Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy free practice questions
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following statement(s) is(are) true about negotiated market?
I. A negotiated market need not have a centralized physical location as most of the buying and selling is done through dealers.
II. Prices in a negotiated market are largely set by dealers, who are primarily responsible for buying and selling securities in these markets.
III. Dealers in negotiated markets differ from brokers, market makers, or specialists in auction markets.
IV. The largest and most well-known over-the-counter or negotiated market in the United States is the New York Stock Exchange (NYSE).Correct
One primary difference between an auction market and an over-the-counter or negotiated market is that an auction market typically has a physical location where buyers and sellers must converge to set prices. A negotiated market, however, need not have a centralized physical location as most of the buying and selling is done through dealers.
As mentioned above, prices in a negotiated market are largely set by dealers, who are primarily responsible for buying and selling securities in these markets. This is in stark contrast to an auction market, in which the buying and selling is performed by the traders or agents working on their behalf. Dealers in negotiated markets differ from brokers, market makers, or specialists in auction markets because instead of working to buy and sell on behalf of their clients (the investors) the dealers are buying and selling at their own risk for their own accounts.
The largest and most well-known over-the-counter or negotiated market in the United States is the NASD Automated Quotations system (NASDAQ).Incorrect
One primary difference between an auction market and an over-the-counter or negotiated market is that an auction market typically has a physical location where buyers and sellers must converge to set prices. A negotiated market, however, need not have a centralized physical location as most of the buying and selling is done through dealers.
As mentioned above, prices in a negotiated market are largely set by dealers, who are primarily responsible for buying and selling securities in these markets. This is in stark contrast to an auction market, in which the buying and selling is performed by the traders or agents working on their behalf. Dealers in negotiated markets differ from brokers, market makers, or specialists in auction markets because instead of working to buy and sell on behalf of their clients (the investors) the dealers are buying and selling at their own risk for their own accounts.
The largest and most well-known over-the-counter or negotiated market in the United States is the NASD Automated Quotations system (NASDAQ). -
Question 2 of 10
2. Question
Which of the following statement(s) is(are) true about auction market?
I. The primary feature of an auction market is that prices are set through a process whereby sellers enter offers, the amount and price at which they are willing to sell, and buyers enter bids, the amount and price at which they are willing to buy.
II. The goals of auction market are to obtain better price discovery, improve liquidity, and dampen volatility.
III. The largest and most well known auction market within the United States is the New York Stock Exchange (NYSE).
IV. An auction market typically has a physical location where buyers and sellers must converge to set prices.Correct
The primary feature of an auction market is that prices are set through a process whereby sellers enter offers, the amount and price at which they are willing to sell, and buyers enter bids, the amount and price at which they are willing to buy. Trades are executed when these bids and offers are matched up against each other. The Specialist or Market Maker is responsible for making a market in a given security. The Specialist/Market Maker’s primary role is to match bids and offers to obtain the optimal pricing for both buyers and sellers. The goals of this process are to obtain better price discovery, improve liquidity, and dampen volatility. Bids and offers are prioritized first by price.
The largest and most well known auction market within the United States is the New York Stock Exchange (NYSE).
An auction market typically has a physical location where buyers and sellers must converge to set prices.Incorrect
The primary feature of an auction market is that prices are set through a process whereby sellers enter offers, the amount and price at which they are willing to sell, and buyers enter bids, the amount and price at which they are willing to buy. Trades are executed when these bids and offers are matched up against each other. The Specialist or Market Maker is responsible for making a market in a given security. The Specialist/Market Maker’s primary role is to match bids and offers to obtain the optimal pricing for both buyers and sellers. The goals of this process are to obtain better price discovery, improve liquidity, and dampen volatility. Bids and offers are prioritized first by price.
The largest and most well known auction market within the United States is the New York Stock Exchange (NYSE).
An auction market typically has a physical location where buyers and sellers must converge to set prices. -
Question 3 of 10
3. Question
Which of the following statement(s) is (are) not true regarding the difference between the negotiated market and auction market?
I. In a auction market, dealers impact pricing by buying and selling securities from their own accounts, as opposed to market makers and brokers who work to match buyers and sellers at mutually agreeable prices within an negotiated market.
II. Negotiated markets typically have a single physical location where traders come to match orders from buyers and sellers, where in an auction market this centralized physical location is not necessary and the buying and selling can be done over an electronic dealer network.
III. In a negotiated market, dealers impact pricing by buying and selling securities from their own accounts, as opposed to market makers and brokers who work to match buyers and sellers at mutually agreeable prices within an auction market.
IV. Auction markets typically have a single physical location where traders come to match orders from buyers and sellers, where in a negotiated market this centralized physical location is not necessary and the buying and selling can be done over an electronic dealer network.Correct
In a negotiated market, dealers impact pricing by buying and selling securities from their own accounts, as opposed to market makers and brokers who work to match buyers and sellers at mutually agreeable prices within an auction market. Additionally, auction markets typically have a single physical location where traders come to match orders from buyers and sellers, where in a negotiated market this centralized physical location is not necessary and the buying and selling can be done over an electronic dealer network.
