TBChap003 (1)

Chapter 03 How Securities Are Traded

Multiple Choice Questions

1. The trading trading of stock stock that was previou previously sly issued issued takes takes place place

A. . C. ".

in the secondary market. in the primary market. usually with the assistance of an investment !anker. !anker. in the secondary and primary markets. markets.

#. A purchas purchase e of a new new issue issue of stock stock tak takes es place place

A. in the secondary market. . in the primary market. C. usually with the assistance of an investment !anker. !anker. ". in the secondary and primary markets. markets. $. in the primary market and usually with the assistance of an investment !anker. !anker. 3. %irms raise raise capita capitall !y issuing issuing stock stock

A. . C. ".

in the secondary market. in the primary market. to unwary investors. only on days when the market is up.

&. 'hich of the followin following g statements statements regard regarding ing the special specialist ist are are true(

A. Specialists maintain a !ook listing outstanding une)ecuted limit limit orders. . Specialists Specialists earn income from commissions commissions and spreads in stock prices. C. Specialists Specialists stand ready ready to trade trade at *uoted !id and and ask prices. ". Specialists cannot trade in their own accounts. $. Specialists maintain a !ook listing outstanding une)ecuted limit orders+ earn income from commissions and spreads in stock prices+ and stand ready to trade at *uoted !id and ask prices.

3-1

,. -nve -nvest stme ment nt !an !ank kers ers

A. act as intermediaries intermediaries !etween issuers issuers of stocks and and investors. . act act as advisors to companies in helping them analye their /nancial needs and /nd !uyers for newly issued securities. C. accept deposits deposits from savers and lend them out to companies. companies. ". act as intermediaries !etween issuers of stocks and investors and act as advisors to companies in helping them analye their /nancial needs and /nd !uyers for newly issued securities. . -n a /rm commitmen commitment+ t+ the the investm investment ent !ank !anker er

A. !uys the stock from from the company and resells resells the issue to the pu!lic. . agrees to help the the /rm sell the stock at a favora!le price. C. /nds the !est marketing marketing arrangement arrangement for the investment !anking !anking /rm. ". agrees to help the /rm sell the stock at a favora!le price and /nds the !est marketing marketing arrangement for the investment !anking /rm. 2. The seco seconda ndary ry mark market et consi consists sts of of

A. transactions on the A$4. . transactions transactio ns in the 5TC market. C. transactions transactio ns through the investment !anker. !anker. ". transactions on the A$4 and in the the 5TC 5TC market. market. $. transactions on the A$4+ through the investment !anker+ and in the 5TC market. market. 6. -nitial -nitial margi margin n re*uire re*uirement ments s are are determin determined ed !y

A. the Securities and $)change Commission. . the %ederal 7eserve System. C. the 8ew 9ork Stock $)change. ". the %ederal %ederal 7eserve System and the 8ew 9ork 9ork Stock $)change. :. 9ou purchased ;8; stock at <,0 per share. share. The stock is is currently currently selling at <,. 9our 9our gains may !e protected !y placing a

A. . C. ". $.

stop=!uy order. limit=!uy order. market order. limit=sell order. 8one of the options

3-2

10. 9ou sold ;C> stock short at <60 per share. 9our 9our losses could !e minimied !y placing a

A. . C. ". $.

limit=sell order. limit=!uy order. stop=!uy order. day=order. 8one of the options

11. 'hich one of the following statements regarding regarding orders is false(

A. A market order is simply an order to !uy or sell a stock immediately at the prevailing market price. . A limit=sell order is where investors specify prices at which they are willing to sell a security. C. -f stock AC is selling at <,0+ a limit=!uy order may instruct the !roker to !uy the stock if and when the share price falls !elow <&,. ". A market order is an order to !uy or sell a stock on a speci/c e)change ?market@. ?market@. 1#. 7estrictions 7estrictions on trading involving insider information information apply to the following except

A. corporate ocers. . corporate directors. C. maBor stockholders. ". All of the options options are su!Bect to insider insider trading restrictions. restrictions. $. 8one of the options is su!Bect su!Bect to insider trading restrictions. restrictions. 13. The cost of !uying and selling selling a stock consists consists of

A. !rokers commissions. commissio ns. . dealers !id=asked spread. C. a price concession an investor may !e forced to make. ". !rokers commissions commissio ns and dealers !id=asked spread. $. !rokers commissions+ dealers !id=asked spread+ and a price concession an investor may !e forced to make.

3-3

1&. Assume you purchased purchased #00 shares of D$ common stock on margin at <20 per share from your !roker. -f the initial margin is ,,E+ how much did you !orrow from the !roker(

A. . C. ". $.

<+000 <&+000 <2+200 <2+000 <+300

1,. 9ou sold short #00 shares of common stock at <0 per share. The initial margin is 0E. 9our initial investment was

A. . C. ".

<&+600. <1#+000. <,+00. <2+#00.

1. 9ou purchased 100 shares of - common stock on margin at <20 per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest interest on margin.

A. . C. ".

<#1 <,0 <&: <60

12. 9ou purchased 100 shares of common stock on margin at <&, per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <30( -gnore interest on margin.

A. . C. ". $.

0.33 0.,, 0.&3 0.#3 0.#,

3-4

16. 9ou purchased 300 shares of common stock on margin for <0 per share. The initial margin is 0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <&, per share( -gnore interest on margin.

