Question 1

The daily trading activity seems to matter with early trades often having more price impact than trades that are the same size occurring late in the day.

Accepted Answer

A) True 
 B)False  True

Question 2

Cross-listing of stocks internationally is prohibited under the Securities Act of 1975.

Accepted Answer

A) True 
 B)False  False

Question 3

Individual investors can earn returns comparable to those of professional traders by following a(n) :

Accepted Answer

A)   Active trading strategy purchasing securities in high growth industries
B)   Passive trading strategy purchasing securities listed on the NYSE
C)   Buy and hold strategy purchasing securities randomly from the market portfolio
D)   Hedging strategy purchasing derivatives to counter adverse price movements
E)   There is no strategy that will work. Professional traders always earn greater returns than the individual investorF) B) and C)
G) A) and E)

Question 4

The New York Stock Exchange was established in the year:

Accepted Answer

A)   1921
B)   1889
C)   1792
D)   1909
E)   1946F) B) and D)
G) A) and D)

Question 5

Holdings of stock by households, which are individuals and families, represent the largest share of investors in corporate stock in the United States; in 2007 was nearly $6.5 trillion.

Accepted Answer

A) True 
 B)False

Question 6

The frequent research finding that daily returns on stock tend to be lowest on Mondays is called the:

Accepted Answer

A)   The daily price skewness effect
B)   The weekend effect
C)   The signaling effect
D)   The strong-form effect
E)   None of the aboveF) A) and B)
G) A) and D)

Question 7

Stocks acquired the last month of the year and sold the following month frequently post excess returns. This is known as the:

Accepted Answer

A)   Year-end effect
B)   Signaling effect
C)   Weak form efficiency
D)   Cumulative price-change effect
E)   None of the aboveF) A) and B)
G) A) and C)

Question 8

Please explain the possible link between economic conditions and the performance of the stock market. Why do stock price movements tend to lead changes in general economic conditions?

Accepted Answer

Recent research suggests that wealth (in...

Question 9

A share of corporate stock is a priority claim against the assets and earnings of a business firm.

Accepted Answer

A) True 
 B)False

Question 10

Program trading involves continuous trading as relative prices between two financial instruments change.

Accepted Answer

A) True 
 B)False

Question 11

What are the essential differences between the following segments of the market for corporate stock?

Accepted Answer

Trading on the organized exchanges is go...

Question 12

Preferred stock issued by ABC Corporation has a par value of $30 per share with a 7 percent dividend rate. How much in annual dividends is each preferred shareholder entitled to receive on each share owned, provided the company declares a dividend?

Accepted Answer

A)   $3.00
B)   $0.70
C)   $2.10
D)   $4.20
E)   None of the aboveF) C) and D)
G) B) and E)

Question 13

Investment firms, organized as private ___________ have grown as an important investment vehicle for wealthy individuals and institutional stock investors and have contributed significantly to the success of the private equity market.

Accepted Answer

A)   Vulture funds
B)   Limited partnerships
C)   Special-purpose corporations
D)   Closed-load mutual funds
E)   None of the aboveF) A) and B)
G) A) and C)

Question 14

The efficient markets hypothesis:

Accepted Answer

A)   Is a broader theory that supplements the random walk hypothesis
B)   Is supported by most studies, at least to a certain degree
C)   Is challenged by market anomalies like the "January effect"
D)   B and C only
E)   A, B and CF) B) and C)
G) A) and B)

Question 15

Which particular market's growth has outstripped nearly all other corporate funding markets in recent years?

Accepted Answer

A)   The American Stock Exchange
B)   The factoring market
C)   The privately-placed corporate debt market
D)   The private equity market
E)   None of the aboveF) A) and E)
G) A) and B)

Question 16

The second largest economy in the world belongs to:

Accepted Answer

A)   China
B)   Japan
C)   Canada
D)   United Kingdom
E)   None of the aboveF) B) and D)
G) A) and B) B

Question 17

ADRs are not sensitive to currency risk.

Accepted Answer

A) True 
 B)False

Question 18

An option that expires without being exercised is worthless.

Accepted Answer

A) True 
 B)False

Question 19

NASDAQ has created its own automated electronic trading platform, called Super Montage.

Accepted Answer

A) True 
 B)False

Question 20

Please describe the different roles played by call and put options in the stock market.

Accepted Answer

Rapid growth has occurred in the closely...

Exam 20: The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

The daily trading activity seems to matter with early trades often having more price impact than trades that are the same size occurring late in the day.

Correct AnswerverifiedTrue

Cross-listing of stocks internationally is prohibited under the Securities Act of 1975.

Correct AnswerverifiedFalse

Individual investors can earn returns comparable to those of professional traders by following a(n) :

Correct AnswerverifiedShow Answer

The New York Stock Exchange was established in the year:

Correct AnswerverifiedShow Answer

Holdings of stock by households, which are individuals and families, represent the largest share of investors in corporate stock in the United States; in 2007 was nearly $6.5 trillion.

Correct AnswerverifiedShow Answer

The frequent research finding that daily returns on stock tend to be lowest on Mondays is called the:

Correct AnswerverifiedShow Answer

Stocks acquired the last month of the year and sold the following month frequently post excess returns. This is known as the:

Correct AnswerverifiedShow Answer

Please explain the possible link between economic conditions and the performance of the stock market. Why do stock price movements tend to lead changes in general economic conditions?

Correct AnswerverifiedRecent research suggests that wealth (in...View AnswerShow Answer

A share of corporate stock is a priority claim against the assets and earnings of a business firm.

Correct AnswerverifiedShow Answer

Program trading involves continuous trading as relative prices between two financial instruments change.

Correct AnswerverifiedShow Answer

What are the essential differences between the following segments of the market for corporate stock?

Correct AnswerverifiedTrading on the organized exchanges is go...View AnswerShow Answer

Preferred stock issued by ABC Corporation has a par value of $30 per share with a 7 percent dividend rate. How much in annual dividends is each preferred shareholder entitled to receive on each share owned, provided the company declares a dividend?

Correct AnswerverifiedShow Answer

Investment firms, organized as private ___________ have grown as an important investment vehicle for wealthy individuals and institutional stock investors and have contributed significantly to the success of the private equity market.

Correct AnswerverifiedShow Answer

The efficient markets hypothesis:

Correct AnswerverifiedShow Answer

Which particular market's growth has outstripped nearly all other corporate funding markets in recent years?

Correct AnswerverifiedShow Answer

The second largest economy in the world belongs to:

Correct AnswerverifiedB

ADRs are not sensitive to currency risk.

Correct AnswerverifiedShow Answer

An option that expires without being exercised is worthless.

Correct AnswerverifiedShow Answer

NASDAQ has created its own automated electronic trading platform, called Super Montage.

Correct AnswerverifiedShow Answer

Please describe the different roles played by call and put options in the stock market.

Correct AnswerverifiedRapid growth has occurred in the closely...View AnswerShow Answer

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Recent research suggests that wealth (in...
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Trading on the organized exchanges is go...
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Rapid growth has occurred in the closely...
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