Trading Markets: NASDAQ/OTC Market

When performing over-the-counter transactions, which of the following statements are TRUE? I. A firm is allowed to give preference to an order for its own account before a customer's account if the transaction is for a short sale II. A firm is not allowed to give preference to an order for its own account before a customer's account under any circumstances III. A firm is allowed to act as both broker and dealer in the same transaction IV. A firm is not allowed to act as both broker and dealer in the same transaction

A firm is not allowed to give preference to an order for its own account before a customer's account under any circumstances A firm is not allowed to act as both broker and dealer in the same transaction It is true that all customer orders have priority over equivalent orders for firm's own account; and that the firm cannot act as both broker and dealer in same trade - it can only act as either a broker, earning a commission or as a dealer, earning a mark-up.

Interdealer transactions in which of the following are reported through ACT? I. NASDAQ Global Market Stocks II. NASDAQ Capital Market stocks III. Listed issues traded in the Third Market IV. OTC Bulletin Board Stocks

All of them

Interdealer transactions in which of the following are reported through ACT? I. NASDAQ Global Market Stocks II. NASDAQ Capital Market stocks III. listed issues traded in the third market IV. OTC bulletin board stocks

All of them

Which of the following can result in the establishment of a short position? I. arbitrage transaction II. sale of a security "against the box" III. position trades of borrowed shares

All of them

Which statements are TRUE about over-the-counter transactions? I. In a principal transaction, the customer is charged a mark-up or mark-down II. In an agency transaction, the customer is charged a commission III. In a principal transaction, the firm trades from its inventory account IV. In an agency transaction, the firm trades with other market makers

All of them In a principal transaction, a firm trades into, or out of, its inventory account, charging the customer a mark-up or mark-down that is fair and reasonable. In an agency transaction, the firm trades with another market marker, charging the customer a fair and reasonable commission for finding the best market.

A NASDAQ security is bid at $35 and offered at $35.50. An over-the-counter trader effects a trade at $35.25 and charges a commission of $.25 to the customer. The price that will show on the tape is: A. $34.75 B. $35.00 C. $35.25 D. $35.75

$35.25 Trade prices that are shown on the tape do not include commissions to customers. This trade was effected at $35.25, and this is the price that will show on the tape

Which of the following is a "firm" quote from a market maker? a. 12.50 b. 12.50 workout c. 12.50 subject d. 12.50 nominal

12.50

Under FINRA rules to find the best available market in an OTC security, over-the-counter traders are obligated to obtain at least: A. 2 quotes B. 3 quotes C. 4 quotes D. 5 quotes

3 quotes Under FINRA rules, to find the best available market for an OTC security (OTCBB or Pink OTC Market), an over-the-counter trader must obtain at least 3 quotes (if that many are available).

Which of the following is NOT a feature of the NASDAQ System (Single Book)? A. Both agency and proprietary orders are accepted B. Orders may be split to get the best execution C. A reserve quote feature allows automatic quote updating D. 30 seconds must elapse between each automatic trade execution

30 seconds must elapse between each automatic trade execution The NASDAQ System displays all orders yet to be filled that are away from the current market and permits automated execution against those orders. It accepts both agency and proprietary orders. Orders can be aggregated or split for entry into the system. Once a trade is executed electronically, there is "0" time delay for the next potential trade. Once a market maker's quote has been exhausted, the system provides for a "reserve quote" feature that automatically renews the quote.

A market maker enters a quote of $20.50 Bid; $21.00 Ask; with a size of "5 x 5" into the NASDAQ System. If a market order to buy is entered into the system for 1,500 shares, and this dealer's quote is matched, the market maker will be obligated to sell: A. 500 shares at $20.50 B. 500 shares at $21.00 C. 1,500 shares at $20.50 D. 1,500 shares at $21.50

500 shares at $21.00 A market order to buy will be matched, in sequence, against the "Ask" quotes in the system, from lowest to highest. Such a market order "sweeps" the book from low to high price, until it is filled. Because this dealer's Ask of $21.00 is only for 500 shares, this is the amount that the system will match. It will then move to the next Ask quotes from other dealers, in sequence, until the order is filled for 1,500 shares

