite were sold at $9.45 on September 16. B) 3,000 shares of Dairy Deelite were […]
Date: September 3rd, 2020
QUESTION Jorge placed a limit order to sell 2,000 shares of RokStar stock with a threshold price of $18.50. At what price does his broker execute the order? A) $18.25 B) $18.40 C) $18.49 D) $18.50 E) $18.60 ANSWER Answer: E Explanation: E) In a limit order for a sale, the broker is directed […]
Date: September 3rd, 2020
