金融市场与金融机构基础 Fabozzi Chapter17

5) ________ involves the sale of a security not owned by the investor at the time of sale. A) Short buying B) Long selling C) Short selling D) Long buying Answer: C Diff: 1

Topic: 17.2 Trading Mechanics

Objective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions

6) A transaction in which an investor borrows to buy shares using the shares themselves as collateral is called ________. A) buying on margin. B) selling on margin. C) buying on loan. D) selling on loan. Answer: A Diff: 1

Topic: 17.2 Trading Mechanics

Objective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions

7) ________ is the minimum proportion of (1) the equity in the investor's margin account to (2) the total market value.

A) preservation margin requirement B) maintenance boundary requirement C) maintenance margin condition D) maintenance margin requirement Answer: D Diff: 1

Topic: 17.2 Trading Mechanics

Objective: 17.1 trading mechanisms such as the types of orders, short selling, and margin transactions

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3 Transaction Costs

1) ________ are the direct costs of trading, such as broker commissions, fees, and taxes. A) Embedded costs B) Operation costs C) Implicit costs D) Explicit costs Answer: D

Comment: Transaction costs, also referred to as trading costs, can be decomposed into two major components: explicit costs and implicit costs. Explicit costs are the direct costs of trading, such as broker commissions, fees, and taxes. Implicit costs represent such indirect costs as the price impact of the trade and the opportunity costs of failing to execute in a timely manner or at all. Whereas explicit costs are associated with identifiable accounting charges, no such reporting of implicit costs occurs. Diff: 2

Topic: 17.3 Transaction Costs

Objective: 17.2 the types of transaction costs encountered when trading stocks

2) Investors often choose their ________ based on who will give them the best execution at the ________ on a specific transaction, and also based on who will provide ________ over a period of time.

A) customers; highest transaction cost; required services B) broker/dealer; highest transaction cost; required services

C) broker/dealer; lowest transaction cost; complementary services D) customers; lowest transaction cost; complementary services Answer: C

Comment: Investors often choose their broker/dealer based on who will give them the best execution at the lowest transaction cost on a specific transaction, and also based on who will provide complementary services (such as research) over a period of time. Diff: 2

Topic: 17.3 Transaction Costs

Objective: 17.2 the types of transaction costs encountered when trading stocks

3) An investor preferentially routes their order to the broker/dealer specified in the soft dollar relationship and does not have to pay real money, for the research or other services. This practice is called paying \ A) \B) \C) \D) \Answer: B Diff: 2

Topic: 17.3 Transaction Costs

Objective: 17.2 the types of transaction costs encountered when trading stocks

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4) Implicit trading costs include ________. A) influence costs, timing costs, and sunk costs. B) impact costs, time period costs, and sunk costs.

C) influence costs, time period costs, and opportunity costs. D) impact costs, timing costs, and opportunity costs. Answer: D Diff: 2

Topic: 17.3 Transaction Costs

Objective: 17.2 the types of transaction costs encountered when trading stocks

5) ________ is the \A) The sunk cost B) The impact cost C) The timing cost

D) The opportunity cost Answer: D Diff: 2

Topic: 17.3 Transaction Costs

Objective: 17.2 the types of transaction costs encountered when trading stocks

4 Trading Arrangements for Retail and Institutional Investors

1) Which of the below statements is FALSE?

A) Trades are executed by individuals (wholesale investors) and institutions. B) Institutions typically transact much larger orders than individuals.

C) Consistent with their larger size, institutions typically pay lower commissions than individuals.

D) Although both an individual and an institution can trade through a broker-dealer, the ways in which their orders are entered and executed may be considerably different, even if the trades are through the same broker-dealer. Answer: A

Comment: Trades are executed by individuals (retail investors) and institutions. Diff: 2

Topic: 17.4 Trading Arrangements for Retail and Institutional Investors

Objective: 17.3 trading arrangements to accommodate institutional traders such as block trades and program trades

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2) ________ may be sent to the broker-dealer's floor broker, and ________ orders may be transacted with another broker-dealer or internalized at a competitive bid or offer. A) Exchange orders; OTC B) Exchange orders; NYSE C) Floor orders; AMEX D) Floor orders; OTC Answer: A Diff: 2

Topic: 17.4 Trading Arrangements for Retail and Institutional Investors

Objective: 17.3 trading arrangements to accommodate institutional traders such as block trades and program trades

3) During the past 50 years, common stock holdings in the United States have become increasingly institutionalized. The major institutional holders include ________. A) pension funds and asset management companies. B) life insurance companies and bank trusts. C) endowments and foundations. D) All of these Answer: D Diff: 2

Topic: 17.4 Trading Arrangements for Retail and Institutional Investors

Objective: 17.3 trading arrangements to accommodate institutional traders such as block trades and program trades

4) ________ are orders requiring the execution of trades in a large number of different stocks at as near the same time as possible. A) Retail trades B) Program trades C) Mutual fund trades D) Block trades Answer: B Diff: 2

Topic: 17.4 Trading Arrangements for Retail and Institutional Investors

Objective: 17.3 trading arrangements to accommodate institutional traders such as block trades and program trades

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