True False

O O 1. If IBM sold additional shares of stock, it would do so in the primary market.

O O 2. It is fair to say that Rule 415 is more beneficial to large corporations than to investors.

O O 3. It is fair to say that the shares of large corporations would not trade on the third market.

O O 4. Logically, bid price < ask price.

O O 5. For a stock trading at $60 per share, a stop buy order would specify a price > $60.

O O 6. A margin rate of 65% would mean that only 35% of a trade requires cash.

O O 7. If the margin rate is 50%, the leverage factor would be 0.50.

O O 8. If the stock price is $40, shares are 100, margin rate is 60% and maintenance margin is 25%, the lowest price before a margin call would be less than $22.

O O 9. The purchaser of short sale stock receives dividends from the short seller.

O O 10. If you pay $10 for a stock on 40% margin and it improves to $12, your return on margin > 40%.

O O 11. The leverage factor will reduce the percentage loss to the investor if the stocks declines in price.

O O 12. If you bought a stock at $25 that now sells for $45 and place a stop loss order at $40, your rate of return when the stock declines to $30 is less than 50%.

O O 13. If you place a limit order to buy at $24 on a stock selling for $28, your rate of return when the stock declines to $20 and then jumps to $36 is more than 40%.

O O 14. If you can buy 100 shares of stock with cash, you can buy 250 shares on 40% margin.

O O 15. Minimal transaction cost is not referred to as informational efficiency.

O O 16. Decimal pricing resulted in increasing the size of the bid-ask spread.

O O 17. A government bond with an original maturity of 5 years is a T-note.

O O 18. Corporate bond sales almost always use the competitive bid method.

O O 19. The New York Stock Exchange is a continuous auction market.

O O 20. A limit order to sell is placed above the current stock price.