C12: Buying and Selling Investments

Question 1

a company’s report to shareholders about the financial position of the company

Answer 1

annual report

Question 2

a legal document issued by an investment company that provides details about the securities it offers for sale

Answer 2

prospectus

Question 3

a qualified stockbroker who provides advice about what securities to buy and sell

Answer 3

full-service broker

Question 4

a qualified stockbroker who buys and sells securities at a reduced commission but provides limited services to clients

Answer 4

discount broker

Question 5

the financial market in which new issues of securities are sold

Answer 5

primary market

Question 6

the financial market in which previously issued securities are bought and sold

Answer 6

secondary market

Question 7

a marketplace where brokers buy and sell securities for their clients

Answer 7

securities exchange

Question 8

a market in which buyers enter competitive bids and sellers enter competitive offers at the same time

Answer 8

auction market

Question 9

a network of brokers who buy and sell securities that are not listed on a securities exchange

Answer 9

over-the-counter (OTC) market

Question 10

a dividend paid in the form of new shares of stock

Answer 10

stock dividend

Question 11

the issuance of more stock to current shareholders in some proportion to the stock they already own

Answer 11

stock split

Question 12

a request to buy (or sell) a stock at the current market price

Answer 12

market order

Question 13

a request to buy (or sell) a stock at a specific price

Answer 13

limit order

Question 14

a request to sell a stock when it reaches a certain price

Answer 14

stop order

Question 15

an order to buy (or sell) a stock that allows the broker to get the best possible price

Answer 15

discretionary order

Question 16

selling stock that has been borrowed from a broker and replacing it at a later date

Answer 16

selling short

Question 17

borrowing money from your broker to buy stock

Answer 17

buying on margin

Question 18

a plan to purchase and keep stock for the long term

Answer 18

buy and hold

Question 19

a strategy of making regular and systematic changes in stock ownership based on trends in the economy

Answer 19

stock turning

Question 20

exactly 100 shares or multiples of 100 shares of stock

Answer 20

round lot

Question 21

fewer than 100 shares of stock

Answer 21

odd lot

Question 22

supervision of activities to ensure that investors rights are protected

Answer 22

oversight

Question 23

an independent federal agency that charters and supervises credit unions

Answer 23

National Credit Union Administration (CUA)

Question 24

a private, nonprofit organization that regulates firms selling securities in the United States

Answer 24

Financial Industry Regulatory Authority (FINRA)

Question 25

a federal corporation whose primary purpose is to protect the retirement incomes of workers with defined-benefit pension plans

Answer 25

Pension Benefit Guaranty Corporation (PBGC)

Question 26

a government agency that regulates futures and options markets in the United States

Answer 26

Commodity Futures Trading Commission (CFC)

Question 27

a government agency that charters, regulates, and supervises all national banks

Answer 27

Office of the Comptroller of the Currency (OCC)

Question 28

the primary overseer and regulator of the U.S. securities market

Answer 28

Securities and Exchange Commission (SEC)

Question 29

a law that set new and stronger standards for public companies and accounting firms regarding the reporting of financial results of operations

Answer 29

Sarbanes-Oxley (SOX)

Question 30

a law that seeks to decrease various risks in the U.S. financial system and enhance investor and consumer protections throughout the system

Answer 30

Wall Street Reform Act