TRUE OR FALSE: 9.

) The name "12b-1" fee got its name from

1.) I. Preferred stock has a nonvoting share in a what act?
corporation - INVESTMENT ACT OF 1940
II. Usually paying a fixed stream of dividends. 10.) Certificates given to investors of Unit
a.) True, True c.) False, True Investment Trusts are called.
b.) True, False d.) False, False - REDEEMABLE TRUST CERTIFICATE
2.) I. Put option - The right to buy an asset at a
specified price on or before a specified MULTIPLE CHOICE:
expiration date. 11.) This is where the new securities are issued
II. Call option - The right to sell an asset at a to the public for the first time.
specified exercise price on or before a specified a.) Primary market
expiration date. b.) Secondary market
a.) True, True b.) True, False 12.) A type of bond issued by state and local
c.) False, True d.) False, False governments.
3.) I. Underwriters purchase securities from the a.) International b.) Federal
issuing company and resell them to the public. c.) Municipal d.) Corporate
II. Public offerings of both stocks and bonds 13.) A time deposit with a bank.
typically are marketed by investment a.) Certificate of Deposit b.) Municipal
bankers who in this role are called c.) Commercial Paper d.) Corporate
underwriters. 14. Consists of very short-term debt securities
a.) True, True b.) True, False that are highly marketable.
c.) False, True d.) False, False a.) Treasury Bills b.) Money Market
4.) I. Auction Market - Markets in which traders c.) Certificate of Deposit d.) Federal
specializing in particular assets buy and sell for 15.) The most marketable of all money market
their own accounts. instruments.
II. Dealer Markets- A market where all a.) Treasury Bills b.) Money Market
traders meet at one place to buy or sell an c.) Certificate of Deposit d.) Federal
asset. 16.) A subset of algorithmic trading that relies
a.) True, True b.) True, False on computer programs to make extremely rapid
c.) False, True d.) False, False decisions.
5.) TRUE OR FALSE. A bond is an example of a a.) Algorithmic Trading b.) Bond Trading
capital market security. c.) Direct Trading d.) High Frequency Trading
- TRUE 17.) It allows investors to profit from a decline
in a security’s price.
IDENTIFICATION: a.) Dark Pools b.) Insider Trading
6.) Conflicts of interest between managers and c.) Bond Trading d.) Short sales
shareholders are called? 18.) 2 largest stock market in the world
- AGENCY PROBLEM a.) NSD and NYSE b.) NYSE and NASDAQ
7.) An act which was implemented in response c.) NYSE and ECN’s d.) NASDAQ and ECN’s
to the scandals between 2000-2002. 19.) Is the use of computer programs to make
- SARBANES-OXLEY ACT trading decisions
8.) The main difference of Mutual fund from ETF a.) Algorithmic Trading b.) Bond Trading
is. c.) High Frequency Trading d.) Direct Trading
- WAY OF SELLING
COMPUTATION:
20. Compute for the rate of return:
NAV Jan. 1 - 20.50
NAV Dec. 31 - 26.40
Income Distribution - 3.20
12b-1 fees - 2% of NAV

RATE OF RETURN = NAV1 – NAV0 + INCOME AND CAPITAL GAINS DISTRIBUTION

NAV0

= (26.40-0.41) – 20.50 + 3.20

20.50

RATE OF RETURN = 42.39%