Incorrect
In a negotiated market, dealers impact pricing by buying and selling securities from their own accounts, as opposed to market makers and brokers who work to match buyers and sellers at mutually agreeable prices within an auction market. Additionally, auction markets typically have a single physical location where traders come to match orders from buyers and sellers, where in a negotiated market this centralized physical location is not necessary and the buying and selling can be done over an electronic dealer network.
-
Question 4 of 10
4. Question
For which of the area the Insider Trading and Securities Fraud Enforcement Act of 1988 provided additional guidance and enforcement?
I. Increasing potential civil penalties for violations
II. Increasing potential criminal penalties and jail time for violations
III. Clarification around those traders who were impacted by violations and classified as contemporaneous traders
IV. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing informationCorrect
The Act provided additional guidance and enforcement in a number of areas, including all of the following:
1. Broadening the scope of the legislation to include other firms or controlling persons who fail to take appropriate measures to prevent insider-trading violations
2. Increasing potential civil penalties for violations
3. Increasing potential criminal penalties and jail time for violations
4. Clarification around those traders who were impacted by violations and classified as contemporaneous traders
5. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing information
6. Enacting a five-year statute of limitations after the date of the last transactionIncorrect
The Act provided additional guidance and enforcement in a number of areas, including all of the following:
1. Broadening the scope of the legislation to include other firms or controlling persons who fail to take appropriate measures to prevent insider-trading violations
2. Increasing potential civil penalties for violations
3. Increasing potential criminal penalties and jail time for violations
4. Clarification around those traders who were impacted by violations and classified as contemporaneous traders
5. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing information
6. Enacting a five-year statute of limitations after the date of the last transaction -
Question 5 of 10
5. Question
The Insider Trading and Securities Fraud Enforcement Act of 1988 provides for a number of civil and criminal penalties for violations of the act and improper insider trading, including:
I. The SEC can impose damages against violators of the Act in an amount up to three times the profit gained or loss avoided as a result of the illegal transaction. These damages are limited to $100,000 for controlling persons.
II. Individuals may face fines of up to $1,000,000: the 1988 Act increased this limit from the previous limit of $100,000.
III. Non-natural persons may face fines of up to $2,500,000: the 1988 Act increased this limit from the previous limit of $500,000.
IV. Violators may face a jail sentence of up to 10 years: the 1988 Act increased this limit from the previous limit of five years.Correct
The Insider Trading and Securities Fraud Enforcement Act of 1988 provides for a number of civil and criminal penalties for violations of the act and improper insider trading, including:
1. The SEC can impose damages against violators of the Act in an amount up to three times the profit gained or loss avoided as a result of the illegal transaction. These damages are limited to $1,000,000 for controlling persons.
2. Individuals may face fines of up to $1,000,000: the 1988 Act increased this limit from the previous limit of $100,000.
3. Non-natural persons may face fines of up to $2,500,000: the 1988 Act increased this limit from the previous limit of $500,000.
4. Violators may face a jail sentence of up to 10 years: the 1988 Act increased this limit from the previous limit of five years.Incorrect
The Insider Trading and Securities Fraud Enforcement Act of 1988 provides for a number of civil and criminal penalties for violations of the act and improper insider trading, including:
1. The SEC can impose damages against violators of the Act in an amount up to three times the profit gained or loss avoided as a result of the illegal transaction. These damages are limited to $1,000,000 for controlling persons.
2. Individuals may face fines of up to $1,000,000: the 1988 Act increased this limit from the previous limit of $100,000.
3. Non-natural persons may face fines of up to $2,500,000: the 1988 Act increased this limit from the previous limit of $500,000.
4. Violators may face a jail sentence of up to 10 years: the 1988 Act increased this limit from the previous limit of five years. -
Question 6 of 10
6. Question
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of –
Correct
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of $1,000,000.
Incorrect
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of $1,000,000.
-
Question 7 of 10
7. Question
Which of the following statement(s) is (are) true about common stock?
I. A share of common stock represents fractional ownership in the issuing company.
II. One feature of common stock is a voting right to elect the Board of Directors and other matters such as executive compensation and corporate financial policy.
III. One feature of common stock is the right to dividends and earnings of the company.
IV. Common stockholders are at the lowest level of priority and will split only what is left after bondholders and preferred stockholders have collected their more senior debts.Correct
A share of common stock represents fractional ownership in the issuing company. As such, one feature of common stock is a voting right to elect the Board of Directors and other matters such as executive compensation and corporate financial policy. Another feature of common stock is the right to dividends and earnings of the company. Earnings that are reinvested into the company increase the value of the share price and dividends distributed are paid to common stockholders. Thus, common stockholders participate in the income earned by the company in one of those two methods. As a fractional owner in the company, common stockholders would receive a portion of the company’s assets in the event of liquidation. However, common stockholders are at the lowest level of priority and will split only what is left after bondholders and preferred stockholders have collected their more senior debts.