The regular hours of operation of the NASDAQ system are: a. 9:00 AM - 4:00 PM ET b. 9:30 AM - 4:00 PM ET c. 9:30 AM - 6:00 PM ET d. 9:00 AM - 8:00 PM ET

9:30 AM - 4:00 PM ET

A member that has knowledge of a client order that has not been entered on a marketplace that could reasonably be expected to affect the market price of the security is prohibited from: I. entering a proprietary order for the purchase or sale of that security II. soliciting an order from another person for the purchase or sale of that security III. informing any other person, other than in the necessary course of business of the client order

All of them

Which of the following describes an "agency cross" transaction? A. A customer directs the broker to sell one stock and use the proceeds to buy another B. A dealer receives a buy order from a customer and the dealer purchases stock into inventory and resells it to a customer C. A market order to buy and a market order to sell come in at the same time from two different customers for the same stock and amount and are matched D. A stock is bought and an equivalent security is simultaneously sold short

A market order to buy and a market order to sell come in at the same time from two different customers for the same stock and amount and are matched Crossing is when a market order to sell and a market order to buy come in at the same time on the same stock and for the same amount from two different customers. Under FINRA rules, the firm can "cross" the order at the current market price, charging a fair and reasonable commission on each trade. Choice A describes a "proceeds transaction;" Choice B describes a "riskless principal transaction;" and Choice D describes an "arbitrage" transaction.

Quotes placed by market participants in unlinked ECNs can be accessed through: a. ATS b. ADF c. ACES d. ACT

ADF

Which of the following are entered into OATS? I. Orders to buy NASDAQ issues II. Orders to sell NASDAQ issues III. Orders to buy OTC issues IV. Order to sell OTC issues

All of them OATS stands for "Order Audit Trail System." It electronically captures order information for equity securities (no more paper order tickets). OATS records of orders are now required for all U.S. equities markets - NYSE, NYSE-MKT (AMEX), NASDAQ and also for OTCBB and Pink OTC Markets issues.

Over-the counter traders perform which of the following functions? I. Position trading for the firm's inventory account II. Filling customer orders III. Giving quotes to customers IV. Setting the spread for each security traded

All of them OTC traders position trade (that is, trade for the firm's inventory account): fill customer orders to buy and sell; establish spreads (the difference between the bid and ask quote that is the profit for the dealer): and give quotes to customers. Clerical duties are handled by clerks.

Which of the following are prohibited trading practices under FINRA rules? I. Backing away II. Interposing III. Marking to market IV. Using a correspondent

Backing away Interposing

Which of the following can result in the creation of a short position? I. Buying a stock on one exchange and simultaneously selling it on another exchange II. Selling stock for a customer that is owned by that customer III. Selling stock for a customer that is not owned by that customer IV. Selling stock for the firm's account that is not owned by the firm

Buying a stock on one exchange and simultaneously selling it on another exchange Selling stock for a customer that is not owned by that customer Selling stock for the firm's account that is not owned by the firm Short sales are sales of borrowed shares, so Choices III and IV are clearly short sales. Choice II is a long sale - selling stock that is owned. Choice I is an arbitrage transaction, where stock is bought on one exchange and simultaneously sold short on another exchange to lock in a price difference. The long position is delivered later to replace the borrowed shares.

Which of the following describes an arbitrage transaction? A. Selling a security and using the proceeds to purchase a different security B. Buying a security into inventory direct from a customer with a mark-down C. Buying and selling short the same security in different markets to lock in a price differential D. After receiving a buy order, the dealer purchases the stock into inventory and resells it to a customer

Buying and selling short the same security in different markets to lock in a price differential If a security is bought on one market; and simultaneously sold on another market; this is known as an arbitrage transaction and is used to exploit price differences for the same security that may exist in those markets. Choice A describes a "proceeds transaction;" Choice B describes a "principal" transaction, or "position" trade; while Choice D describes a riskless principal transaction.

