Chapter 4/5

Question 1

Bid and Ask prices

Answer 1

Prices quoted by market value at which they are willing to buy and sell securities

Question 2

Spread

Answer 2

Difference between the bid and ask price

Question 3

Market Order

Answer 3

Order to buy or sell a security at the best current price

Question 4

Margin

Answer 4

Investors equity in a security position

Question 5

Long Position

Answer 5

Purchase of securities in anticipation of a price increase

Question 6

Short Position

Answer 6

Sale of borrowed securities in anticipation of price decrease

Question 7

Monetary Policy

Answer 7

Management of the money supply for the purpose of maintaining stable prices

Question 8

Board of Governors

Answer 8

Controlling body of the FED whose members are appointed by the President

Question 9

Federal Open Market Committee

Answer 9

Part of the Federal Reserve that establishes and executes monetary policy

Question 10

What are the 3 tools of Monetary Policy

Answer 10

• Reserve Requirement
• Discount Rate
• Open Market Operations

Question 11

Open Market Operations

Answer 11

Most important tool; Buying and selling of US treasury securities by the FED

Question 12

What impacts the yield curve?

Answer 12

• The FED

- Investors

Question 13

Ticker symbol for Delta

Answer 13

DAL

Question 14

What is the formula for the percentage return or Holding period return?

Answer 14

new-old/old x 100

Question 15

How many analysts cover Delta

Answer 15

19

Question 16

Key takeaways from the State of the Union

Answer 16

• The Wall will be see through steel structure
• Trump will meet with Kim Jong Un for 2nd time
• Lowering the cost of prescription drugs

Question 17

True/False: When an individual buys a stock from a secondary market, the firm receives the sales proceeds

Answer 17

False

Question 18

T/F: An investment banker specializes in corporate loans

Answer 18

False

Question 19

T/F: In an underwriting, the firm selling the securities forms a syndicate

Answer 19

False

Question 20

T/F: A major function of the NYSE is to raise money for firms

Answer 20

False

Question 21

T/F: The price of a new issue is established through the registration process with the SEC

Answer 21

False

Question 22

Which of the following is not part of the underwriting process

• the prospectus
• the FED
• the SEC
• the syndicate

Answer 22

The FED

Question 23

What does the Securities Investor Protection Corporation protect individuals from

Answer 23

Brokerage firm failures

Question 24

T/F: the larger the margin requirement, the greater the proportion of a stock purchase the investor may borrow

Answer 24

False

Question 25

T/F: Securities markets are often inefficient; so investors can anticipate beating the market over a period of time

Answer 25

False