A. . C. ". $.

#,.00E =33.33E &&.31E =&1.2E =,&.##E

1:. Assume you sell short 100 shares of common stock at <&, per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <&0 per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

A. . C. ".

#0.03E #,.2E ##.##E 22.&E

#0. 9ou sold short 300 shares of common stock at <,, per share. The initial margin is 0E. At what stock price would you receive a margin call if the maintenance margin is 3,E(

A. . C. ".

<,1.00 <,.16 <3,.## <&0.3

#1. Assume you sold short 100 shares of common stock at <,0 per share. The initial margin is 0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <0(

A. . C. ".

&0E 33E 3,E #,E

3-5

##. Specialists on stock e)changes perform which of the following functions(

A. Act as dealers in their own accounts. . Analye the securities in which they specialie. C. >rovide li*uidity to the market. ". Act as dealers in their own accounts and analye the securities in which they specialie. $. Act as dealers in their own accounts and provide li*uidity to the market. #3. Shares for short transactions

A. are usually !orrowed from other !rokers. . are typically shares held !y the short sellers !roker in street name. C. are !orrowed from commercial !anks. ". are typically shares held !y the short sellers !roker in street name and are !orrowed from commercial !anks. #&. 'hich of the following orders is most useful to short sellers who want to limit their potential losses(

A. . C. ".

imit order "iscretionary order imit=loss order Stop=!uy order

#,. 'hich of the following orders instructs the !roker to !uy at the current market price(

A. . C. ". $.

imit order "iscretionary order imit=loss order Stop=!uy order arket order

#. 'hich of the following orders instructs the !roker to !uy at or !elow a speci/ed price(

A. . C. ". $.

imit=loss order "iscretionary order imit=!uy order Stop=!uy order arket order

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#2. 'hich of the following orders instructs the !roker to sell at or !elow a speci/ed price(

A. . C. ". $.

imit=sell order Stop=loss imit=!uy order Stop=!uy order arket order

#6. 'hich of the following orders instructs the !roker to sell at or a!ove a speci/ed price(

A. . C. ". $.

imit=!uy order "iscretionary order imit=sell order Stop=!uy order arket order

#:. 'hich of the following orders instructs the !roker to !uy at or a!ove a speci/ed price(

A. . C. ". $.

imit=!uy order "iscretionary order imit=sell order Stop=!uy order arket order

30. Shelf registration

A. is a way of placing issues in the primary market. . allows /rms to register securities for sale over a two=year period. C. increases transaction costs to the issuing /rm. ". is a way of placing issues in the primary market and allows /rms to register securities for sale over a two=year period. $. is a way of placing issues in the primary market and increases transaction costs to the issuing /rm. 31. lock transactions are transactions for more than IIIIIII shares and they account for a!out IIIII percent of all trading on the 89S$.

A. . C. ". $.

1+000F , ,00F 10 100+000F ,0 10+000F 30 ,+000F #3

3-7

3#. A program trade is

A. a trade of 10+000 ?or more@ shares of a stock. . a trade of many shares of one stock for one other stock. C. a trade of analytic programs !etween /nancial analysts. ". a coordinated purchase or sale of an entire portfolio of stocks. $. not feasi!le with current technology !ut is e)pected to !e popular in the near future. 33. 'hen stocks are held in street name

A. the investor receives a stock certi/cate with the owners street address. . the investor receives a stock certi/cate without the owners street address. C. the investor does not receive a stock certi/cate. ". the !roker holds the stock in the !rokerage /rms name on !ehalf of the client. $. the investor does not receive a stock certi/cate and the !roker holds the stock in the !rokerage /rms name on !ehalf of the client. 3&. 8AS"AJ su!scri!er levels

A. permit those with the highest level+ 3+ to make a market in the security. . permit those with a level # su!scription to receive all !id and ask *uotes+ !ut not to enter their own *uotes. C. permit level 1 su!scri!ers to receive general information a!out prices. ". include all 5TC stocks. $. permit those with the highest level+ 3+ to make a market in the securityF permit those with a level # su!scription to receive all !id and ask *uotes+ !ut not to enter their own *uotesF and permit level 1 su!scri!ers to receive general information a!out prices. 3,. 9ou want to !uy 100 shares of Hotstock -nc. at the !est possi!le price as *uickly as possi!le. 9ou would most likely place a

A. . C. ". $.

stop=loss order. stop=!uy order. market order. limit=sell order. limit=!uy order.

3-8

3. 9ou want to purchase 458 stock at <0 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <3+000 to invest+ how many shares can you !uy(

A. . C. ". $.

100 shares #00 shares ,0 shares ,00 shares #, shares

32. A sale !y - of new stock to the pu!lic would !e a?n@

A. . C. ". $.

short sale. seasoned e*uity oGering. private placement. secondary market transaction. initial pu!lic oGering.

36. The /nalied registration statement for new securities approved !y the S$C is called

A. . C. ". $.

a red herring. the preliminary statement. the prospectus. a !est=eGorts agreement. a /rm commitment.

3:. 5ne outcome from the S$C investigation of the %lash Crash of #010 was

A. a prohi!ition of short selling. . higher margin re*uirements. C. approval of new circuit !reakers. ". esta!lishment of electronic communications networks ?$C8s@. $. passage of the Sar!anes=5)ley Act. &0. All of the following are considered new trading strategies e)cept

A. . C. ".

high fre*uency trading. algorithmic trading. dark pools. short selling.

3-9

&1. 9ou sell short 100 shares of oser Co. at a market price of <&, per share. 9our ma)imum possi!le loss is

A. . C. ". $.

<&+,00. unlimited. ero. <:+000. Cannot tell from the information given

&#. 9ou !uy 300 shares of Jualitycorp for <30 per share and deposit initial margin of ,0E. The ne)t day+ Jualitycorps price drops to <#, per share. 'hat is your actual margin(

A. . C. ". $.

,0E &0E 33E 0E #,E

&3. 'hen a /rm markets new securities+ a preliminary registration statement must !e /led with

A. . C. ". $.

the e)change on which the security will !e listed. the Securities and $)change Commission. the %ederal 7eserve. all other companies in the same line of !usiness. the %ederal "eposit -nsurance Corporation.

&&. -n a typical underwriting arrangement the investment !anking /rm -@ sells shares to the pu!lic via an underwriting syndicate. --@ purchases the securities from the issuing company. ---@ assumes the full risk that the shares may not !e sold at the oGering price. -K@ agrees to help the /rm sell the issue to the pu!lic+ !ut does not actually purchase the securities.

