a.SOES and
direct access electronic execution equipment and software
permits you to compete with NASDAQ market makers
b.The number of
online accounts exceeded 7 million in 1999 and
was expected to grow to 24 million by the end of 2002.
This will probably come true.
c.Today’s
traders operate in a highly competitive environment with
narrow spreads in most major liquid stocks.
d.24-hour
trading on-line will never occur because of international
limits.
e.The SEC
cautions that online traders should know what they are
buying, understand the ground rules and level of risk they
are assuming.
Answer
Question
2)All of the following are benefits of direct access
traders except?
a.Online
brokerages which route customer orders in exchange for
“payment for order flow” ensure better execution prices.
b.You get faster
and more reliable data and execution.
c.You can play
market maker.
d.You can see
market transparency with Level II which shows the
number of price levels, share size, volume and spread.
e.Easier
to trade pre- and post-market.
Answer
Question
3)The U.S. stock market
is heavily influenced by the bond market, which is affected by
the commodity markets, which in turn depend on the trend of
the U.S. dollar.At
2/1/00, the U.S. economy had grown for 107 consecutive
months, setting a record for the longest expansion in U.S.
history.All of
the following are likely causes of this expansion except?
a.Technology and
increased productivity
b.Financial
deregulation
c.Entrepreneurship
and investment capital
d.End of the
Cold War
e.Consumer
spending boom
f.Deficit
reduction
g.The bearish
stock market caused by the “Baby Boomers”
h.International
trade
LEVEL
II ANALYSIS
Answer
Question
4)Which statement is false regarding order
execution on the NYSE?
a.It is an auction market that uses specialists to assure
an orderly market.
b.The floor broker
makes a “bid” for the stock based on that price, competing
with other brokers assembled in the trading area.
c.The specialist
is required to be a buyer and seller of last resort.
d.Market makers
are allowed to trade ahead of customer orders while specialists
are not.
e.
Specialists always lose money on large gap down openings because
they are obligated to provide liquidity and buy from the public.
Answer
Question
5)Which of the following is false regarding market
makers and ECNs?
a.INCA and BTRD are primary choice ECNs used by
institutions
b.ISLD and ARCA
are primary choice ECNs used by retail traders.
c.The following
are all market makers: GSCO, MLCO, STRK
and LEHM
d.The following
are all ECNs:
BTRD – Bloomberg
REDI – Spear, Leads & Kellogg
ATTN – Attain
BRUT – Brass Trading
NTRD – Next Trade
INCA - Instinet
Answer
Question
6)All of the following are primary purposes of market
makers except?
a.Buy or sell
for their own account
b.To circumvent
many SEC regulations that otherwise apply to the public
c.Buy or sell
for clients
d.Serving the
role of MM, providing liquidity AND making the spread
Answer
Question
7)All of the following are true of SelectNET except?
a.Allows traders to negotiate price through the NASDAQ.
b.Orders are only broadcast to MMs and are not reflected
on Level II.
c.Orders may be displayed to
specific MMs or
ECNS through “preferencing.”
d.You are executed automatically like a SOES order.
e.A way to test the market and its liquidity.
Answer
Question
8)Direct access allows you to
execute trades on the following except:
a.ISLD
b.ARCA
c.SelectNET
d.NITE
Answer
Question
9)All of the following are perceived
benefits of swing trading (overnight) except?
a.You can profit from the natural swings of
stocks that the big mutual funds are unable to do because of
their position size.
b.Can be more profitable than a traditional
buy and hold strategy.
c.More appealing than scalping to many because
the commissions and emotional stress are lower.
d.The margin requirements are more favorable.
Answer
Question
10)Which of following would be least important to a
technical analyst?
a.Support and resistance
b.Volume analysis
c.Earnings
d.Japanese candlestick patterns
e.Moving averages
Answer
Question
11)Which of following would be least
important to a fundamental analyst?
a.Chart Patterns
b.Price-earnings ratio
c.Management
d.Competitive threats
e.New products
Answer
Question
12)Which of these is least important under
top-down market analysis?
a.
Sector
and Industry analysis and the health of the overall market
b.
Market
sectors for relative strength and divergences
c.
Macro-economic
imbalances
d.
