QUESTION 1

1. A "pump and dump" scheme involves buying shares of stock, hyping that stock via the
Internet and then quickly selling the shares at a profit.

True

False

3 points
QUESTION 2
1. Current price information is found in which of the following?

II and III only

I, II and III only
II, III and IV only
I, II, III and IV

3 points
QUESTION 3
1. The financial markets are becoming more globally integrated.

True

False

3 points
QUESTION 4
1. American Depositary Receipts represent
receipts for the stocks of foreign companies held by banks in the companies' home
country.
receipts from foreign broker-dealers establishing ownership of foreign stocks.
receipts for shares of foreign companies held by U.S. broker-dealers.
receipts for dollar deposits in foreign banks.

3 points
QUESTION 5
1. Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The
initial margin is 70%. The maintenance margin is 30%. How low can the price of each share
of DEF be before Justin will have to add equity to his account?
$6.75
$4.73
$9.64
$5.25
 3 points
QUESTION 6
1. Jessica purchased 200 shares of stock at $38 using her 70% margin account. Her
maintenance margin is 40%. Jessica has no other securities in her account. At what price
will she receive a margin call?
$26.60
$7.60
$19.00
$11.40

3 points
QUESTION 7
1. When a person sells a common stock short, she or he is betting that the price of the stock
will fall.

True

False

3 points
QUESTION 8
1. Insider trading is the use of nonpublic information about a security to gain a profit.

True

False

3 points
QUESTION 9
1. Crossing markets are those that
fill only the orders which have opposing orders at identical prices.
trade foreign securities.
conduct business at locations in varying time zones.
conduct transactions between institutional and individual traders.

3 points
QUESTION 10
1. Which one of the following can be considered a pitfall for investors new to on-line trading?
On-line investors pay lower costs per trade than investors using a broker.
On-line trading is available to the average investor.
On-line investors tend to trade too frequently.
On-line trading is fast and efficient.