A. . C. ". $.

-+ --+ and ---+ ---+ and -K - and -K -- and --- and --

3-10

&,. 'hich of the following is true regarding private placements of primary security oGerings(

A. $)tensive and costly registration statements are re*uired !y the S$C. . %or very large issues+ they are !etter suited than pu!lic oGerings. C. They trade in secondary markets. ". The shares are sold directly to a small group of institutional or wealthy investors. $. They have greater li*uidity than pu!lic oGerings. &. A specialist on the A$4 Stock $)change is oGering to !uy a security for <32.,0. A !roker in 5klahoma City wants to sell the security for his client. The -ntermarket Trading System shows a !id price of <32.32, on the 89S$. 'hat should the !roker do(

A. 7oute the order to the A$4 Stock $)change. . 7oute the order to the 89S$. C. Call the client to see if she has a preference. ". 7oute half of the order to A$4 and the other half to the 89S$. $. -t doesnt matterLhe should Mip a coin and go with it. &2. 9ou sold short 100 shares of common stock at <&, per share. The initial margin is ,0E. 9our initial investment was

A. . C. ".

<&+600. <1#+000. <#+#,0. <2+#00.

&6. 9ou sold short 1,0 shares of common stock at <#2 per share. The initial margin is &,E. 9our initial investment was

A. . C. ".

<&+600.0. <1#+000.#,. <#+#,0.2,. <1+6##.,0.

3-11

&:. 9ou purchased 100 shares of 458 common stock on margin at <0 per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest on margin.

A. . C. ".

<&#.6 <,0.2, <&:.2 <60.3&

,0. 9ou purchased 1000 shares of CSC5 common stock on margin at <1: per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest on margin.

A. . C. ".

<1#.6 <1,.2, <1:.2 <13.,2

,1. 9ou purchased 100 shares of common stock on margin at <&0 per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <#,( -gnore interest on margin.

A. . C. ". $.

0.33 0.,, 0.#0 0.#3 0.#,

,#. 9ou purchased 1+000 shares of common stock on margin at <30 per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <#&( -gnore interest on margin.

A. . C. ". $.

0.33 0.32, 0.#0 0.#3 0.#,

3-12

,3. 9ou purchased 100 shares of common stock on margin for <,0 per share. The initial margin is ,0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <, per share( -gnore interest on margin.

A. . C. ". $.

#6E 33E 1&E &#E #&E

,&. 9ou purchased 100 shares of common stock on margin for <3, per share. The initial margin is ,0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <&# per share( -gnore interest on margin.

A. . C. ". $.

#6E 33E 1&E &0E #&E

,,. Assume you sell short 1+000 shares of common stock at <3, per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <#, per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

A. . C. ".

#0.&2E #,.3E ,2.1&E 22.#3E

,. Assume you sell short 100 shares of common stock at <30 per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <3, per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

A. . C. ".

=33.33E =#,.3E =,2.1&E =22.#3E

3-13

,2. 9ou want to purchase D stock at <&0 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <&+000 to invest+ how many shares can you !uy(

A. . C. ". $.


,6. 9ou want to purchase - stock at <60 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <#+000 to invest+ how many shares can you !uy(

A. . C. ". $.


,:. Assume you sold short 100 shares of common stock at <&0 per share. The initial margin is ,0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <,0(

A. . C. ".

&0E #0E 3,E #,E

0. Assume you sold short 100 shares of common stock at <20 per share. The initial margin is ,0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <6,(

A. . C. ".

&0.,E #0.,E 3,.,E #3.,E

3-14

1. 9ou sold short 100 shares of common stock at <&, per share. The initial margin is ,0E. At what stock price would you receive a margin call if the maintenance margin is 3,E(

A. . C. ".

<,0 <, <3, <&0

#. 9ou sold short 100 shares of common stock at <2, per share. The initial margin is ,0E. At what stock price would you receive a margin call if the maintenance margin is 30E(

A. . C. ".

<:0.#3 <66.,# <6.,& <62.1#

3. The preliminary prospectus is referred to as a

A. . C. ". $.

red herring. indenture. greenmail. tom!stone. headstone.

&. The securities act of 1:33 -@ re*uires full disclosure of relevant information relating to the issue of new securities. --@ re*uires registration of new securities. ---@ re*uires issuance of a prospectus detailing /nancial prospects of the /rm. -K@ esta!lished the S$C. K@ re*uires periodic disclosure of relevant /nancial information. K-@ empowers S$C to regulate e)changes+ 5TC trading+ !rokers+ and dealers.

A. . C. ". $.

-+ --+ and ---+ --+ ---+ -K+ K+ and K-+ --+ and K -+ --+ and -K -K only

3-15

,. The Securities Act of 1:3& -@ re*uires full disclosure of relevant information relating to the issue of new securities. --@ re*uires registration of new securities. ---@ re*uires issuance of a prospectus detailing /nancial prospects of the /rm. -K@ esta!lished the S$C. K@ re*uires periodic disclosure of relevant /nancial information. K-@ empowers S$C to regulate e)changes+ 5TC trading+ !rokers+ and dealers.

A. . C. ". $.

-+ --+ and ---+ --+ ---+ -K+ K+ and K-+ --+ and K -+ --+ and -K -K+ K+ and K-

. 'hich of the following is not re*uired under the C%A -nstitute Standards of >rofessional Conduct(

A. Nnowledge of all applica!le laws+ rules and regulations . "isclosure of all personal investments+ whether or not they may conMict with a clients investments C. "isclosure of all conMicts to clients and prospects ". 7easona!le in*uiry into a clients /nancial situation $. All of the options are re*uired under the C%A -nstitute standards. 2. According to the C%A -nstitute Standards of >rofessional Conduct+ C%A -nstitute mem!ers have responsi!ilities to all of the following except

A. . C. ". $.

the government. the profession. the pu!lic. the employer. clients and prospective clients.

Short Answer Questions

3-16

6. "iscuss margin !uying of common stocks. -nclude in your discussion the advantages and disadvantages+ the types of margin re*uirements+ how these re*uirements are met+ and who determines these re*uirements.