Time of day
e.Public
sentiment
Answer
Question
13) Order types you could use to protect gains in a
long position except?
a.Market
b.Sell-stop
c.Buy to cover
d.Sell limit
Answer
Question
14)Oscillators are indicators that determine when a market
is in an overbought or oversold condition.All of the following are oscillators except?
a.Momentum
b.Band width
c.Rate of change
d.Relative strength index
e.Stochastic
f.MACD
(moving average convergence/divergence)
g.Commodity channel index
(CCI)
Answer
Question
15)A technical analyst would
consider all of the following “reversal patterns” except?
a.Double
top-double bottom
b.Head
and shoulders
c.Island
reversal
d.Gann
square
Answer
Question
16)A technical analyst would
consider all of the following “continuation patterns”except?
a.Cup
and handle
b.Ascending
triangle
c.Flag
breakout
d.Rising
wedge
e.Pennant
f.Elliott wave
Answer
Question
17)Which of the following news
items is likely to have the greatest negative effect on
a company’s stock price?
a.Management is caught playing fast and loose with
accounting rules to maximize profit
b.Employee layoffs
c.Replacement of CEO
d.Approval by FDA of new drug
e.Automotive recall
f. Airline crash
g.Product sabotage
h.Analyst downgrade
i.Decreasing a dividend
j.Stock split
Answer
Question
18)Which trading discipline is least useful?
a.
Trade
free from speculative prejudices
b.
Concern
yourself with proper trading strategies, and not on making
money
c.
Methodically
and consistently trade with a trading plan, and not with
hope
d.
Trading
is all about proper thinking, risk and managing that risk
e.
As
long is your trade was profitable, you were disciplined
and did all of the right things
Answer
Question
19)All of the following market trading disciplines
are useful except?
a.
Don’t
believe everything you read or hear as many believe that
the media makes its living by promoting fear
b.
Don’t
be angry at a stock even if it unexpectedly or even
illogically goes against you
c.
The
market needs to climb a “wall of worry” as excessive
optimism is a sign that a top is near
d.
There
are no gifts on Wall Street
e.
Underestimating
what the market can do can lead to financial ruin
f.
All
are useful
Answer
Question
20)All of the following personal trading disciplines
are useful except?
a.
The
true battle is not with the market, but learning how to
control your own emotional impulses, psychological demons,
and human nature
b.
Disciplined
traders can observe the market from the perspective as if
they were not in a position, even when they are
c.
Your
physical or emotional state does not affect your trading
as long as you stay focused
d.
Spend
time daily developing yourself to be a better person and
trader
e.
Complete,
maintain, and periodically study a daily trading journal
21)Which indices would be the best indicator of current strength for Intel
(INTC)?
a.
Bond Market
b.
Dow Jones Industrials
Index
c.
NASDAQ Composit Index
d.
S&P 500 Futures
e.
Semiconductor Index
Answer
Question
22)All of the following would
be used by day traders to gauge current market strength except?
a.
NYSE
TICK
b.
NYSE
TRIN
c.
S&P
Futures
d.
Put
Call ratio
e.
VIX
(Volatility Index)
f.
New
highs / New lows
g.
Audited
financial statements
Answer
Question
23)Which statement is false?
a.
Short
term interest rates are more volatile than long term rates
and usually react quicker to changes in monetary policy
b.
The
U.S. stock market is heavily influenced by the bond
market, which is affected by the commodity markets, which
in turn depend on the trend of the U.S. dollar
c.
Long
term interest rates are more sensitive to longer term
inflationary expectations
d.
Trends
in commodity markets gives clues about the strength of the
economy and the direction of inflation and interest rates
e.
Long
term interest rates are always higher than short term
rates
Answer
Question
24)Psychological indicators attempt to measure the degree of
bullishness or bearishness among investors and traders.These are contrary indicators and are used in much the
same fashion as overbought or oversold oscillators.All of the following are sentiment indicators except?
a.Number of stocks bouncing off their 200-day moving
average
b.Percent investment advisors bullish
c.Public/specialist short sales
d.Short interest ratio
e.OTC versus NYSE trading volume
f.Number of new-issues and IPOs
g.University of Michigan Consumer Sentiment Index
h.Mutual fund purchases and redemptions
i.Amount of public margin debt
Answer
Question
25)All of the following would
be used by day traders to suggest a short-term rally to the
upside except?
