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Question 1 of 10
1. Question
Why were UTMA and UGMA accounts established?
I. For gifting any type of securities into the account as well as cash without limitation.
II. The account may also use it to provide for beneficiary needs such as education and general support.
III.For meeting expenses incurred with everyday raising of the child.
IV. For the benefit of a minor child.Correct
Established by an adult for the benefit of a minor party. Any type of securities may be gifted into the account as well as cash without limitation.The account is not usually used to provide for expenses incurred with everyday raising of the child.
Incorrect
Established by an adult for the benefit of a minor party. Any type of securities may be gifted into the account as well as cash without limitation.The account is not usually used to provide for expenses incurred with everyday raising of the child.
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Question 2 of 10
2. Question
What things need to be kept in mind while opening an UTMA account?
I. Cash, interest, and dividends earned in the account must be reinvested within a reasonable time period
II. High Risk investment are appropriate.
III. Managed as cash account.
IV. Minor age needs to be considered when making an investment choice.Correct
Cash, interest, and dividends earned in the account must be reinvested within a reasonable time period. The minor’s age must be taken into account regarding investment choices. High-risk investments such as naked options (conservative options contracts such as covered calls are usually allowed) and shorting strategies are never appropriate for a UTMA account.
Incorrect
Cash, interest, and dividends earned in the account must be reinvested within a reasonable time period. The minor’s age must be taken into account regarding investment choices. High-risk investments such as naked options (conservative options contracts such as covered calls are usually allowed) and shorting strategies are never appropriate for a UTMA account.
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Question 3 of 10
3. Question
Which of the following statements holds true for Health Savings account?
I. These accounts allow tax-deductible contributions.
II. Any investment in the account matures tax-free.
III.There are taxes on distributions even if they are used for qualified medical expenses.
IV. No taxes on distribution as long as it is used for qualified medical expensesCorrect
These accounts allow tax-deductible contributions which are then used to pay for qualified medical expenses not covered by the health plans. Moreover, any investment in the account grows tax-free, and there are no taxes on distributions, so long as they are used for qualified medical expenses.
Incorrect
These accounts allow tax-deductible contributions which are then used to pay for qualified medical expenses not covered by the health plans. Moreover, any investment in the account grows tax-free, and there are no taxes on distributions, so long as they are used for qualified medical expenses.
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Question 4 of 10
4. Question
Which of the following statements is/are true regarding bids and offer?
I. Offer price is very high than the bid price.
II. Offer price is lower than the bid price.
III. Offer price is same as the bid price.
IV. Offer price is slightly higher than the bid price.Correct
Usually the offer price is slightly higher than the bid price.
Incorrect
Usually the offer price is slightly higher than the bid price.
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Question 5 of 10
5. Question
The difference in the bid price and offer price is called?
I. Spreads
II. Quotes
III.Securities
IV. MarketCorrect
The bid price of a security is the highest price at which a dealer is willing to buy a security from a seller. The offer price is the lowest price at which an investor may buy a security from a dealer. The difference in the two prices is called the spread.
Incorrect
The bid price of a security is the highest price at which a dealer is willing to buy a security from a seller. The offer price is the lowest price at which an investor may buy a security from a dealer. The difference in the two prices is called the spread.
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Question 6 of 10
6. Question
Which of the following statement is true in regards of market order?
I. If a price hits or trades through the stop amount it changes to a limit order.
II. Its a triggering order.
III. The trade is immediately executed without regard to the price of the security.
IV. A trade won’t be executed if the limit is exceeded.Correct
Market orders are placed when the investor wants to buy a security at the next available price. The trade is immediately executed without regard to the price
Incorrect
Market orders are placed when the investor wants to buy a security at the next available price. The trade is immediately executed without regard to the price
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Question 7 of 10
7. Question
Which of the following statements is/are true?
I. Investors usually choose cash accounts to hold securities for a traditional long-term investment strategy.
II. Short selling is a strategy whereby the investor may speculate on the upward movement of the price of a security.
III. In a margin account, an investor may use the securities they currently hold as collateral for a loan.
IV. A cash account is a high risk account.Correct
Investors usually choose cash accounts to hold securities for a traditional long-term investment strategy, in which they buy and hold securities and hope for long- term gains.In a margin account, an investor may use the securities they currently hold as collateral for a loan from which they may buy more securities, or withdraw cash.
Incorrect
Investors usually choose cash accounts to hold securities for a traditional long-term investment strategy, in which they buy and hold securities and hope for long- term gains.In a margin account, an investor may use the securities they currently hold as collateral for a loan from which they may buy more securities, or withdraw cash.
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Question 8 of 10
8. Question
Under which condition a broker dealer act as a principal?
I. When a client wants to sell of his/her security a broker provides the client with a buyer.
II. When a client wants to buy a security a broker choose to sell the security from its own reserves of securities.
III.When a broker invests a security on behalf of the client.
IV. When a broker require a margin call from the client when they they don’t have sufficient capital within the account to maintain the broker- dealer’s minimum capital requirement.Correct
If a client wishes to buy a security, the broker-dealer may choose to sell the security to the client from its own reserves of securities. In this case, the broker-dealer is acting on its own behalf, for profit. In this role, the broker-dealer is a principal.
Incorrect
If a client wishes to buy a security, the broker-dealer may choose to sell the security to the client from its own reserves of securities. In this case, the broker-dealer is acting on its own behalf, for profit. In this role, the broker-dealer is a principal.
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Question 9 of 10
9. Question
Which of the following statements hold true for high frequency trading?
I. Uses technology to process high quantities of orders and transactions at extremely fast speeds.
II. Utilizes algorithms to compile and apply data from several different markets and to assess market conditions.
III.Improve market liquidity.
IV. No impact on market liquidity.Correct
Uses technology, computers in particular, to process high quantities of orders and transactions at extremely fast speeds. Such trading utilizes algorithms to compile and apply data from several different markets and to assess market conditions. Although HFT systems have been acknowledged to improve market liquidit.
Incorrect
Uses technology, computers in particular, to process high quantities of orders and transactions at extremely fast speeds. Such trading utilizes algorithms to compile and apply data from several different markets and to assess market conditions. Although HFT systems have been acknowledged to improve market liquidit.
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Question 10 of 10
10. Question
What does the dark pool of liquidity do?
I. Worsen the market liquidity.
II. Improves market liquidity.
III For some orders, the volume of securities traded can be hidden from public knowledge.
IV. Removes the human element of practical judgment from stock trading.Correct
For some orders, the volume of securities traded can be hidden from public knowledge. This is usually done by institutional investors, to keep their trades secret from other (competing) institutional investors. These types of trades are said to involve dark pools of liquidity, since the actual trades are concealed or cloudy.
Incorrect
For some orders, the volume of securities traded can be hidden from public knowledge. This is usually done by institutional investors, to keep their trades secret from other (competing) institutional investors. These types of trades are said to involve dark pools of liquidity, since the actual trades are concealed or cloudy.