:. ist three factors that are listing re*uirements for the 8ew 9ork Stock $)change. 'hy does the e)change have such re*uirements(

3-17

Chapter 03 How Securities Are Traded Ney

Multiple Choice Questions

1.

The trading of stock that was previously issued takes place

in the secondary market. A. . in the primary market. C. usually with the assistance of an investment !anker. ". in the secondary and primary markets. Secondary market transactions consist of trades !etween investors.

AACSB: Analytic Blooms: Apply Difculty: Basic

#.

A purchase of a new issue of stock takes place

A. in the secondary market. . in the primary market. C. usually with the assistance of an investment !anker. ". in the secondary and primary markets. E. in the primary market and usually with the assistance of an investment !anker. %unds from the sale of new issues Mow to the issuing corporation+ making this a primary market transaction. -nvestment !ankers usually assist !y pricing the issue and /nding !uyers.


3-18

3.

%irms raise capital !y issuing stock

A. in the secondary market. in the primary market. B. C. to unwary investors. ". only on days when the market is up. %unds from the sale of new issues Mow to the issuing corporation+ making this a primary market transaction.


&.

'hich of the following statements regarding the specialist are true(

A. Specialists maintain a !ook listing outstanding une)ecuted limit orders. . Specialists earn income from commissions and spreads in stock prices. C. Specialists stand ready to trade at *uoted !id and ask prices. ". Specialists cannot trade in their own accounts. E. Specialists maintain a !ook listing outstanding une)ecuted limit orders+ earn income from commissions and spreads in stock prices+ and stand ready to trade at *uoted !id and ask prices. The specialists functions are all of the items listed. -n addition+ specialists trade in their own accounts.

AACSB: Analytic Blooms: Apply Difculty: Intermediate

3-19

,.

-nvestment !ankers

A. act as intermediaries !etween issuers of stocks and investors. . act as advisors to companies in helping them analye their /nancial needs and /nd !uyers for newly issued securities. C. accept deposits from savers and lend them out to companies. D. act as intermediaries !etween issuers of stocks and investors and act as advisors to companies in helping them analye their /nancial needs and /nd !uyers for newly issued securities. The role of the investment !anker is to assist the /rm in issuing new securities+ !oth in advisory and marketing capacities. The investment !anker does not have a role compara!le to a commercial !ank+ as indicated in accept deposits from savers and lend them out to companies.


.

-n a /rm commitment+ the investment !anker

A. !uys the stock from the company and resells the issue to the pu!lic. . agrees to help the /rm sell the stock at a favora!le price. C. /nds the !est marketing arrangement for the investment !anking /rm. ". agrees to help the /rm sell the stock at a favora!le price and /nds the !est marketing arrangement for the investment !anking /rm. -n a /rm commitment+ the investment !anker !uys the stock from the company and resells the issue to the pu!lic.


3-20

2.

The secondary market consists of

A. transactions on the A$4. . transactions in the 5TC market. C. transactions through the investment !anker. transactions on the A$4 and in the 5TC market. D. $. transactions on the A$4+ through the investment !anker+ and in the 5TC market. The secondary market consists of transactions on the organied e)changes and in the 5TC market. The investment !anker is involved in the placement of new issues in the primary market.


6.

-nitial margin re*uirements are determined !y

A. the Securities and $)change Commission. the %ederal 7eserve System. B. C. the 8ew 9ork Stock $)change. ". the %ederal 7eserve System and the 8ew 9ork Stock $)change. The oard of Dovernors of the %ederal 7eserve System determines initial margin re*uirements.


3-21

:.

9ou purchased ;8; stock at <,0 per share. The stock is currently selling at <,. 9our gains may !e protected !y placing a

A. stop=!uy order. . limit=!uy order. C. market order. limit=sell order. D. $. 8one of the options 'ith a limit=sell order+ your stock will !e sold only at a speci/ed price+ or !etter. Thus+ such an order would protect your gains. 8one of the other orders are applica!le to this situation.


10.

9ou sold ;C> stock short at <60 per share. 9our losses could !e minimied !y placing a

A. limit=sell order. . limit=!uy order. stop=!uy order. C. ". day=order. $. 8one of the options 'ith a stop=!uy order+ the stock would !e purchased if the price increased to a speci/ed level+ thus limiting your loss.


3-22

11.

'hich one of the following statements regarding orders is false(

A. A market order is simply an order to !uy or sell a stock immediately at the prevailing market price. . A limit=sell order is where investors specify prices at which they are willing to sell a security. C. -f stock AC is selling at <,0+ a limit=!uy order may instruct the !roker to !uy the stock if and when the share price falls !elow <&,. D. A market order is an order to !uy or sell a stock on a speci/c e)change ?market@. All of the order descriptions a!ove are correct e)cept a market order is an order to !uy or sell a stock on a speci/c e)change ?market@.


1#.

7estrictions on trading involving insider information apply to the following except

A. corporate ocers. . corporate directors. C. maBor stockholders. D. All of the options are su!Bect to insider trading restrictions. $. 8one of the options is su!Bect to insider trading restrictions. Corporate ocers+ corporate directors+ and maBor stockholders are corporate insiders and are su!Bect to restrictions on trading on inside information. %urther+ the Supreme Court held that traders may not trade on nonpu!lic information even if they are not insiders.


3-23

13.

The cost of !uying and selling a stock consists of

A. !rokers commissions. . dealers !id=asked spread. C. a price concession an investor may !e forced to make. ". !rokers commissions and dealers !id=asked spread. E. !rokers commissions+ dealers !id=asked spread+ and a price concession an investor may !e forced to make. All of the options are possi!le costs of !uying and selling a stock.


1&.

Assume you purchased #00 shares of D$ common stock on margin at <20 per share from your !roker. -f the initial margin is ,,E+ how much did you !orrow from the !roker(

A. <+000 . <&+000 C. <2+200 ". <2+000 <+300 E. #00 shares O <20Pshare O ?1 = 0.,,@ Q <1&+000 O ?0.&,@ Q <+300.


1,.

