Unit 19

When securities are bought and sold, ownership changes hands between the buyer and the seller A) on the transaction date. B) on the settlement date of the transaction. C) at an agreed time between both parties. D) upon delivery of the trade confirmation.

B) on the settlement date of the transaction.

Your client, Jacob Riley, wants to purchase Treasury bonds and asks when he would need to pay for the bonds. You would tell him that regular way settlement for U.S. government bonds is A) trade date. B) trade date plus 1 business day. C) trade date plus 3 business days. D) trade date plus 2 business days.

B) trade date plus 1 business day.

Your client, Teresa Jenson, calls and wants to purchase T-bills and wants to know when payment is due. You should tell her A) trade date. B) trade date plus 1 business day. C) trade date plus 2 business days. D) trade date plus 3 business days.

B) trade date plus 1 business day.

Which of the following settlement arrangements has trade and settlement occurring on the same day? A) Regular way settlement B) Buyer's option C) Seller's option D) Cash settlement

D) Cash settlement

Regular way settlement for common stock is A) trade date plus 1 business day. B) trade date. C) trade date plus 3 business days. D) trade date plus 2 business days.

D) trade date plus 2 business days.

Your client is buying municipal bonds and wants to know when payment is due. You should tell him A) trade date. B) trade date plus 3 business days. C) trade date plus 1 business day. D) trade date plus 2 business days.

D) trade date plus 2 business days.

Your client is purchasing XYZ corporate bonds and wants to know when regular way settlement is. You should tell her A) trade date plus 1 business day. B) trade date plus 3 business days. C) trade date. D) trade date plus 2 business days.

D) trade date plus 2 business days.

Your client, Alice Tate, lives in Irvine, California, and wishes to purchase some bonds that would be both state- and federal-tax free for her. You recommend some school district bonds from Costa Mesa. She then asks when she would need to pay for the bonds. You should tell her A) trade date plus 1 business day. B) trade date. C) trade date plus 3 business days. D) trade date plus 2 business days.

D) trade date plus 2 business days.

Your customer has purchased $10,000 in U. S. Treasury bonds. These securities A) can be transferred in either physical or book-entry form in accordance with the purchasers request. B) cannot be delivered in physical certificates because they exceed the amount for paper certificate delivery. C) are required to be delivered in the form of physical paper certificates. D) will have evidence of ownership recorded in book-entry form.

D) will have evidence of ownership recorded in book-entry form.

A corporate stock is purchased on Friday, April 2, regular way. When will the trade settle? A) Wednesday, April 7 B) Monday, April 5 C) Tuesday, April 6 D) Friday, April 2

C) Tuesday, April 6

When shares are held in street name, this refers to the shares being A) held at the transfer agent for the beneficial owner. B) allowed to be sold only on the exchange where they were initially purchased. C) held in the name of the broker-dealer for the beneficial owner. D) restricted, and thus, nontransferable.

C) held in the name of the broker-dealer for the beneficial owner.

Josie Reese, one of your clients with an option account, calls and asks you to remind her when she is required to settle if she bought a call today. You would tell her A) trade date plus 3 business days. B) trade date. C) trade date plus 1 business day. D) trade date plus 2 business days.

C) trade date plus 1 business day.

Isaac James has some call options in his account that he would like to exercise. He wants to know when the resulting purchase of the stock would settle. You would tell him A) trade date plus 3 business days. B) trade date plus 1 business day. C) trade date plus 2 business days. D) trade date.

C) trade date plus 2 business days.

James Thomas calls and is interested in buying some GNMA certificates and wants to know when payment will be due. You should tell him A) trade date plus 1 business day. B) trade date plus 3 business days. C) trade date plus 2 business days. D) trade date.

C) trade date plus 2 business days.

A stock trade took place on Tuesday, July 2. When would regular way settlement normally take place? A) Friday, July 5 B) Tuesday, July 2 C) Monday, July 8 D) Wednesday, July 3

A) Friday, July 5

Nate McCann is closing on a house tomorrow and wants to sell some securities to meet closing costs. He wants to know how soon he could get the money and what he needs to do. You should tell A) if he does the trade today for cash settlement he could settle today. B) if he does the trade today he won't be able to get the money for 3 business days because regular way settlement is T + 3. C) if he does the trade today for cash settlement he would settle tomorrow. D) if he does the trade today he won't be able to get the money for 2 business days because regular way settlement is T + 2.

A) if he does the trade today for cash settlement he could settle today.

A term indicating that a security is tradable and all of the requirements of the contract to sell the security have been met and the security is ready to be transferred is A) buyer's options. B) good delivery. C) regular way settlement. D) seller's option.

B) good delivery.

Some issuers issue securities in electronic form, while some securities have been issued in physical form. Which of the following statements is true in relation to electronic or physical form? A) All U.S. government securities are issued with physical paper certificates B) All U.S. government securities are issued in book entry form C) Corporate stocks can only exist in electronic form D) Corporate bonds have always been issued in electronic form

B) All U.S. government securities are issued in book entry form