Investments and Securities Overview|
Secured Transactions Overview|
Financial Securities Overview
Set 1: Investments and Securities Overview
1. _____ risk can be reduced through diversification. They are risks that are unique to a
specific industry, business enterprise, or investment type.
o A) Systematic risk
o B) Unsystematic risk (Answer)
o C) Market risk
o D) Liquidity risk
2. An investor who sells a call:
o A) Has the option to buy the underlying security
o B) Has the option to sell the underlying security
o C) Has the obligation to provide the underlying security at a predetermined price
(Answer)
o D) Has the obligation to buy the underlying security at the strike price
3. What does the term 'option premium' refer to in the context of options trading?
o A) The total value of an option contract
o B) The cost of an option contract per share (Answer)
o C) The profit made from exercising an option
o D) The fee charged by brokers for trading options
4. The ______________ is the price at which the stock will be bought or sold if the contract
is exercised, also expressed in dollars per share.
o A) Strike price (Answer)
o B) Premium
o C) Market price
o D) Conversion price
5. A customer is long 100 shares of ABC stock purchased at $30. The stock is now trading
at $42. The customer believes that the stock has the potential to move up to $55 a share,
but no further. The customer would like to generate extra income and also enjoy the
limited upside gain potential in the stock. To do this, the customer should:
o A) Buy 1 ABC Jan 40 Call
o B) Sell 1 ABC Jan 40 Call (Answer)
o C) Buy 1 ABC Jan 55 Call
, o D) Sell 1 ABC Jan 55 Call
6. A corporation's offer to current stockholders of the ability to purchase a proportionate
number of new shares at a specific price for a limited time is called a:
o A) Right (Answer)
o B) Option
o C) Warrant
o D) Preference
7. American Depositary Receipts pay dividends in __ only. The dividends are declared and
paid in the __ currency by the issuer. The bank that issues the ADR exchanges the
dividend that was received in the foreign currency into U.S. Dollars and pays this to the
U.S. ADR holders.
o A) U.S. Dollars; U.S. Dollars
o B) Foreign currency; foreign currency (Answer)
o C) U.S. Dollars; foreign currency
o D) Foreign currency; U.S. Dollars
8. What records have to be maintained for 6 years?
o A) Client trade confirmations and account statements (Answer)
o B) Tax records
o C) Corporate financial statements
o D) Employee payroll data
9. Regarding the registration statement filed with the Securities and Exchange Commission
(SEC) when new securities are to be issued, all of the following are true except?
o A) The accuracy and adequacy of the registration documents is the responsibility of the
underwriters.
o B) The names and addresses of company officers and directors, their salaries, and a
five-year business history of each must be shown. (Answer)
o C) Underwriters may assist the issuer in preparing and filing the registration statement.
10. Some institutions can function as a depository and intermediary for settling transactions
between buyers and sellers of securities. All of the following are acceptable for this
purpose except:
A) Carrying firms
B) National banks (Answer)
C) the Depository Trust Company (DTC)
D) the National Securities Clearing Corporation (NSCC)
Set 2: Secured Transactions Overview
1. For a security interest to attach, which of the following conditions must be met in
addition to the secured party giving value?
o A) The debtor must have rights in the collateral. (Answer)
Secured Transactions Overview|
Financial Securities Overview
Set 1: Investments and Securities Overview
1. _____ risk can be reduced through diversification. They are risks that are unique to a
specific industry, business enterprise, or investment type.
o A) Systematic risk
o B) Unsystematic risk (Answer)
o C) Market risk
o D) Liquidity risk
2. An investor who sells a call:
o A) Has the option to buy the underlying security
o B) Has the option to sell the underlying security
o C) Has the obligation to provide the underlying security at a predetermined price
(Answer)
o D) Has the obligation to buy the underlying security at the strike price
3. What does the term 'option premium' refer to in the context of options trading?
o A) The total value of an option contract
o B) The cost of an option contract per share (Answer)
o C) The profit made from exercising an option
o D) The fee charged by brokers for trading options
4. The ______________ is the price at which the stock will be bought or sold if the contract
is exercised, also expressed in dollars per share.
o A) Strike price (Answer)
o B) Premium
o C) Market price
o D) Conversion price
5. A customer is long 100 shares of ABC stock purchased at $30. The stock is now trading
at $42. The customer believes that the stock has the potential to move up to $55 a share,
but no further. The customer would like to generate extra income and also enjoy the
limited upside gain potential in the stock. To do this, the customer should:
o A) Buy 1 ABC Jan 40 Call
o B) Sell 1 ABC Jan 40 Call (Answer)
o C) Buy 1 ABC Jan 55 Call
, o D) Sell 1 ABC Jan 55 Call
6. A corporation's offer to current stockholders of the ability to purchase a proportionate
number of new shares at a specific price for a limited time is called a:
o A) Right (Answer)
o B) Option
o C) Warrant
o D) Preference
7. American Depositary Receipts pay dividends in __ only. The dividends are declared and
paid in the __ currency by the issuer. The bank that issues the ADR exchanges the
dividend that was received in the foreign currency into U.S. Dollars and pays this to the
U.S. ADR holders.
o A) U.S. Dollars; U.S. Dollars
o B) Foreign currency; foreign currency (Answer)
o C) U.S. Dollars; foreign currency
o D) Foreign currency; U.S. Dollars
8. What records have to be maintained for 6 years?
o A) Client trade confirmations and account statements (Answer)
o B) Tax records
o C) Corporate financial statements
o D) Employee payroll data
9. Regarding the registration statement filed with the Securities and Exchange Commission
(SEC) when new securities are to be issued, all of the following are true except?
o A) The accuracy and adequacy of the registration documents is the responsibility of the
underwriters.
o B) The names and addresses of company officers and directors, their salaries, and a
five-year business history of each must be shown. (Answer)
o C) Underwriters may assist the issuer in preparing and filing the registration statement.
10. Some institutions can function as a depository and intermediary for settling transactions
between buyers and sellers of securities. All of the following are acceptable for this
purpose except:
A) Carrying firms
B) National banks (Answer)
C) the Depository Trust Company (DTC)
D) the National Securities Clearing Corporation (NSCC)
Set 2: Secured Transactions Overview
1. For a security interest to attach, which of the following conditions must be met in
addition to the secured party giving value?
o A) The debtor must have rights in the collateral. (Answer)
