HS 328 Exam 2 QUESTIONS WITH
CORRECT ANSWERS
The decision of whether to go public is an important one for private
| | | | | | | | | | | | |
companies. Which of the following statements is (are) a disadvantage of
| | | | | | | | | |
going public?
| |
I. Loss of some control over business operations
| | | | | | |
II. The obligation to file annual and quarterly reports to the SEC
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a. I only
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b. II only
| |
c. Both I and II
| | | |
d. Neither I nor II - CORRECT ANSWER✔✔-c. Both I and II
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Explanation: Companies that go public have less control over their
| | | | | | | | | |
business operations and must file reports to the SEC.
| | | | | | | |
At 11 PM EST, an investor in New York buys shares of a company listed
| | | | | | | | | | | | | | |
on the NYSE. Through which of the following did the investor make this
| | | | | | | | | | | | |
purchase?
,a. An organized exchange
| | |
b. An over-the-counter market
| | |
c. The fourth market
| | |
d. The primary market - CORRECT ANSWER✔✔-b. An over-the-counter
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market
Explanation: The "third market" involves over-the-counter trades of
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exchange-listed securities after those exchanges have closed.
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The goals of regulatory oversight include all the following EXCEPT
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a. reducing inequality.
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b. enhancing transparency.
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c. increasing integrity.
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d. maintaining accuracy in financial reporting. - CORRECT ANSWER✔✔-
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a. reducing inequality.
| | |
Explanation: The goals of regulatory oversight are fostering
| | | | | | | |
transparency, integrity, and accuracy.| | |
,Which securities law regulates the offering and sale of securities in the
| | | | | | | | | | | |
primary market and ensures more transparency in financial statements?
| | | | | | | |
a. The Securities Act of 1933
| | | | |
b. The Securities Exchange Act of 1934
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c. The Investment Advisers Act of 1940
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d. The Investment Company Act of 1940 - CORRECT ANSWER✔✔-a. The
| | | | | | | | | | |
Securites Act of 1933 | | |
Explanation: The Securities Act of 1933 requires disclosures of new
| | | | | | | | | |
securities in the primary market. The Securities Exchange Act of 1934
| | | | | | | | | | |
focuses on the trading of securities in the secondary market. The
| | | | | | | | | | |
Investment Advisers Act of 1940 regulates investment advisers and
| | | | | | | | |
requires registration with the SEC for firms or any individual advisers
| | | | | | | | | | |
with assets under management exceeding $100 million. The Investment
| | | | | | | | |
Company Act of 1940 forms the backbone of financial regulation and
| | | | | | | | | | |
established the foundation for mutual funds and hedge funds.
| | | | | | | |
A young client is building a retirement portfolio. Which of the following
| | | | | | | | | | | |
asset allocations is most appropriate?
| | | |
a. 80% cash, 10% bonds, 10% equities
| | | | | |
b. 5% cash, 80% bonds, 15% equities
| | | | | |
c. 0% cash, 50% bonds, 50% equities
| | | | | |
, d. 5% cash, 10% bonds, 85% equities - CORRECT ANSWER✔✔-d. 5%
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cash, 10% bonds, 85% equities
| | | |
Explanation: Portfolios with long time horizons, such as the retirement
| | | | | | | | | |
portfolio of a young client, should be dominated by equities with
| | | | | | | | | | |
relatively low allocations toward bonds and cash.
| | | | | |
Which of the following is an example of an equity?
| | | | | | | | |
a. Treasury bills
| |
b. Municipal bonds
| |
c. Common stock
| |
d. Real estate - CORRECT ANSWER✔✔-c. Common stock
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Explanation: Equities include common stock and preferred stock.
| | | | | | |
Which of the following is considered to be a traditional asset class for a
| | | | | | | | | | | | | |
retirement portfolio? |
a. Derivatives
|
b. Equities
|
c. Hedge funds
| |
CORRECT ANSWERS
The decision of whether to go public is an important one for private
| | | | | | | | | | | | |
companies. Which of the following statements is (are) a disadvantage of
| | | | | | | | | |
going public?
