16) Which of the following statements regarding the specialist are true?

A) Specialists maintain a book listing outstanding, unexecuted limit orders. B) Specialists earn income from commissions and spreads in stock prices. C) Specialists stand ready to trade at quoted bid and ask prices. D) Specialists cannot trade in their own accounts. E) Specialists maintain a book listing outstanding, unexecuted limit orders, earn income from commissions and spreads in stock prices, and stand ready to trade at quoted bid and ask prices.

17) Which one of the following statements regarding orders is false?

A) A market order is simply an order to buy or sell a stock immediately at the prevailing market price. B) A limit-sell order is where investors specify prices at which they are willing to sell a security. C) If stock ABC is selling at $50, a limit-buy order may instruct the broker to buy the stock if and when the share price falls below $45. D) A market order is an order to buy or sell a stock on a specific exchange (market).

18) Assume you purchased 200 shares of KO common stock on margin at $70 per share from your broker. If the initial margin is 55%, how much did you borrow from the broker?

A) $6,000 B) $4,000 C) $7,700 D) $7,000 E) $6,300

19) Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

A) 20.03% B) 25.67% C) 22.22% D) 77.46%

20) Assume you sold short 100 shares of common stock at $50 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $60?

A) 40% B) 33% C) 35% D) 25%