Review Test Submission: Quiz 6
Instructions This quiz consist of 20 multiple choice questions. The first 10 questions cover the material in Chapter 11. The second 10 questions cover the material in Chapter 12. Be sure you are in the correct Chapter when you take the quiz.
• Question 1
An order that remains in effect until the end of the day is called a:
• Question 2
The price for which the owner is willing to sell the security is called the:
• Question 3
If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?
• Question 4
An agreement whereby an investment banker tries to sell securities of an issuing corporation, but assumes no risk if the flotation is unsuccessful is called a:
• Question 5
Commercial banks were for many years prohibited from full-fledged investment banking by the:
• Question 6
Sales of securities that the seller does not own is called a:
• Question 7
___________________ is the maximum purchase price or minimum selling price specified by an investor.
• Question 8
A market whereby large institutional investors arrange purchases and sales of securities among themselves without the benefit of a broker or dealer is referred to as the:
• Question 9
A contract that gives the owner the option or choice of selling a particular good at a specified price on or before a specified date is called a (n):
• Question 10
A contract that obligates the owner to purchase an underlying asset at a specified price on a specified day is a (n) ____________ contract.
• Question 11
Which one of the following is not considered to be a generally recognized type of market efficiency?
• Question 12
Which of the following is not required to compute the standard deviation of a two-stock portfolio?
• Question 13
The market portfolio would have a beta of:
• Question 14
Variations in a firm’s tax rate and tax-related charges over time due to changing tax laws and regulations is called:
• Question 15
In comparing the deviations of returns, which one of the following assets has historically had the largest standard deviation of annual returns?
• Question 16
The risk cause by variations in income before taxes over time because fixed interest expenses do not change when operating income rises or falls is called:
• Question 17
The correlation between the return on the risk-free asset and the return on a risky asset is always:
• Question 18
If the _____________ of a stock is known, an investor can use the security market line to determine the expected return on that stock.
• Question 19
Which one of the following assets has historically had the highest average annual return?
• Question 20
The risk cause by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:
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