Quotes found in the ADF are primarily bids and offers from: a. NASDAQ market makers b. third market makers c. ECNs d. designated market makers

ECNs

Quotes found in the ADF are primarily bids and offers from: A. NASDAQ market markers B. Third market makers C. ECNs D. Designated market makers

ECNs The "ADF" - Alternate Display Facility - was established under an SEC rule in 2002 as a place for ECNs that did not wish to place their quotes in the NASDAQ System because these ECNs felt that NASDAQ's order processing algorithms favored NASDAQ Market Makers over ECNs.

Last sale reports are available for trades of all of the following securities EXCEPT: A. Municipal bonds B. Eurodollar bonds C. Stocks listed on a stock exchange D. Stocks listed in the Pink Sheets

Eurodollar bonds Trades of exchange listed securities and all OTC equity issues (OTCBB and Pink Sheets) are reported on a real-time basis. Trades of corporate bonds and municipal bonds effected OTC are also reported on a real-time basis. Corporate and agency bond trades are reported via TRACE, while municipal bond trades are reported via RTRS. Note, however, that trades of Eurodollar bonds are not reported since the trades take place in Europe, not in the United States.

Which of the following securities trade on NASDAQ? I. Global Market issues II. NYSE listed issues III. Capital Market issues IV. OTCBB listed issues

Global Market issues Capital Market issues NASDAQ is divided into 2 tiers of stock listings. The larger NASDAQ listings such as Microsoft or Intel are included in the "Global Market." The lower tier of smaller stocks is called the NASDAQ Capital Market. NYSE listed issues generally do not trade on NASDAQ; and companies that do not meet NASDAQ listing standards, but which are current in their SEC reports, are quoted in the OTCBB (Over-The-Counter Bulletin Board) or Pink OTC Markets.

Which statement is TRUE about agency transactions? A. In an agency transaction, a commission is charged B. In an agency transaction, a mark-up or mark-down is charged C. In an agency transaction, both a commission and a mark-up or mark-down are charged D. In an agency transaction, neither a commission, nor a mark-up nor mark-down are charged

In an agency transaction, a commission is charged In an agency transaction, a commission is charged. In a principal transaction, a mark-up or mark-down is charged. It is prohibited to charge both a commission; and a mark-up or mark-down; in the same transaction.

Which of the following orders can be placed in the NASDAQ System (Single Book)? I. Market order II. Stop order III. Limit order IV. Not Held order

Market order Limit order Single Book is the quotation and trading system for all NASDAQ issues - both Global Market and Capital Market. The system accepts market orders, marketable limit orders (a limit order at the current inside price) and limit orders that are away from the market. The system cannot accept orders that require human judgment for execution such as a market-not held order (where a trader uses his or her best judgment decide when to execute to get the best price). Finally, the system does not accept stop orders - the same is true for the NYSE Super Display Book system. Member firms take stop orders into their internal systems and feed them to the appropriate exchange if they are triggered.

The NASDAQ Market Center Execution System (Single Book) is the automated trading and order maintenance system for which of the following? I. NASDAQ Global Market issues II.NASDAQ Capital Market issues III. pink sheet issues IV. OTCBB issues

NASDAQ Global Market issues NASDAQ Capital Market issues

The OTCBB includes quotes for: A. NASDAQ stocks B. Non-NASDAQ Stocks C. NYSE listed stocks D. All of the above

Non-NASDAQ Stocks Over-the-counter stocks that are too small for NASDAQ are found on the OTCBB - the "Over-The-Counter Bulletin Board" (run by FINRA) or can be found in the privately run "Pink Sheets" - now renamed the Pink OTC Markets.

The OTCBB includes quotes for: a. NASDAQ stocks b. Non-NASDAQ stocks c. NYSE listed stocks d. all of the above

Non-NASDAQ stocks

Which statements are TRUE? I. OATS intakes orders for NASDAQ issues II. ACT intakes orders for all NASDAQ issues III. OATS matches and reports completed trades of NASDAQ issues IV. ACT matches and reports completed trades of NASDAQ issues

OATS intakes orders for NASDAQ issues ACT matches and reports completed trades of NASDAQ issues The ACT system takes the details of completed trades and reports the trade to the Network C (NASDAQ) Tape; to the contra-party to the trade for comparison; and to the clearing corporation for settlement. OATS is the Order Audit Trail System - which automates order entry for NYSE, NYSE-MKT (AMEX), NASDAQ and OTC issues.

