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Trading – FVPL – Objective Questions

Objective Questions

1. The equity method of accounting is adopted in:
a. Controlling interest.
b. Significant influence.
c. Passive investments.
d. None of the above.

2. In trade date accounting, a liability payable for acquiring the asset will be recorded on:
a. The trade date.
b. The reporting date.
c. The settlement date.
d. All of the above.

3. A broker-dealer who records the transactions on settlement date basis should compute the net capital on:
a. The trade date.
b. The reporting date.
c. The settlement date.
d. Any of the above.

4. The definition of equity security as per FAS 115 does not applies to:
a. Investment companies.
b. Nonprofit organizations.
c. Brokers and dealers in securities.
d. All of the above.

5. The shareholder will recognize the dividend income:
a. On the date of dividend declaration.
b. On the ex-dividend date.
c. At the end of accounting period.
d. None of the above.

6. A shareholder is said to have controlling interest in the company if he holds:
a. Less than 20 percent shares of the investee company.
b. From 20 to 50 percent shares of the investee company.
c. More than 50 percent shares of the investee company.
d. None of the above.

7. Unrealized gains or loss computed for available-for-sale (AFS) securities will be reported as:
a. Income/loss on the income statement.
b. Other comprehensive income.
c. Dividend income.
d. None of the above.

8. For private equity investment, the responsibility of fulfillment of the obligation is vested with:
a. The stock exchange.
b. The broker.
c. The seller.
d. All of the above.

9. If the net holding of any share is negative, then it is referred to as:
a. Available-for-sale (AFS).
b. A long position.
c. A short position.
d. Trading securities.

10. Under the incremental value method, mark-to-market entry is reversed:
a. On T + 2.
b. At the end of the accounting period.
c. On the next valuation date.
d. None of the above.

11. The fair value of securities that are listed and traded through stock exchanges is determined based on:
a. The highest bid price quoted in the exchange for each day.
b. Market quotes at the end of each day.
c. Market quotes at the opening of each day.
d. The forecasted price received from stock broker.
e. The average price of the high and low recorded in the exchange.

12. In private equity investments where the trade is executed over-the-counter, who among the following will be the actual counterparty?
a. The stock exchange in which the stock is listed.
b. The buyer.
c. The seller.
d. The custodian bank.
e. The broker.

13. When the net holding of any given share is shown in negative value, it refers to:
a. Quantity of short position.
b. Loss from long position.
c. Unrealized loss from short position.
d. Quantity of long position.
e. Dividend receivable.

14. For exchange-traded securities, the delivery of the securities either in physical or in electronic form takes place:
a. When the trade is booked.
b. When the broker confirms the receipt of payment.
c. Immediately after the payment is received by the stock exchange.
d. On T + 1.
e. At a predetermined future date.

15. When a company announces a dividend, who among the following is entitled to receive it?
a. An investor listed as holder of stock as of the dividend declaration date.
b. An investor listed as holder of stock as of the ex-dividend date.
c. An investor listed as holder of stock as of the day before ex-dividend date.
d. An investor listed as holder of stock as of the record date.
e. An investor listed as holder of stock as of the dividend payment date.

16. If an investor buys 1,000 shares at $50 and the initial margin is 60 percent and the maintenance margin is 30 percent, he will receive the first marginal call when the stock price falls below:
a. $14.00
b. $21.00
c. $28.57
d. $49.99

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{ 1 comment… add one }

  • mbc September 21, 2011, 3:48 pm

    Thanks great quiz

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