| |
I. Loss of some control over business operations
| | | | | | |
II. The obligation to file annual and quarterly reports to the SEC
| | | | | | | | | | |
a. I only
| |
b. II only
| |
c. Both I and II
| | | |
d. Neither I nor II - CORRECT ANSWER✔✔-c. Both I and II
| | | | | | | | | | |
Explanation: Companies that go public have less control over their
| | | | | | | | | |
business operations and must file reports to the SEC.
| | | | | | | |
At 11 PM EST, an investor in New York buys shares of a company listed
| | | | | | | | | | | | | | |
on the NYSE. Through which of the following did the investor make this
| | | | | | | | | | | | |
purchase?
,a. An organized exchange
| | |
b. An over-the-counter market
| | |
c. The fourth market
| | |
d. The primary market - CORRECT ANSWER✔✔-b. An over-the-counter
| | | | | | | | |
market
Explanation: The "third market" involves over-the-counter trades of
| | | | | | | |
exchange-listed securities after those exchanges have closed.
| | | | | |
The goals of regulatory oversight include all the following EXCEPT
| | | | | | | | |
a. reducing inequality.
| |
b. enhancing transparency.
| |
c. increasing integrity.
| |
d. maintaining accuracy in financial reporting. - CORRECT ANSWER✔✔-
| | | | | | | |
a. reducing inequality.
| | |
Explanation: The goals of regulatory oversight are fostering
| | | | | | | |
transparency, integrity, and accuracy.| | |
,Which securities law regulates the offering and sale of securities in the
| | | | | | | | | | | |
primary market and ensures more transparency in financial statements?
| | | | | | | |
a. The Securities Act of 1933
| | | | |
b. The Securities Exchange Act of 1934
| | | | | |
c. The Investment Advisers Act of 1940
| | | | | |
d. The Investment Company Act of 1940 - CORRECT ANSWER✔✔-a. The
| | | | | | | | | | |
Securites Act of 1933 | | |
Explanation: The Securities Act of 1933 requires disclosures of new
| | | | | | | | | |
securities in the primary market. The Securities Exchange Act of 1934
| | | | | | | | | | |
focuses on the trading of securities in the secondary market. The
| | | | | | | | | | |
Investment Advisers Act of 1940 regulates investment advisers and
| | | | | | | | |
requires registration with the SEC for firms or any individual advisers
| | | | | | | | | | |
with assets under management exceeding $100 million. The Investment
| | | | | | | | |
Company Act of 1940 forms the backbone of financial regulation and
| | | | | | | | | | |
established the foundation for mutual funds and hedge funds.
| | | | | | | |
A young client is building a retirement portfolio. Which of the following
| | | | | | | | | | | |
asset allocations is most appropriate?
| | | |
a. 80% cash, 10% bonds, 10% equities
| | | | | |
b. 5% cash, 80% bonds, 15% equities
| | | | | |
c. 0% cash, 50% bonds, 50% equities
| | | | | |
, d. 5% cash, 10% bonds, 85% equities - CORRECT ANSWER✔✔-d. 5%
| | | | | | | | | | |
cash, 10% bonds, 85% equities
| | | |
Explanation: Portfolios with long time horizons, such as the retirement
| | | | | | | | | |
portfolio of a young client, should be dominated by equities with
| | | | | | | | | | |
relatively low allocations toward bonds and cash.
| | | | | |
Which of the following is an example of an equity?
| | | | | | | | |
a. Treasury bills
| |
b. Municipal bonds
| |
c. Common stock
| |
d. Real estate - CORRECT ANSWER✔✔-c. Common stock
| | | | | | |
Explanation: Equities include common stock and preferred stock.
| | | | | | |
Which of the following is considered to be a traditional asset class for a
| | | | | | | | | | | | | |
retirement portfolio? |
a. Derivatives
|
b. Equities
|
c. Hedge funds
| |
