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1. The primary difference between dealers and brokers is that:
A) dealers are market makers, who buy and sell out of their own inventory of securities, while brokers are
matchmakers, who match buyers with sellers.
B) dealers operate only in the bond market, while brokers conduct trades in stocks, bonds and options.
C) dealers operate exclusively in the primary market whereas brokers operate only in the secondary
market.
D) Both Choices B and C describe differences between dealers and brokers.
2. Which of the following would be required to register as an investment company?
I. a non-diversified management company
II. a unit investment trust
III. a face-amount certificate company
A) II only
B) I and II only
C) II and III only
D) I, II, and III
3. NASDAQ is:
A) a computerized system that links together the U.S. regional exchanges.
B) a computerized quotation system used in the over-the-counter market.
C) an acronym for Norway's major stock exchange.
D) the government organization that insures accounts at U.S. brokerage firms.
4. Mr. A. D. Venturer owns 10,000 shares of Risky Corporation, which is currently selling for $8 a share. He
is leaving shortly for an extended trip to Antarctica and will be out of communication for that time. He
doesn't want to liquidate his investment in Risky before he goes, but he doesn't want to return to find that
his $80,000 investment is worth little to nothing. Which of the following options would make sense for Mr.
Venturer?
A) place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share
B) enter a good 'til cancelled (GTC) market order to sell Risky
C) place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share
D) buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his
return
5. Private placements may be sold to whom?
A) to as many as 35 non-accredited investors.
B) only to accredited investors.
C) to only 35 investors.
D) only to institutional investors.
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: C | Question # 5 Answer: A |
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