Incorrect
A share of common stock represents fractional ownership in the issuing company. As such, one feature of common stock is a voting right to elect the Board of Directors and other matters such as executive compensation and corporate financial policy. Another feature of common stock is the right to dividends and earnings of the company. Earnings that are reinvested into the company increase the value of the share price and dividends distributed are paid to common stockholders. Thus, common stockholders participate in the income earned by the company in one of those two methods. As a fractional owner in the company, common stockholders would receive a portion of the company’s assets in the event of liquidation. However, common stockholders are at the lowest level of priority and will split only what is left after bondholders and preferred stockholders have collected their more senior debts.
-
Question 8 of 10
8. Question
Which of the following statement(s) is (are) true about preferred stock?
I. Preferred shares typically have a fixed, stated dividend while dividends for common shares can vary at the discretion of the company.
II. Preferred shares have the first right to dividends and can also often have cumulative rights.
III. Preferred stockholders typically do not have any voting rights.
IV. Preferred shareholders would receive their portion of the liquidation prior to common stockholders in the event of corporate bankruptcy, giving them a greater level of principal protection.Correct
Common stock differs from preferred stock in rights to dividends because preferred shares typically have a fixed, stated dividend while dividends for common shares can vary at the discretion of the company. Also, preferred shares have the first right to dividends and can also often have cumulative rights, so that any funds allocated to dividends will first be used to pay dividends, and any missed prior dividends, to preferred shareholders. Contrary to common stockholders, preferred stockholders typically do not have any voting rights. Finally, preferred shareholders would receive their portion of the liquidation prior to common stockholders in the event of corporate bankruptcy, giving them a greater level of principal protection. However, preferred stockholders still fall behind bondholders in the liquidation structure and would still face a substantial risk of loss.
Incorrect
Common stock differs from preferred stock in rights to dividends because preferred shares typically have a fixed, stated dividend while dividends for common shares can vary at the discretion of the company. Also, preferred shares have the first right to dividends and can also often have cumulative rights, so that any funds allocated to dividends will first be used to pay dividends, and any missed prior dividends, to preferred shareholders. Contrary to common stockholders, preferred stockholders typically do not have any voting rights. Finally, preferred shareholders would receive their portion of the liquidation prior to common stockholders in the event of corporate bankruptcy, giving them a greater level of principal protection. However, preferred stockholders still fall behind bondholders in the liquidation structure and would still face a substantial risk of loss.
-
Question 9 of 10
9. Question
Which of the following statement(s) is (are) true about the dividend rate of preferred stock?
Correct
A share of preferred stock will generally pay a higher dividend rate than a share of common stock, but will not have the same possibility for upside capital appreciation through increased share price.
Incorrect
A share of preferred stock will generally pay a higher dividend rate than a share of common stock, but will not have the same possibility for upside capital appreciation through increased share price.
-
Question 10 of 10
10. Question
Which of the following statement(s) is (are) not true about American Depositary Receipt, or ADR?
I. An American Depositary Receipt, or ADR, is a certificate issued by a US financial institution that represents a given number of shares of the equity securities of a foreign company.
II. ADRs are denominated in US dollars and traded on US exchanges.
III. ADRs simplify the process of investing in foreign companies for US investors by essentially removing the currency translation and international investing requirements.
IV. ADRs represent a simplified process for reaching a larger pool of investors without having to go through the same stringent requirements that would be imposed if they were to formally list their securities on a US exchange.Correct
An American Depositary Receipt, or ADR, is a certificate issued by a US financial institution that represents a given number of shares of the equity securities of a foreign company. ADRs are denominated in US dollars and traded on US exchanges. ADRs simplify the process of investing in foreign companies for US investors by essentially removing the currency translation and international investing requirements. Thus, a US investor can still experience and participate in the performance of a foreign company without having to worry about foreign exchanges or personally handling the translation of foreign currency back into US dollars. For foreign companies, ADRs represent a simplified process for reaching a larger pool of investors without having to go through the same stringent requirements that would be imposed if they were to formally list their securities on a US exchange.
Incorrect
An American Depositary Receipt, or ADR, is a certificate issued by a US financial institution that represents a given number of shares of the equity securities of a foreign company. ADRs are denominated in US dollars and traded on US exchanges. ADRs simplify the process of investing in foreign companies for US investors by essentially removing the currency translation and international investing requirements. Thus, a US investor can still experience and participate in the performance of a foreign company without having to worry about foreign exchanges or personally handling the translation of foreign currency back into US dollars. For foreign companies, ADRs represent a simplified process for reaching a larger pool of investors without having to go through the same stringent requirements that would be imposed if they were to formally list their securities on a US exchange.