SIE Unit 16 Qbank

An order is entered by a customer to sell at 30 stop limit. Once the order is entered, the stock trades in the following sequence: 32, 29, 31, and 33. The order would be executed and the investor would receive a price of A) 31. B) 30. C) 29. D) 32.

31 This is a sell stop order with a limit of 30. Once the stock trades at 30 or lower, the order is elected (triggered) and becomes a live working order. This occurs at 29. The order will then be executed at its limit (30) or better. This occurs at 31.

An order is entered by a customer to sell at 30 stop limit. Once the order is entered, the stock trades in the following sequence: 32, 29, 31, and 33. The order would be executed and the investor would receive a price of A) 30. B) 31. C) 29. D) 32.

31. This is a sell stop order with a limit of 30. Once the stock trades at 30 or lower, the order is elected (triggered) and becomes a live working order. This occurs at 29. The order will then be executed at its limit (30) or better. This occurs at 31.

In left unexecuted, a good til cancel (GTC) order will automatically be canceled when? A) On the last business day of June and the last business day of December B) On the last business day of April and the last business day of October C) On the first business day of April and the first business day of October D) On the cancel date specified by the customer at the time the order is entered

On the last business day of April and the last business day of October

Your client Mrs. Bourne has owned QRS for a few years but is now bearish on QRS. Which transaction would you recommend? A) Buy QRS to close B) Sell QRS to close C) Sell QRS to open D) Buy QRS to open

Sell QRS to close Because Mrs. Bourne already owns the stock, this would be a closing transaction and because she is bearish it would be a sell.

Caleb McCann got a tip from his brother Nate on XYZ stock two months ago Caleb hasn't previously been investing in the stock market but has been watching this stock since he got the tip from his brother. Caleb is now very bullish on XYZ and wants to place a trade. Which of the following would you recommend? A) Buy XYZ to close out a short position B) Sell XYZ to open a short position C) Buy XYZ to open a long position D) Sell XYZ to close a long position

Buy XYZ to open a long position Caleb has no existing position. This would be an opening transaction and if bullish on the stock it would be a purchase.

Your client, Mrs. Stephens, has been bearish on LMN stock and sold it short several months ago. She now believes the company is in a good position for a turn around and wants to change her strategy on LMN. What should she do to implement her new strategy? A) Buy to close her existing position and open a new long position in the stock B) Buy an equal number of shares to her existing short position C) Sell an equal number of shares to her existing position D) Sell short LMN to close her existing position

Buy to close her existing position and open a new long position in the stock Buying to close will eliminate her existing position, but if she now wants to engage in a bullish strategy on LMN she would need to buy additional shares.

Which of the following orders need not be immediately filled in their entirety? Immediate or cancel (IOC) Fill or kill (FOK) Market at open Buy stop limit

I and IV Immediate or cancel (IOC) orders allow partial execution, with the unexecuted portion of the order being canceled. Limit orders may be partially filled. A limit order may be filled in pieces until the end of the day (if a day order), or until cancelled (if GTC). Both FOK and market at open orders are expected to be filled immediately and in their entirety. If unable, a FOK order would be canceled (killed).

Distinguishing between a sell stop order and a sell stop limit order, which of the following are true? The sell stop limit order becomes a sell limit once triggered. The sell stop order becomes a sell limit order once triggered. The sell stop limit order becomes an order to sell at the market triggered. The sell stop order becomes an order to sell at the market triggered.

I and IV Stop orders become market orders once triggered, and stop limit orders become orders to sell at the specified limit once triggered. Stop or stop limit orders can be either buys or sells.

If your client, Henry Bourne, places a sell stop order at 38 when ABC is trading at 40, at which of the following prices could the order be filled? 38 39 40 41

I, II, III, & IV A sell stop order is an instruction to sell at the market when a trade occurs at or below the stop price. If ABC stock's price drifted down and trades at 38, the stop is triggered. Even if it leaps over 38 to, for example, 37.95 the stop would trigger. Remember that a stop, when triggered, becomes a market order. Market orders may fill at any price.

