Question

Sorry, this is all the info I have on this problem, I have. If you cannot do it please cancel/refund the question so we both can save time :)

5. A type of order that becomes a market order when a round lot trades at or through a particular

price is called a

a. market order

b. limit order

c. stop order

d. none of the above

6. A customer's initial transaction in a margin account is the purchase of 100 shares of stock at $68

per share. How much must the customer deposit when the margin requirement is 50%?

a. $3400

b. $4,000

c. $3,000

d. none of the above amounts.

7. The primary market is distinguished from the secondary market in that trading in the secondary

market consists of _________.

a. Less publicized securities of smaller firms.

b. Already existing securities.

c. Newly issued securities

d. Securities with maturities of one year or less.

8. Mr. Investor purchases $10,000 worth of stock in a margin account. If he uses fully paid

securities to meet the margin call, what value of securities would he be required to deposit?

a. he cannot do this under current law

b. $5,000

c. $10,000

d. $20,000

Answer 1

Question 1: Stop Order

Stop order refers to the purchasing and selling of the stocks when the specified price is achieved. When the specified price reaches it becomes the market order which executes the order immediately at the specified price the buyer or seller has put. It is also known as stop loss, it is used to limit the loss and to take advantage of the share price when the market is going in upward direction.

Question 2 $3400

Margin requirement refers to the balance that the investor has to maintain in trading account to buy or sell the stocks.

Margin Requirement = Number of Share * Purchase price * Margin Requirement

= 100 * 68 * 50%

= 6800 * 50%

= 3400

Question 3 Already existing securities

Primary market refers to the market where the stocks are traded for the first time. For Example: Initital Public Offer, Issuance of Bond etc. while secondard market is the market where the existing stocks are traded, the ownership of the stocks in the secondary market is transferred from one investor to other while in primary market usually companies issue the stocks to the investors.

Question 4 5,000

Usually, the margin call requirement in the United states has 50% requirement if fully paid securities like equity is given. So, The margin requirement will be $10,000 * 50%

= $5,000