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Question 1 of 10
1. Question
Which of the following is true about stop orders?
Correct
Stop orders, similar to limit orders, help the investor with timing. The stop level is essentially a trigger point in the securities price. Unlike a limit, however, once desired level is reached, the very next price will be accepted regardless of the next price.
Incorrect
Stop orders, similar to limit orders, help the investor with timing. The stop level is essentially a trigger point in the securities price. Unlike a limit, however, once desired level is reached, the very next price will be accepted regardless of the next price.
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Question 2 of 10
2. Question
The following are true about short sales except:
Correct
Short sales are speculative investments whereby an investor attempts to profit from the decline in value of a given security.
Incorrect
Short sales are speculative investments whereby an investor attempts to profit from the decline in value of a given security.
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Question 3 of 10
3. Question
Securities traded in auction markets will naturally be traded according to the:
Correct
Securities traded in auction markets will naturally be traded according to the highest bid and lowest ask price.
Incorrect
Securities traded in auction markets will naturally be traded according to the highest bid and lowest ask price.
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Question 4 of 10
4. Question
On what instance will the spread be a bad measurement of a markup?
Correct
The spread is usually an effective means by which the markup can be calculated; however, if the broker has held the security that is offered for sale for an extended length of time, it may not be a good measurement of the markup.
Incorrect
The spread is usually an effective means by which the markup can be calculated; however, if the broker has held the security that is offered for sale for an extended length of time, it may not be a good measurement of the markup.
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Question 5 of 10
5. Question
These are true about NASDAQ except:
I.
II.
III.
IV.Correct
The best known example of an OTC market is the NASDAQ. It is an electronic trading exchange that is not considered to be a formal exchange. Many companies listed on major exchanges pay to be listed on the NASDAQ for ease of trading. These companies’ stocks are not considered traditional OTC stock, but are traded OTC.
Incorrect
The best known example of an OTC market is the NASDAQ. It is an electronic trading exchange that is not considered to be a formal exchange. Many companies listed on major exchanges pay to be listed on the NASDAQ for ease of trading. These companies’ stocks are not considered traditional OTC stock, but are traded OTC.
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Question 6 of 10
6. Question
The total Return of an investment includes the following except:
Correct
The total return of an investment includes dividends, interest, and capital gain, in addition to capital appreciation, evaluated annually.
Incorrect
The total return of an investment includes dividends, interest, and capital gain, in addition to capital appreciation, evaluated annually.
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Question 7 of 10
7. Question
Which of the following best explains unreasonable markups?
Correct
Unreasonable markups are unethically high markups. Markups are determined to be unreasonable if they are unusually higher than most other markups on other transactions that are significantly similar.
Incorrect
Unreasonable markups are unethically high markups. Markups are determined to be unreasonable if they are unusually higher than most other markups on other transactions that are significantly similar.
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Question 8 of 10
8. Question
Which of the following best describes unreasonable commissions?
Correct
Unreasonable commissions usually describe a situation whereby an unreasonable amount of profit is made but may also occur when a broker sells a security much higher than the actual value of the security, even if he or she is not making a large profit because of it. This may happen because the broker paid a higher price for the security and the security has been underperforming.
Incorrect
Unreasonable commissions usually describe a situation whereby an unreasonable amount of profit is made but may also occur when a broker sells a security much higher than the actual value of the security, even if he or she is not making a large profit because of it. This may happen because the broker paid a higher price for the security and the security has been underperforming.
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Question 9 of 10
9. Question
Which of the following best describes margin accounts?
Correct
Margin accounts are accounts whereby investors have access to loanable funds, or leverage. The loanable funds are used to magnify gains but have the potential to magnify losses. The investor must also pay a rate of interest on the loaned funds in a margin account.
Incorrect
Margin accounts are accounts whereby investors have access to loanable funds, or leverage. The loanable funds are used to magnify gains but have the potential to magnify losses. The investor must also pay a rate of interest on the loaned funds in a margin account.
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Question 10 of 10
10. Question
Which of the following is the correct order of liquidation?
Correct
The order of liquidation, or the order in which the security holders are reimbursed, is as follows:
1. secured debtors (secured bonds)
2. unsecured debtors (unsecured bonds)
3. preferred stockholders
4. common stockholdersIncorrect
The order of liquidation, or the order in which the security holders are reimbursed, is as follows:
1. secured debtors (secured bonds)
2. unsecured debtors (unsecured bonds)
3. preferred stockholders
4. common stockholders