A buy stop order at 39 could fill at which of the following prices? 38 39 40 41

I, II, III, and IV A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price.

Which of the following would be required for a good-til-canceled order to remain in force for more than six months? A) Nothing it stays on the books until the customer cancels it B) The specialist on the NYSE would need to reconfirm the order C) The customer would need to reconfirm the order D) The broker-dealer would need to reconfirm the order for it to remain in force

The customer would need to reconfirm the order Good-til-canceled orders historically have been canceled the end of April and October some firms will cancel them more frequently but for the order to stay in effect longer than six months the customer would need to reinstate the order.

Which of the following best describes how a market order to sell would fill if placed when the price of the stock is a 40? A) Only at 40 B) The next available price below 40 C) The next available price above 40 D) The next available price

The next available price Market order always get the next available price, regardless of if it is a buy or sell and regardless of price.

Which of the following best describes how a sell stop at 39 order would be filled? A) The next price above 39 after the market rises to 39. B) The next available price after the market price falls to 39. C) Only the next price below 39 after the market falls to 39. D) The next available price after the market price rises to 39.

The next available price after the market price falls to 39. Sell stop orders are placed below the current market price and become market orders once the price touches or passes through the stop price.

John Bourne places a buy limit order at 42 when the market price of the stock is at 45. Which of the following best describes how the order would fill? A) The order would be filled between when the stock price is between 42 and 45. B) The order would be filled immediately because the market price is already above 42. C) The order can only be filled at a price of 42 or lower. D) The order would be filled at the next available price after the stock price drops to 42.

The order can only be filled at a price of 42 or lower Buy limit orders are placed below the current market price and fill at the stated price or lower.

An order that when triggered becomes a market order is called a A) stop limit order. B) stop order. C) limit order. D) market order.

stop order. This is the basic purpose of a stop order.

The market for Dizzy Rides Inc., is at $52 per share. Your customer would like to sell his shares for $55, and believes the stock will climb to that level in the next two to three weeks. What order should he place? A) Sell limit 55 GTC B) Sell limit 55 FOK C) Sell limit 55 D) Sell limit 55 AON

Sell limit 55 GTC Only the good-til-canceled (GTC) order will live past today. All the others will cancel if unexecuted by the end of the day. If there is no qualifier then it is a day order. Fill-or-dill (FOK) orders that cannot be filled immediately or cancelled. An all-or-none order would need to also be marked GTC to go into the next day.

An investor has her registered representative enter a sell stop limit order at 50. Following the order entry, trades occur at 52, 50, 49, 51, and 53. The investor would receive A) 53 B) 49 C) 50 D) 51

51 This is really two orders. The first is to stop at 50. That is, once the stock trades at 50 or lower, the order is elected (triggered) and becomes a live working order. That order is to sell at 50 or better. Therefore, the first time the stock hits 50 (or less), is the trade at 50. That triggers the sell limit order to sell at 50 or better. The next trade is at 49 and that is not an acceptable price given the limit order set at 50. The following price, however, at 51, is the next acceptable price after the order is triggered and that is where the order would be executed.

Your client, Quinn, wants to place an order to sell a stock in her portfolio when the current price is 45, but she is only willing to sell if she can sell for at least 47. Which order should she place? A) A sell stop order B) A market order C) A sell stop limit order D) A sell limit order

A sell limit order Sell limit orders are placed above the current market price and fill at the stated price or higher market orders fill at the next available price; sell stop and sell stop limit orders are not triggered until the market drops to or through the stop price.

A market order to buy must be executed when and at what available price? A) Immediately, at the highest B) Within 24 hours, at the lowest C) Immediately, at the lowest D) Within 24 hours, at the highest

Immediately, at the lowest Market orders carry the idea of immediate execution at the best available price. A market order to buy would require execution at the lowest available price.

A market order to buy must be executed when and at what available price? A) Within 24 hours, at the highest B) Immediately, at the lowest C) Within 24 hours, at the lowest D) Immediately, at the highest

Immediately, at the lowest Market orders carry the idea of immediate execution at the best available price. A market order to buy would require execution at the lowest available price.