Question 1

A(n)________ is an order to a stock broker to buy or sell a security at the prevailing price at the time the order is placed.

Accepted Answer

A market order instructs a broker to execute a transaction immediately at the best available price. This means that the price received may not be the exact price at the time the order was placed since market prices can fluctuate rapidly. A stop order is an order to buy or sell a security once it reaches a certain price, while a limit order is an order to buy or sell a security at a specific price or better. An odd lot order is a purchase or sale of a number of shares that is less than the normal trading unit of 100 shares, and a round lot order is a purchase or sale of a number of shares that is a multiple of the normal trading unit of 100 shares.

Question 2

Mutual funds that invest in new companies or even troubled companies and other high-risk securities are emphasizing

Accepted Answer

Mutual funds that invest in new companies or troubled companies and other high-risk securities tend to prioritize aggressive growth over stability, high current income and safety.

Question 3

The ________ is the percentage of the total sales price that a buyer must put up to place an order for a stock or a futures contract.

Accepted Answer

The term used in the given statement is "margin" which refers to the percentage of the total sales price that a buyer must put up to place an order for a stock or a futures contract. Therefore, the correct answer is E) margin.

Question 4

Suppose you purchased a $1000 par-value bond in 2009 for $650.Its stated interest rate is 6 percent and it matured in 2019.What was your yield?

Accepted Answer

The answer of Suppose you purchased a $1000 par-value bond...

Question 5

A stock quote of 30.5 means

Accepted Answer

A stock quote of 30.5 typically means that the stock is selling at $30.50. It is important to note that the decimal in the quote represents a fraction of a dollar, not a fraction of a cent. Therefore, a quote of 30.5 is not the same as a quote of 0.305.

Question 6

Assume you bought a $1000 par value bond in 2011 for 85 1/4 with an interest rate of 4.7 percent.If you held the bond until maturity in 2021,what would be the total amount that you would earn on this bond?

Accepted Answer

The bond was purchased for $852.50 (85.25% of $1000). Over 10 years, it pays 4.7% annual interest on the $1000 par value, totaling $470 in interest. The total earnings are the interest ($470) plus the difference between the par value and purchase price ($1000 - $852.50 = $147.50), totaling $617.50.

Question 7

A(n)________ is an order to a stock broker to sell a security if its price falls to or below a specified amount.

Accepted Answer

A stop order is an order placed with a broker to sell a security when it reaches a certain price. It is typically used as a form of protection against potential losses. Once the security reaches the specified price, the stop order becomes a market order and is executed at the best available price.

Question 8

Suppose that in June 2018 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2018.If the market price of the stock at some point before October 2018 is $23,and you exercise your option,what will happen?

Accepted Answer

The profit is calculated as (Market Price - Strike Price) * Number of Shares = ($23 - $20) * 100 = $300.00.

Question 9

Klaus just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

Accepted Answer

The answer of Klaus just called his broker to place...

Question 10

Klaus just called his broker to place an order to buy 100 shares of IBM at a price of $70 or less.Which of the terms below describe his order?

Accepted Answer

Klaus's order is for 100 shares, which is a round lot, and he specified a maximum price of $70, making it a limit order.

Question 11

Marco is a bullish investor,but the stock market is currently bearish.What is Marco most likely to do?

Accepted Answer

Selling certain winning stocks to realize a profit and putting the cash to work buying stocks when prices are low is a prudent approach during a bearish market. This strategy involves taking advantage of the lower prices to buy good stocks and win in the long term.

Answer: D
 Selling losing stocks to avoid further losses and holding onto winners is a wise decision during a bear market. This approach protects investments from further declines and maximizes gains.

Question 12

What is a mutual fund?

Accepted Answer

A mutual fund is a type of investment where investors pool their money to purchase a variety of stocks, bonds, and other securities. This is managed by a professional fund manager who then invests the money on behalf of the investors. The aim is to diversify the investment and spread the risk to maximize returns.

Question 13

In order for a security to be listed on the Toronto Stock Exchange (TSX),the issuing corporation must

Accepted Answer

To be listed on the TSX, a corporation must pay a listing fee, among other requirements, but it does not need to meet the other conditions mentioned in the options.

Question 14

If a stock option is "underwater" what does that mean?

Accepted Answer

The answer of If a stock option is "underwater" what...

Question 15

Which of the following is correct with respect to bonds?

Accepted Answer

The answer of Which of the following is correct with...

Question 16

A(n)________ is an order to a stock broker to buy a security only if its price is equal to or less than a specified amount.

Accepted Answer

A limit order is an order to a stock broker to buy or sell a security only if its price is equal to or better than a specified amount. This means that in the case of a buy limit order, the broker will only execute the order if the price of the security is at or below the specified limit price. This protects the investor from paying more than they want for the security, but it also means that there is no guarantee that the order will be executed at all, since the price may never reach the limit order price.

Question 17

A ________ is the right to buy a particular stock at a certain price until a particular date,while a ________ gives the owner the right to sell a particular stock at a specified price until a particular date.

Accepted Answer

A call option gives the holder the right to buy a stock at a specific price, known as the strike price, until a certain date or expiration date. On the other hand, a put option gives the holder the right to sell a stock at a specific price until a certain date or expiration date. Therefore, the correct answer is C, call option for the right to buy and put option for the right to sell. A, B, D, and E are incorrect options.

Question 18

When an investor gets involved in a short sale,what is that investor hoping for in the movement of the price of the stock?

Accepted Answer

When an investor gets involved in a short sale, they borrow shares and sell them, hoping to buy them back at a lower price and return them to the lender. Therefore, they are hoping for a sharp drop in the price of the stock so that they can profit from the difference between the selling price and the buying price.

Question 19

Bonds that receive poor ratings are likely to

Accepted Answer

Bonds that receive poor ratings are likely to pay higher interest rates in order to attract investors.

Question 20

During a bear market,

Accepted Answer

During a bear market, stock prices as a whole are falling. This is typically accompanied by negative economic conditions, high unemployment rates, and widespread investor pessimism.

Quiz 15: Financial Decisions and Risk Management

A(n) ________ is an order to a stock broker to buy or sell a security at the prevailing price at the time the order is placed.