9ou sold short #00 shares of common stock at <0 per share. The initial margin is 0E. 9our initial investment was

A. <&+600. . <1#+000. C. <,+00. <2+#00. D. #00 shares O <0Pshare O 0.0 Q <1#+000 O 0.0 Q <2+#00.


3-24

1.

9ou purchased 100 shares of - common stock on margin at <20 per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest on margin.

A. <#1 <,0 B. C. <&: ". <60 100 shares O <20 O ., Q <2+000 O 0., Q <3+,00 ?loan amount@F 0.30 Q ?100 P = <3+,00@P100PF 30P Q 100P = <3+,00F =20 P Q =<3+,00F P Q <,0.

AACSB: Analytic Blooms: Apply Difculty: Challenge

12.

9ou purchased 100 shares of common stock on margin at <&, per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <30( -gnore interest on margin.

A. 0.33 . 0.,, C. 0.&3 ". 0.#3 0.#, E. 100 shares O <&,Pshare O 0., Q <&+,00 O 0., Q <#+#,0 ?loan amount@F X Q R100?<30@ = <#+#,0P100?<30@F X Q 0.#,.


3-25

16.

9ou purchased 300 shares of common stock on margin for <0 per share. The initial margin is 0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <&, per share( -gnore interest on margin.

A. #,.00E . =33.33E C. &&.31E =&1.2E D. $. =,&.##E 300?<0@?0.0@ Q <10+600 investmentF 300?<0@ Q <16+000 O ?0.&0@ Q <2+#00 loanF proceeds after selling stock and repaying loan <13+,00 = <2+#00 Q <+300F 7eturn Q ?<+300 = <10+600@P<10+600 Q =&1.2E.


1:.

Assume you sell short 100 shares of common stock at <&, per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <&0 per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

A. #0.03E . #,.2E ##.##E C. ". 22.&E >ro/t on stock Q ?<&, = <&0@ O 100 Q <,00+ <,00P<#+#,0 ?initial investment@ Q ##.##E.


3-26

#0.

9ou sold short 300 shares of common stock at <,, per share. The initial margin is 0E. At what stock price would you receive a margin call if the maintenance margin is 3,E(

A. <,1.00 <,.16 B. C. <3,.## ". <&0.3 $*uity Q 300?<,,@ O 1. Q <#+&00F 0.3, Q ?<#+&00 = 300 P@P300PF 10,P Q <#+&00 = 300PF &0,P Q <#+&00F P Q <,.16.


#1.

Assume you sold short 100 shares of common stock at <,0 per share. The initial margin is 0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <0(

A. &0E 33E B. C. 3,E ". #,E <,+000 O 1. Q <6+000F R<6+000 = 100?<0@P100?<0@ Q 33E.


##.

Specialists on stock e)changes perform which of the following functions(

A. Act as dealers in their own accounts. . Analye the securities in which they specialie. C. >rovide li*uidity to the market. ". Act as dealers in their own accounts and analye the securities in which they specialie. E. Act as dealers in their own accounts and provide li*uidity to the market. Specialists are !oth !rokers and dealers and provide li*uidity to the marketF they are not analysts.

AACSB: Analytic

3-27

Blooms: Apply Difculty: Intermediate

#3.

Shares for short transactions

A. are usually !orrowed from other !rokers. B. are typically shares held !y the short sellers !roker in street name. C. are !orrowed from commercial !anks. ". are typically shares held !y the short sellers !roker in street name and are !orrowed from commercial !anks. Typically+ the only source of shares for short transactions is the short sellers !roker in street nameF often these are margined shares.


#&.

'hich of the following orders is most useful to short sellers who want to limit their potential losses(

A. imit order . "iscretionary order C. imit=loss order Stop=!uy order D. y issuing a stop=!uy order+ the short seller can limit potential losses !y assuring that the stock will !e purchased ?and the short position closed@ if the price increases to a certain level.


3-28

#,.

'hich of the following orders instructs the !roker to !uy at the current market price(

A. imit order . "iscretionary order C. imit=loss order ". Stop=!uy order arket order E. arket orders are to !e e)ecuted immediately at the !est prevailing price.


#.

'hich of the following orders instructs the !roker to !uy at or !elow a speci/ed price(

A. imit=loss order . "iscretionary order imit=!uy order C. ". Stop=!uy order $. arket order imit=!uy orders are to !e e)ecuted if the market price decreases to the speci/ed limit price.


#2.

'hich of the following orders instructs the !roker to sell at or !elow a speci/ed price(

A. imit=sell order Stop=loss B. C. imit=!uy order ". Stop=!uy order $. arket order Stop=loss orders are to !e e)ecuted if the market price decreases to the speci/ed limit price.

AACSB: Analytic

3-29


#6.

'hich of the following orders instructs the !roker to sell at or a!ove a speci/ed price(

A. imit=!uy order . "iscretionary order imit=sell order C. ". Stop=!uy order $. arket order imit=sell orders are to !e e)ecuted if the market price increases to the speci/ed limit price.


#:.

'hich of the following orders instructs the !roker to !uy at or a!ove a speci/ed price(

A. imit=!uy order . "iscretionary order C. imit=sell order Stop=!uy order D. $. arket order Stop=!uy orders are to !e e)ecuted if the market price increases to the speci/ed limit price.


3-30

30.

Shelf registration

A. is a way of placing issues in the primary market. . allows /rms to register securities for sale over a two=year period. C. increases transaction costs to the issuing /rm. D. is a way of placing issues in the primary market and allows /rms to register securities for sale over a two=year period. $. is a way of placing issues in the primary market and increases transaction costs to the issuing /rm. Shelf registration lowers transactions costs to the /rm as the /rm may register issues for a longer period than in the past and thus re*uires the services of the investment !anker less fre*uently.


31.

lock transactions are transactions for more than IIIIIII shares and they account for a!out IIIII percent of all trading on the 89S$.

A. 1+000F , . ,00F 10 C. 100+000F ,0 10+000F 30 D. $. ,+000F #3 lock transactions are de/ned as trades of 10+000 or more shares.


