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    Quiz 2 AFM 121 With Answers

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    Sippican Corporation Case Study Solution - Trabalhos Feitos www.trabalhosfeitos.com/.../sippican-corporation-case-study-solution/0 Grátis Artigos Acadêmicos em Sippican Corporation Case Study Solution para estudantes. Use nossos trabalhos para ajudá-lo a redigir os seus.

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    Quiz 2 AFM 121 With Answers

    Uploaded by

    Don
    228 views4 pages
    Sippican Corporation Case Study Solution - Trabalhos Feitos www.trabalhosfeitos.com/.../sippican-corporation-case-study-solution/0 Grátis Artigos Acadêmicos em Sippican Corporation Case Study Solution para estudantes. Use nossos trabalhos para ajudá-lo a redigir os seus.

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    Sippican Corporation Case Study Solution - Trabalhos Feitos www.trabalhosfeitos.com/.../sippican-corporation-case-study-solution/0 Grátis Artigos Acadêmicos em Sippican Corporation Case Study Solution para estudantes. Use nossos trabalhos para ajudá-lo a redigir os seus.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    228 views4 pages

    Quiz 2 AFM 121 With Answers

    Uploaded by

    Don
    Sippican Corporation Case Study Solution - Trabalhos Feitos www.trabalhosfeitos.com/.../sippican-corporation-case-study-solution/0 Grátis Artigos Acadêmicos em Sippican Corporation Case Study Solution para estudantes. Use nossos trabalhos para ajudá-lo a redigir os seus.

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    At a glance
    Powered by AI
    The document discusses options trading and concepts related to investment banking such as underwriting, red herrings, and bid/ask spreads.

    Underwriting is the process by which an investment banking firm assumes the risk of purchasing newly issued securities from a company and reselling those shares to investors in the market.

    A preliminary prospectus not yet approved by the OSC is referred to as a red herring.

    Quiz #2

    January 22nd, 2013


    AFM 121
    Section Andrew Ecclestone, CFA

    Name:_____________________
    Student #:__________________

    Question
    1 -10
    11
    Total

    Questions 1-10 (10 marks)

    Score

    Use the following information on options


    AA Company: Price 35.20
    Calls:
    Strike
    Symbol
    Last
    27.50
    AAEY
    7.70
    30.00
    AAEF
    5.20
    32.50
    AAEZ
    2.80
    35.00
    AAEG
    0.45

    Change
    +0.28
    +0.36
    +0.30
    +0.20

    Bid
    7.70
    5.20
    2.75
    0.40

    Ask
    7.80
    5.30
    2.80
    0.50

    Volume
    2
    453
    520
    656

    Open Int.
    289
    1,306
    3,609
    5,372

    Puts:
    Strike
    35.00
    37.50
    40.00

    Change
    -0.20
    -1.30
    -0.10

    Bid
    0.25
    2.30
    4.80

    Ask
    0.30
    2.40
    4.90

    Volume
    19
    11
    2

    Open Int.
    1,607
    114
    13

    Symbol
    AAQG
    AAQS
    AAQH

    Last
    0.30
    2.35
    4.80

    1.

    You would like to have the right to purchase 500 shares of AA stock at a price of $35 a share.
    How much will it cost you to buy options to meets this objective?

    A.
    B.
    C.
    D.
    E.

    $125
    $150
    $200
    $250
    $300

    2.

    Which of the following is a primary asset?

    A.
    B.
    C.
    D.
    E.

    Call option.
    Common stock.
    Futures.
    Put option.
    All of the above.

    3.

    You are buying 500 shares of stock from your uncle in the NASDAQ market. This transaction is
    taking place in the ____ market.

    A.
    B.
    C.
    D.
    E.

    Third
    Primary
    Initial
    Secondary
    OTC

    4.

    A(n) ________ specializes in finding buyers for newly issued securities and helps arrange
    financing for companies.

    A.
    B.
    C.
    D.
    E.

    stock market
    investment banking firm
    stock exchange
    open market
    commercial bank

    5.

    ________ is the process by which an investment banking firm assumes the risk of purchasing
    newly issued securities from a company and reselling those shares to investors in the market.

    A.
    B.
    C.
    D.
    E.

    Underwriting
    New issue
    Open market operations
    Commercial sales
    Firm commitment

    6.

    The percentage the investment banker keeps when selling a security for a company is called the
    underwriter __________.

    A.
    B.
    C.
    D.
    E.

    Profit
    Spread
    Margin
    Take
    Markup

    7.

    A preliminary prospectus not yet approved by the OSC is referred to as a(n) ____.

    A.
    B.
    C.
    D.
    E.

    Primary prospectus
    Red herring
    Best effort document
    Initial prospectus
    Draft

    8.

    The price at which a dealer is willing to sell a security in the market is called the _____ price.
    This is the ____ of the two prices quoted for securities.

    A.
    B.
    C.
    D.
    E.

    Ask; higher
    Bid: higher
    Ask; lower
    Bid; lower
    Spread; medium

    9.

    The majority of all capital market transactions occur in the

    A.

    Primary market

    B.
    C.
    D.
    E.

    Secondary market
    Third market
    Fourth market
    Direct placement market

    10.

    You place a stop-loss order at $78. The current share price is $82. The stock price drops the next
    day to $75. What is the best price you could receive for your stock?

    A.
    B.
    C.
    D.
    E.

    $75.00
    $78.00
    $74.99
    $82.00
    $75.01

    11. Use the following information for the questions below.


    Buy Orders
    Shares
    Price
    300
    $64.12
    150
    $64.10
    400
    $64.09
    500
    $64.05

    Shares
    200
    150
    75
    300

    Sell Orders
    Price
    $64.15
    $64.16
    $64.20
    $64.21

    Ensure that you reflect all orders in the order book as they occur. Ignore all commission costs.
    a)

    Purchase 100 shares at the market. What was your total purchase cost?

    100 x 64.15 = $6,415


    b)

    Sell 500 shares with a limit order priced at $64.11. What is the best bid after the order
    has been executed?

    300 shares get sold at $64.12. 200 shares are offered at $64.11. Best bid is therefore $64.10
    c)

    What is the current best offer?

    $64.11
    d) Sell 200 shares at the market. What is the total amount you received on the sale of the
    shares?
    150 * 64.10 + 50 * 64.09 = $12,819.50

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