UNIT 22 series 65 trading securities || with Error-free
Solutions.
Which of the following statements is TRUE about sales of new issues under the Securities
Exchange Act of 1934?
A)
Credit may be used in purchasing new issues.
B)
The SEC determines what issues may be purchased on margin.
C)
The use of credit to purchase new issues is prohibited for the first 30 days.
D)
Installment payments are allowed on purchases. correct answers C
Which of the following orders may be used to acquire a security at a specific price or better?
A buy stop limit
A buy limit
A sell stop
A sell limit
A)
I and III
B)
I and II
C)
II and IV
D)
II and III correct answers B
nder the Securities Exchange Act of 1934, which body regulates the extension of credit for
nonexempt securities?
A)
The Comptroller of Currency
B)
The Federal Reserve Board
C)
The SEC
D)
The New York Stock Exchange correct answers B
An investor purchased 100 shares of GRA stock at $100 per share in a margin account. Two
years later, the GRA was sold for $120 per share. If the investor's account was charged $700 in
margin interest, it would be proper to state that this is an example of
A)
positive margin.
B)
, a long-term capital gain of $1,300.
C)
negative margin.
D)
a speculative investment. correct answers A
Watson, a customer of Gibraltar Securities, wishes to place an order to buy 50 shares of a thinly
traded stock priced at $8 per share. Because the stock is so thinly traded, Gibraltar Securities
feels it needs to charge Watson a commission of $100 to justify the time it must spend locating a
seller of the stock. Which of the following statements best describes this action?
A)
It would not be considered a prohibited practice for Gibraltar to charge Watson $100 to complete
the transaction, provided Gibraltar informed Watson of the $100 commission prior to the
transaction and Watson chose to proceed with the trade.
B)
Gibraltar Securities is not required to disclose the amount of commission in advance to Watson.
However, it must receive clearance from the Administrator before charging commission in
amounts exceeding 10% of the value of the securities traded under the transaction.
C)
A commission of $100 on a transaction correct answers A
When an agent submits an order ticket to purchase securities for a client, all of the following
would appear EXCEPT
A)
the current market price of the security
B)
the agent's name
C)
the details of the order
D)
the broker-dealer's name correct answers A
You have a client with a margin account at your broker-dealer. If the market price of the
securities in the client's account should fall to a point where your firm has to ask the client for
additional funds, it is
A)
a margin call
B)
a maintenance margin call
C)
a market call
D)
a Regulation T call correct answers B
Solutions.
Which of the following statements is TRUE about sales of new issues under the Securities
Exchange Act of 1934?
A)
Credit may be used in purchasing new issues.
B)
The SEC determines what issues may be purchased on margin.
C)
The use of credit to purchase new issues is prohibited for the first 30 days.
D)
Installment payments are allowed on purchases. correct answers C
Which of the following orders may be used to acquire a security at a specific price or better?
A buy stop limit
A buy limit
A sell stop
A sell limit
A)
I and III
B)
I and II
C)
II and IV
D)
II and III correct answers B
nder the Securities Exchange Act of 1934, which body regulates the extension of credit for
nonexempt securities?
A)
The Comptroller of Currency
B)
The Federal Reserve Board
C)
The SEC
D)
The New York Stock Exchange correct answers B
An investor purchased 100 shares of GRA stock at $100 per share in a margin account. Two
years later, the GRA was sold for $120 per share. If the investor's account was charged $700 in
margin interest, it would be proper to state that this is an example of
A)
positive margin.
B)
, a long-term capital gain of $1,300.
C)
negative margin.
D)
a speculative investment. correct answers A
Watson, a customer of Gibraltar Securities, wishes to place an order to buy 50 shares of a thinly
traded stock priced at $8 per share. Because the stock is so thinly traded, Gibraltar Securities
feels it needs to charge Watson a commission of $100 to justify the time it must spend locating a
seller of the stock. Which of the following statements best describes this action?
A)
It would not be considered a prohibited practice for Gibraltar to charge Watson $100 to complete
the transaction, provided Gibraltar informed Watson of the $100 commission prior to the
transaction and Watson chose to proceed with the trade.
B)
Gibraltar Securities is not required to disclose the amount of commission in advance to Watson.
However, it must receive clearance from the Administrator before charging commission in
amounts exceeding 10% of the value of the securities traded under the transaction.
C)
A commission of $100 on a transaction correct answers A
When an agent submits an order ticket to purchase securities for a client, all of the following
would appear EXCEPT
A)
the current market price of the security
B)
the agent's name
C)
the details of the order
D)
the broker-dealer's name correct answers A
You have a client with a margin account at your broker-dealer. If the market price of the
securities in the client's account should fall to a point where your firm has to ask the client for
additional funds, it is
A)
a margin call
B)
a maintenance margin call
C)
a market call
D)
a Regulation T call correct answers B