3-31

3#.

A program trade is

A. a trade of 10+000 ?or more@ shares of a stock. . a trade of many shares of one stock for one other stock. C. a trade of analytic programs !etween /nancial analysts. D. a coordinated purchase or sale of an entire portfolio of stocks. $. not feasi!le with current technology !ut is e)pected to !e popular in the near future. >rogram trading is a coordinated purchase or sale of an entire portfolio of stocks.


33.

'hen stocks are held in street name

A. . C. ". E.

the investor receives a stock certi/cate with the owners street address. the investor receives a stock certi/cate without the owners street address. the investor does not receive a stock certi/cate. the !roker holds the stock in the !rokerage /rms name on !ehalf of the client. the investor does not receive a stock certi/cate and the !roker holds the stock in the !rokerage /rms name on !ehalf of the client. 'hen stocks are held in street name+ the investor does not receive a stock certi/cateF the !roker holds the stock in the !rokerage /rms name on !ehalf of the client. This arrangement speeds transfer of securities.


3-32

3&.

8AS"AJ su!scri!er levels

A. permit those with the highest level+ 3+ to make a market in the security. . permit those with a level # su!scription to receive all !id and ask *uotes+ !ut not to enter their own *uotes. C. permit level 1 su!scri!ers to receive general information a!out prices. ". include all 5TC stocks. E. permit those with the highest level+ 3+ to make a market in the securityF permit those with a level # su!scription to receive all !id and ask *uotes+ !ut not to enter their own *uotesF and permit level 1 su!scri!ers to receive general information a!out prices. 8AS"AJ links dealers in a loosely organied network with diGerent levels of access to meet diGerent needs.


3,.

9ou want to !uy 100 shares of Hotstock -nc. at the !est possi!le price as *uickly as possi!le. 9ou would most likely place a

A. stop=loss order. . stop=!uy order. market order. C. ". limit=sell order. $. limit=!uy order. A market order is for immediate e)ecution at the !est possi!le price.


3-33

3.

9ou want to purchase 458 stock at <0 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <3+000 to invest+ how many shares can you !uy(

100 shares A. . #00 shares C. ,0 shares ". ,00 shares $. #, shares ., Q R?Q O <0@ = <3+000P? Q O <0@F <30Q Q <0Q = <3+000F <30Q Q <3+000F Q Q 100.


32.

A sale !y - of new stock to the pu!lic would !e a?n@

A. short sale. seasoned e*uity oGering. B. C. private placement. ". secondary market transaction. $. initial pu!lic oGering. 'hen a /rm whose stock already trades in the secondary market issues new shares to the pu!lic+ this is referred to as a seasoned e*uity oGering.


36.

The /nalied registration statement for new securities approved !y the S$C is called

A. a red herring. . the preliminary statement. the prospectus. C. ". a !est=eGorts agreement. $. a /rm commitment. The prospectus is the /nalied registration statement approved !y the S$C.

AACSB: Analytic

3-34


3:.

5ne outcome from the S$C investigation of the %lash Crash of #010 was

A. a prohi!ition of short selling. . higher margin re*uirements. approval of new circuit !reakers. C. ". esta!lishment of electronic communications networks ?$C8s@. $. passage of the Sar!anes=5)ley Act. See The %lash Crash of #010.


&0.

All of the following are considered new trading strategies e)cept

A. high fre*uency trading. . algorithmic trading. C. dark pools. short selling. D. See Section 3=,+ 8ew Trading StrategiesF short selling has !een in use for over 100 years in the U.S.


&1.

9ou sell short 100 shares of oser Co. at a market price of <&, per share. 9our ma)imum possi!le loss is

A. <&+,00. unlimited. B. C. ero. ". <:+000. $. Cannot tell from the information given A short seller loses money when the stock price rises. Since there is no upper limit on the stock price+ the ma)imum theoretical loss is unlimited.

AACSB: Analytic

3-35


&#.

9ou !uy 300 shares of Jualitycorp for <30 per share and deposit initial margin of ,0E. The ne)t day+ Jualitycorps price drops to <#, per share. 'hat is your actual margin(

A. ,0E &0E B. C. 33E ". 0E $. #,E AM Q R300 ?<#,@ = .,?300@ ?<30@PR300 ?<#,@ Q .&0.


&3.

'hen a /rm markets new securities+ a preliminary registration statement must !e /led with

A. the e)change on which the security will !e listed. the Securities and $)change Commission. B. C. the %ederal 7eserve. ". all other companies in the same line of !usiness. $. the %ederal "eposit -nsurance Corporation. The S$C re*uires the registration statement and must approve it !efore the issue can take place.


3-36

&&.

-n a typical underwriting arrangement the investment !anking /rm -@ sells shares to the pu!lic via an underwriting syndicate. --@ purchases the securities from the issuing company. ---@ assumes the full risk that the shares may not !e sold at the oGering price. -K@ agrees to help the /rm sell the issue to the pu!lic+ !ut does not actually purchase the securities.

-+ --+ and --A. . -+ ---+ and -K C. - and -K ". -- and --$. - and -A typical underwriting arrangement is made on a /rm commitment !asis.


&,.

'hich of the following is true regarding private placements of primary security oGerings(

A. $)tensive and costly registration statements are re*uired !y the S$C. . %or very large issues+ they are !etter suited than pu!lic oGerings. C. They trade in secondary markets. D. The shares are sold directly to a small group of institutional or wealthy investors. $. They have greater li*uidity than pu!lic oGerings. %irms can save on registration costs+ !ut the result is that the securities cannot trade in the secondary markets and therefore are less li*uid. >u!lic oGerings are !etter suited for very large issues.


3-37

&.

