Question

10. You purchased XYZ stock at $50 per share. The stock is currently selling at $80. You expect the stock price to go up, but not 100% sure. Placing a ___________ may protect your current gains of $30 while at the same time keeping the opportunity open for future upward potential.

1. limit-buy order
2. limit-sell order
3. stop-buy order
4. stop-loss order

12. The NYSE is an example of ________ and NASDAQ is an example of ______
    1. a dealer market ; an auction market
    2. a specialist market; a dealer market
    3. a brokered market; a dealer market
    4. a direct search market; a brokered market

13. The money market is the market where:
    1. Only equity securities are traded.
    2. Debt securities with maturities of longer than a year are traded.
    3. Where treasury debt securities are traded.
    4. Securities of maturities up to one year are traded.

15. Which of the following is NOT a problem associated with the Bank Discount Yield that prevents it from being useful as an accurate measure of investment returns?

      A. Simple interest

      B. 360-day year

      C. Initial investment amount in the denominator

      D. Par value in the denominator

Answer 1

1)

D. stop-loss order

Stop Loss order limits the ptice at which the order will grt executed, if the price trades below the specified amount. So, in this case, Stop Loss order ensures $30 gain and keeps the future upward potential.

2)

B. a specialist market; a dealer market

3)

D. Securities of maturities up to one year are traded

4)

C. Initial Investment amount in the denominator

Bank discount yield is calculated as:

(D/F)*(360/t); where D is discount and F is Par value.

So, the calculation contains Par value as denominator and not Initial investment.