Market Organization and Structure

9 questions

1. 1. An investor's brokerage account has a minimum margin requirement of 45%. What is the leverage ratio for a position financed by this margin requirement?
   1.451.822.22
2. 2. An investor purchases stocks of a company at $100 per share with 50% margin. The maintenance margin requirement is 30%. At what price will the investor receive a margin call?
   $70$71.43$50
3. 3. Which of the following would be used to stop losses from a short sale? Assume you short sell at the current market price.
   A stop buy order with the stop price set above the current market price.A stop buy order with the stop price set below the current market price.A stop sell order with the stop price set above the current market price.
4. 4. An investor places a limit order to buy a stock at $50 or less. Your instruction to buy a stock at $50 or less is:
   Execution instructionValidity instructionClearing instruction
5. 5. Six months ago, an investor bought ABC Company stock at $60 per share. Today, the stock sells for $72 per share. The investor likes the long-term prospects for the stock, but wants some protection against price decreases. Which of the following orders is the best way for the investor to participate in future price increases and simultaneously ensure a minimum profit of $10 per share?
   A limit sell order, limit price = $82.A stop sell order, stop price = $70.A limit buy order, limit price = $62.
6. 6. Which of the following observations concerning private placements is true?
   They generally will be more suited for very large offerings.They are characterized by high post-issue liquidity.They do not trade in secondary markets like stock exchanges.
7. 7. In a stock market order, which of the following is NOT a validity instruction?
   Market orderImmediate-or-cancel orderStop loss order
8. 8. The London Stock Exchange is an example of a:
   Quote-driven marketOrder-driven marketBrokered market
9. 9. Which of the following statements is least accurate about trade execution systems?
   Quote-driven markets are OTC markets.Most ECNs are organized as quote-driven markets.Real estate market is an example of a brokered market.