A specialist on the A$4 Stock $)change is oGering to !uy a security for <32.,0. A !roker in 5klahoma City wants to sell the security for his client. The -ntermarket Trading System shows a !id price of <32.32, on the 89S$. 'hat should the !roker do(

7oute the order to the A$4 Stock $)change. A. . 7oute the order to the 89S$. C. Call the client to see if she has a preference. ". 7oute half of the order to A$4 and the other half to the 89S$. $. -t doesnt matterLhe should Mip a coin and go with it. The !roker should try to o!tain the !est price for his client. Since the client wants to sell shares and the !id price is higher on the A$4+ he should route the order there.


&2.

9ou sold short 100 shares of common stock at <&, per share. The initial margin is ,0E. 9our initial investment was

A. <&+600. . <1#+000. <#+#,0. C. ". <2+#00. 100 shares O <&,Pshare O 0.,0 Q <&+,00 O 0.,0 Q <#+#,0.


&6.

9ou sold short 1,0 shares of common stock at <#2 per share. The initial margin is &,E. 9our initial investment was

A. <&+600.0. . <1#+000.#,. C. <#+#,0.2,. <1+6##.,0. D. 1,0 shares O <#2Pshare O 0.&, Q <&+0,0 O 0.&, Q <1+6##.,0.

AACSB: Analytic

3-38


&:.

9ou purchased 100 shares of 458 common stock on margin at <0 per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest on margin.

<&#.6 A. . <,0.2, C. <&:.2 ". <60.3& 100 shares O <0 O ., Q <+000 O 0., Q <3+000 ?loan amount@F 0.30 Q ?100 P = <3+000@P100PF 30P Q 100P = <3+000F =20 P Q =<3+000F P Q <&#.6.


,0.

9ou purchased 1000 shares of CSC5 common stock on margin at <1: per share. Assume the initial margin is ,0E and the maintenance margin is 30E. elow what stock price level would you get a margin call( Assume the stock pays no dividendF ignore interest on margin.

A. <1#.6 . <1,.2, C. <1:.2 <13.,2 D. 1+000 shares O <1: O ., Q <1:+000 O 0., Q <:+,00 ?loan amount@F 0.30 Q ?1+000 P = <:+,00@P1+000PF 300P Q 1+000P = <:+,00F =200P Q =<:+,00F P Q <13.,2.


3-39

,1.

9ou purchased 100 shares of common stock on margin at <&0 per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <#,( -gnore interest on margin.

A. 0.33 . 0.,, 0.#0 C. ". 0.#3 $. 0.#, 100 shares O <&0Pshare O 0., Q <&+000 O 0., Q <#+000 ?loan amount@F X Q R100?<#,@ = <#+000P100?<#,@F X Q 0.#0.


,#.

9ou purchased 1+000 shares of common stock on margin at <30 per share. Assume the initial margin is ,0E and the stock pays no dividend. 'hat would the maintenance margin !e if a margin call is made at a stock price of <#&( -gnore interest on margin.

A. 0.33 0.32, B. C. 0.#0 ". 0.#3 $. 0.#, 1+000 shares O <30Pshare O 0., Q <30+000 O 0., Q <1,+000 ?loan amount@F X Q R1+000?<#&@ = <1,+000P1+000?<#&@F X Q 0.32,.


3-40

,3.

9ou purchased 100 shares of common stock on margin for <,0 per share. The initial margin is ,0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <, per share( -gnore interest on margin.

A. #6E . 33E C. 1&E ". &#E #&E E. 100?<,0@?0.,0@ Q <#+,00 investmentF gain on stock sale Q ?, = ,0@?100@ Q <00F 7eturn Q ?<00P<#+,00@ Q #&E.


,&.

9ou purchased 100 shares of common stock on margin for <3, per share. The initial margin is ,0E and the stock pays no dividend. 'hat would your rate of return !e if you sell the stock at <&# per share( -gnore interest on margin.

A. #6E . 33E C. 1&E &0E D. $. #&E 100?<3,@?0.,0@ Q <1+2,0 investmentF gain on stock sale Q ?&# = 3,@?100@ Q <200F 7eturn Q ?<200P<1+2,0@ Q &0E.


3-41

,,.

Assume you sell short 1+000 shares of common stock at <3, per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <#, per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

A. #0.&2E . #,.3E ,2.1&E C. ". 22.#3E >ro/t on stock Q ?<3, = <#,@?1+000@ Q <10+000F initial investment Q ?<3,@?1+000@ ?.,@ Q <12+,00F return Q <10+000P<12+,00 Q ,2.1&E.


,.

Assume you sell short 100 shares of common stock at <30 per share+ with initial margin at ,0E. 'hat would !e your rate of return if you repurchase the stock at <3, per share( The stock paid no dividends during the period+ and you did not remove any money from the account !efore making the oGsetting transaction.

=33.33E A. . =#,.3E C. =,2.1&E ". =22.#3E >ro/t on stock Q ?<30 = <3,@?100@ Q =,00F initial investment Q ?<30@?100@?.,@ Q <1+,00F return Q <,00P<1+,00 Q =33.33E.


3-42

,2.

9ou want to purchase D stock at <&0 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <&+000 to invest+ how many shares can you !uy(

A. 100 shares #00 shares B. C. ,0 shares ". ,00 shares $. #, shares 9ou can !uy ?<&+000P<&0@ Q 100 shares outright and you can !orrow <&+000 to !uy another 100 shares.


,6.

9ou want to purchase - stock at <60 from your !roker using as little of your own money as possi!le. -f initial margin is ,0E and you have <#+000 to invest+ how many shares can you !uy(

A. 100 shares . #00 shares ,0 shares C. ". ,00 shares $. #, shares 9ou can !uy ?<#+000P<60@ Q #, shares outright and you can !orrow <#+000 to !uy another #, shares.


3-43

,:.

Assume you sold short 100 shares of common stock at <&0 per share. The initial margin is ,0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <,0(

A. &0E #0E B. C. 3,E ". #,E <&+000 O 1., Q <+000F R<+000 = 100?<,0@P100?<,0@ Q #0E.


0.

