QUESTION 1

1. A report describing the transactions in an account, listing the dividend and interest
payments received, and detailing the current holdings is called a
red herring.
street certificate.
statement.
prospectus.

3 points
QUESTION 2
1. Shares of stock owned by an individual but held in a brokerage firm's name for ease of
trading are said to be held in street name.

True

False

3 points
QUESTION 3
1. Dividends earned on securities held in street name by the brokerage are not reported to
the Internal Revenue Service.

True

False

3 points
QUESTION 4
1. Which is the correct order of events when an individual buys a stock through a brokerage
firm?

II, I, IV, III

I, II, III, IV
II, IV, I, III
II, I, III, IV

3 points
QUESTION 5
1. An individual investor who wishes to borrow money to buy stocks must open a
margin account.
joint account.
custodial account.
 signature account.

3 points
QUESTION 6
1. A stop-loss order is activated once the stock reaches the specified price.

True

False

3 points
QUESTION 7
1. Which of the following statements concerning day traders are correct?

I and II only
I and III only
I, II and IV only
II, III and IV only

3 points
QUESTION 8
1. A margin account
allows an investor to borrow a portion of the purchase price at a reasonable rate of
interest.
is permitted only in wrap accounts.
can be opened by any investor who wants to purchase securities by charging them to
his/her credit card.
allows an investor to borrow one hundred percent of the cost of the securities
purchased.
3 points
QUESTION 9
1. The Securities Investors Protection Corporation protects investors from brokers who offer
incompetent advice.

True

False

3 points
QUESTION 10
1. Many day traders are also margin traders.

True

False
 Question 1
3 out of 3 points

When an investor places a ________ order, he agrees to buy or sell at the best available price
when the trade is executed.

Selected Answer: statement.

 Question 2
3 out of 3 points

Shares of stock owned by an individual but held in a brokerage firm's name for ease of
trading are said to be held in street name.
Selected Answer: True
 Question 3
0 out of 3 points

Dividends earned on securities held in street name by the brokerage are not reported to
the Internal Revenue Service.
Selected Answer: True
 Question 4
3 out of 3 points

Which is the correct order of events when an individual buys a stock through a
brokerage firm?

Selected Answer: II, I, IV, III

 Question 5
3 out of 3 points

An individual investor who wishes to borrow money to buy stocks must open a
Selected Answer: margin account.
 Question 6
3 out of 3 points

A stop-loss order is activated once the stock reaches the specified price.
Selected Answer: True
 Question 7
3 out of 3 points
 Which of the following statements concerning day traders are correct?

Selected Answer: I and III only

 Question 8
3 out of 3 points

A margin account
Selected allows an investor to borrow a portion of the purchase price at a
Answer:
reasonable rate of interest.
 Question 9
3 out of 3 points

The Securities Investors Protection Corporation protects investors from brokers who
offer incompetent advice.
Selected Answer: False
 Question 10
3 out of 3 points

Many day traders are also margin traders.

Selected Answer: True