Question 1. When ranking security returns from highest return to lowest return, the data shows that the annualized returns are as follows:
Large stocks, small stocks, long-term corporate bonds, long-term government bonds, and treasury bills.
Treasury bills, long-term government bonds, long-term corporate bonds, large stocks, small stocks
Large stocks, small stocks, long-term government bonds, long-term corporate bonds, and treasury bills.
Small stocks, large stocks, long-term corporate bonds, long-term government bonds, and treasury bills.

Question 2. A direct equity claim arises through investment in __.
bonds and other debt instruments
common stocks, warrants, and options
preferred stock and commodity futures
mutual funds

Question 3. What factors must be considered in choosing between investment alternatives?
Risk and liquidity
Interest or dividends versus capital gains
Timeframe for managing funds and evaluating performance and tax effects
All of the above

Question 4. Which of the following is NOT a characteristic of an organized exchange?
An organized exchange functions as a primary market.
Securities are bought and sold in an auction market by brokers acting as agents for buyers and sellers in a central location.
An organized exchange may be either national or regional.
An organized exchange has a central location where all trading takes place.

Question 5. Secondary markets provide _____.
efficiency
continuity
competition
All of the above

Question 6. The process of selling a new issue of securities so that the price is guaranteed to the selling firm is referred to as _____.
underwriting
best efforts
direct by issuer
shelf registration
Comments:

Question 7. The first exchange to become a publicly traded company was the _____.
New York Stock Exchange
Chicago Board of Trade
NASDAQ Stock Market
Chicago Mercantile Exchange

Question 8. The _____ is the tax rate that applies to each new dollar of income.
average tax rate
short-term capital gains tax rate
long-term capital gains tax rate
marginal tax rate
Comments:

Question 9. The index which gives equal weight to every company included, and is therefore not dominated by any single company, is the _____.
Dow Jones Composite Average
Standard & Poor's 400 Index
Value Line Average
American Stock Exchange Index
Comments:

Question 10. The success of a short investment position depends on _____.
a level stock price
a declining stock market
an increasing stock price
declining interest rates.