Assume you sold short 100 shares of common stock at <20 per share. The initial margin is ,0E. 'hat would !e the maintenance margin if a margin call is made at a stock price of <6,(

A. &0.,E . #0.,E C. 3,.,E #3.,E D. <2+000 O 1., Q <10+,00F R<10+,00 = 100?<6,@P100?<6,@ Q #3.,E.


1.

9ou sold short 100 shares of common stock at <&, per share. The initial margin is ,0E. At what stock price would you receive a margin call if the maintenance margin is 3,E(

<,0 A. . <, C. <3, ". <&0 $*uity Q 100?<&,@ O 1., Q <+2,0F 0.3, Q ?<+2,0 = 100 P@P100PF 3,P Q <+2,0 = 100PF 13,P Q <+2,0F P Q <,0.00

AACSB: Analytic Blooms: Apply

3-44

Difculty: Challenge

#.

9ou sold short 100 shares of common stock at <2, per share. The initial margin is ,0E. At what stock price would you receive a margin call if the maintenance margin is 30E(

A. <:0.#3 . <66.,# <6.,& C. ". <62.1# $*uity Q 100?<2,@ O 1., Q <11+#,0F 0.30 Q ?<11+#,0 = 100 P@P100PF 30P Q <11+#,0 = 100PF 130P Q <11+#,0F P Q <6.,&.


3.

The preliminary prospectus is referred to as a

red herring. A. . indenture. C. greenmail. ". tom!stone. $. headstone. The preliminary prospectus is referred to as a red herring.


3-45

&.

The securities act of 1:33 -@ re*uires full disclosure of relevant information relating to the issue of new securities. --@ re*uires registration of new securities. ---@ re*uires issuance of a prospectus detailing /nancial prospects of the /rm. -K@ esta!lished the S$C. K@ re*uires periodic disclosure of relevant /nancial information. K-@ empowers S$C to regulate e)changes+ 5TC trading+ !rokers+ and dealers.

-+ --+ and --A. . -+ --+ ---+ -K+ K+ and KC. -+ --+ and K ". -+ --+ and -K $. -K only The Securities Act of 1:33 re*uires full disclosure of relevant information relating to the issue of new securities+ re*uires registration of new securities+ and re*uires issuance of a prospectus detailing /nancial prospects of the /rm.


,.

The Securities Act of 1:3& -@ re*uires full disclosure of relevant information relating to the issue of new securities. --@ re*uires registration of new securities. ---@ re*uires issuance of a prospectus detailing /nancial prospects of the /rm. -K@ esta!lished the S$C. K@ re*uires periodic disclosure of relevant /nancial information. K-@ empowers S$C to regulate e)changes+ 5TC trading+ !rokers+ and dealers.

A. -+ --+ and --. -+ --+ ---+ -K+ K+ and KC. -+ --+ and K ". -+ --+ and -K -K+ K+ and KE. The Securities Act of 1:3& esta!lished the S$C+ re*uires periodic disclosure of relevant /nancial information+ and empowers S$C to regulate e)changes+ 5TC trading+ !rokers+ and dealers.

AACSB: Analytic

3-46

Blooms: Apply Difculty: Basic

.

'hich of the following is not re*uired under the C%A -nstitute Standards of >rofessional Conduct(

A. Nnowledge of all applica!le laws+ rules and regulations B. "isclosure of all personal investments+ whether or not they may conMict with a clients investments C. "isclosure of all conMicts to clients and prospects ". 7easona!le in*uiry into a clients /nancial situation $. All of the options are re*uired under the C%A -nstitute standards. See $)cerpts from C%A -nstitute Standards of >rofessional Conduct. >ersonal investments need not !e disclosed unless they are in potential or actual conMict.


2.

According to the C%A -nstitute Standards of >rofessional Conduct+ C%A -nstitute mem!ers have responsi!ilities to all of the following except

the government. A. . the profession. C. the pu!lic. ". the employer. $. clients and prospective clients. See $)cerpts from C%A -nstitute Standards of >rofessional Conduct.


Short Answer Questions

3-47

6.

"iscuss margin !uying of common stocks. -nclude in your discussion the advantages and disadvantages+ the types of margin re*uirements+ how these re*uirements are met+ and who determines these re*uirements.

uying stock on margin means !uying stock with partially !orrowed funds. These funds are !orrowed from your !roker+ who has !orrowed the funds from a commercial !ank. The initial margin re*uirement is the percent of the funds that must !e your own. The current initial margin re*uirement is ,0E and is set !y the %ederal 7eserve System. argin is simply e*uity as a percent of the value of your account. Su!se*uent to opening the account+ stock prices change and thus the margin of your account changes. The maintenance margin is the relevant margin after you open your account. A #,E maintenance margin is re*uired for 89S$ listed stocksF however+ most !rokers will re*uire a maintenance margin a!ove that amount. -f the margin of your account falls !elow the maintenance margin re*uirement+ you will receive a margin call. 9ou can either send your !roker more cash to reduce the amount of the original loan to get your account !ack to the re*uired maintenance margin+ or your !roker can sell some of the shares for you+ using the proceeds to reduce the amount of your original loan+ thus getting your account !ack to the margin re*uirement. The advantage of margin is that of leverage. -f the price of stock increases+ you own more shares than had you used only your own funds and your returns will !e greater. The disadvantage of margin is that if the price of the stock declines+ you will own more shares and your losses will !e greater than had you used only your own funds.

AACSB: Reecti!e "hin#ing Blooms: $nderstand Difculty: Intermediate

:.

ist three factors that are listing re*uirements for the 8ew 9ork Stock $)change. 'hy does the e)change have such re*uirements(

%actors include+ !ut are not limited to+ minimum preta) income in the last year+ minimum average annual preta) income in the previous two years+ minimum market value of pu!licly held stock+ minimum num!er of shares pu!licly held+ and a minimum num!er of holders of one hundred shares or more. The 89S$ has these re*uirements to ensure that the /rm has enough trading interest for the 89S$ to allocate facilities and Moor space.

AACSB: Reecti!e "hin#ing Blooms: %no&ledge Difculty: Intermediate

3-48

TBChap003 (1)

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