SIE Unit 19 Qbank
When securities are bought and sold, ownership changes hands between the buyer and the seller A) on the settlement date of the transaction. B) upon delivery of the trade confirmation. C) at an agreed time between both parties. D) on the transaction date.
on the settlement date of the transaction.
Good delivery of a stock certificate requires all of the following except A) proper signatures of a firm principal on the certificate. B) certificates in good condition. C) the correct number of shares are delivered. D) proper endorsement by all owners.
proper signatures of a firm principal on the certificate The broker-dealer does not sign the certificate. All the rest of these are requirements.
A document that substitutes for the owners signatures on the back of a stock or bond certificate is called a A) stock or bond power. B) security substitution letter. C) signature substitution letter. D) certificate power.
stock or bond power.
Your client Mr. Jenson calls and wants to purchase T-bills and wants to know when payment is due. You should inform him A) trade date. B) trade date plus two business days. C) trade date plus one business day. D) trade date plus three business days.
trade date plus one business day.
Your client, Jacob Riley, wants to purchase Treasury bonds and asks when he would need to pay for the bonds. You would inform him that regular way settlement for U.S. Government Bond is A) trade date. B) trade date plus one business day. C) trade date plus two business days. D) trade date plus three business days.
trade date plus one business day.
all treasury securities (T-bills, T-notes, T-bonds), option trades, index option settle on A) trade date plus two business days. B) trade date plus three business days. C) on the trade date. D) trade date plus one business day.
trade date plus one business day.
Josie Reese, one of your clients with an option account, calls asking you to remind her when she would settle if she bought a call today. You would tell her A) trade date plus two business days. B) trade date plus one business day. C) trade date plus three business days. D) trade date.
trade date plus one business day. Options settle the next business day (T plus 1) Regular way settlement is T plus 2 for everything else except Treasuries and money market securities.
Isaac James has some call option in his account that he would like to exercise. He wants to know when the resulting purchase of the stock would settle. A) trade date B) trade date plus two business days C) trade date plus three business days D) trade date plus one business day
trade date plus two business days When purchasing or selling an option the settlement is the next business day but when an option is exercised the resulting stock transaction is two business days following exercise.
Your client, Allice 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 one business day. B) trade date plus three business days. C) trade date plus two business days. D) trade date.
trade date plus two 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 two business days. B) trade date plus three business days. C) on the trade date. D) trade date plus one business day.
trade date plus two business days. Regular way settlement is T + 2 for everything except Treasuries, money market securities, and options.
Which of the following settlement arrangements has trade and settlement occurring on the same day? A) Seller's option B) Regular way settlement C) Cash settlement D) Buyer's option
Cash settlement If both parties to the trade agree, and if the buyer has the cash on hand and the seller has the securities on hand, trade and settlement can take place on the same day. This is known as cash settlement.
On Tuesday, December 10 your customer Bought 5 OEX (S&P 100 Index) 230 March calls at four. On Tuesday, March 10 the calls are in-the-money and your customer issues exercise instructions. On what days did the trade and the exercise settle? A) December 12 and March 12 B) December 11 and March 11 C) December 12 and March 11 D) December 11 and March 12
December 11 and March 11 All option trades settle next business days. The exercise of an Index option settles the next business day.
Corporate issues (stocks and bonds), municipal debt, agency securities such as GNMA, GSE eecurities such as fnma & FHLMC, equity option exercise settle on A) trade date plus two business days. B) trade date plus three business days. C) on the trade date. D) trade date plus one business day.
A) trade date plus two business days.
On Friday, July 1 your customer purchased 10 3% T-bonds maturing in 15 years. This trade will settle on A) July 3 B) July 2 C) July 6 D) July 5
July 5 Treasuries settle T+1 (next business day after the trade). A trade on Friday would normally settle on Monday, but this Monday is a holiday (Independence Day). Remember the July 4 and December 25 are not settlement days.
Ron buys 522 shares of Narcissus Inc., common stock in a cash account on Monday, March 19. He deposits cash in the account sufficient to cover the trade on March 20. How soon would he be able to withdraw those shares? A) Tuesday, March 20 B) Friday, March 23 C) Thursday, March 22 D) Wednesday, March 21
Wednesday, March 21 This is a regular way settlement of a corporate security (T+2). The trade is fully paid for so the customer may request the shares be moved on or after settlement on Wednesday, March 21.
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) good delivery. B) regular way settlement. C) seller's option. D) buyer's options.
good delivery In order to make settlement good delivery must be made if all the conditions of the contract have been met.
Shares held in electronic form at a clearing house under a broker-dealers account are A) held in street name. B) in trust name. C) held in safe keeping. D) are in custodial name.
held in street name Shares held in street name are normally registered to the broker-dealer, who hold them on behalf of the client at the broker-dealers clearing firm.
A signature endorsement on a stock certificate would not be required for good delivery if the shares were A) in trust name. B) are in custodial name. C) held in safe keeping. D) held in street name.
held in street name. Shares held in street name are normally registered to the broker-dealer, who hold them on behalf of the client. As these shares are likely only in electronic form no signature is required to transfer them.
Some issuers issue securities in electronic form, while some securities have been issued in physical form. Which of the following statements are true in relation to electronic or physical form? A) Corporate stocks can only exist in electronic form B) All U.S. government securities are issued in book entry form C) Corporate bonds have always been issued in electronic form D) All U.S. government securities are issued with physical paper certificates
All U.S. government securities are issued in book entry form Since the mid-1980s, all government securities have been in electronic form. All of the paper certificates have matured. Historically, corporate securities were issued in paper form and some still exist, but most of the bonds have matured that were issued in physical form. Some investors still hold paper stock certificates. Virtually all new securities are now issued in electronic form (book entry).
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 plus 2 business days. C) trade date. D) trade date plus 1 business day.
trade date plus 1 business day.