Which of the following securities is LEAST likely to trade "over-the-counter"? A. U.S. Government Securities B. American Depositary Shares C. Preferred Stock D. Options

Options Options are "listed" and trade on exchanges. There is virtually no options trading "over-the-counter." U.S. Government bonds and municipal bonds are only traded "over-the-counter," they do not trade on exchanges. Common stock, preferred stock, and American Depositary Shares trade on exchanges and trade "over-the-counter" as well.

Bid and Ask quotes for non-NASDAQ "over-the-counter" stocks can be obtained from the: I. Pink Sheets II. Yellow Sheets III. OTC Bulletin Board IV. Consolidated Quotations Service

Pink Sheets OTC Bulletin Board

All of the following trades are reported through ACT's Trade Reporting Facilities (TRFs) EXCEPT: A. NASDAQ System (Single Book) trade of a NASDAQ listed stock B. Super Display Book trade of an NYSE listed issue C. Trade of an NYSE listed issue in the Third Market D. Trade of an OTCBB issue in the Second Market

Super Display Book trade of an NYSE listed issue

Trades of NASDAQ securities executed on an unlinked ECN are reported by: a. CAES b. TRACS c. ACT d. TRACE

TRACS

Which statement is TRUE? I. TRF reports trades of NASDAQ issues listed in the NASDAQ system II. TRF reports trades of NASDAQ issues listed in the ADF III. TRACS reports trades of NASDAQ issues listed in the NASDAQ system IV. TRACS reports trades of NASDAQ issues listed in the ADF

TRF reports trades of NASDAQ issues listed in the NASDAQ system TRACS reports trades of NASDAQ issues listed in the ADF

Which statements are TRUE when comparing the NYSE and NASDAQ markets? I. The Specialist (DMM) trades on the NYSE II. The Specialist (DMM) trades on NASDAQ III. The Market Maker trades on the NYSE IV. The Market Maker trades on NASDAQ

The Specialist (DMM) trades on the NYSE The Market Maker trades on NASDAQ Specialists (now called Designated Market Makers) are the assigned market makers that trade a given stock on the NYSE floor. There is only 1 DMM assigned to each stock traded, and the Specialist/DMM must make a fair and orderly market in that stock and must stand ready to trade at all times that the market is open. Market Makers trade NASDAQ stocks through the NASDAQ System. NASDAQ has multiple competing market makers - it is competition that creates the "best" market. Market makers are not obligated to make a continuous competitive market in a stock (like NYSE Specialists/DMMs), but it is in their best interests to do so.

Which statements are TRUE about reporting of trades in NASDAQ stocks? I. The initiating member must report II. The executing member must report III. Trades must be reported within 10 seconds of execution IV. Trades must be reported by the end of the day

The executing member must report Trades must be reported within 10 seconds of execution Trades of NASDAQ stocks must be reported by the executing member within 10 seconds of execution to the Network C tape. This is FINRA's reporting rule for trades of NASDAQ stocks and all OTC equity trades, including OTC trades of NYSE-listed issues (Third Market trades), OTCBB trades and trades of Pink Sheet issues. Note that the NYSE operates under the same rule.

Which statement is TRUE about the NASDAQ Regular Market trading session? A. The session starts earlier than the NYSE opening B. The session ends later than the NYSE closing C. The session coincides with NYSE trading hours D. The session starts later than the NYSE opening and closes later than the NYSE closing

The session coincides with NYSE trading hours NASDAQ's Regular Hours session is from 9:30 AM to 4:00 PM Eastern Time - the same as NYSE hours.

Which of the following will result in a "locked-in" trade? a. a market order placed for a NASDAQ issue quoted in the NASDAQ system (Single Book) b. a market order placed for an OTC equity issue quoted in the OTCBB c. a market order placed for an OTC equity issue quoted in the Pink Sheets d. all of the above

a market order placed for a NASDAQ issue quoted in the NASDAQ system (Single Book)

All of the following terms are synonymous EXCEPT: A. principal B. market maker C. dealer D. agent

agent A dealer is a market maker, who is a principal in a transaction, earning a mark-up or mark-down. An agent is a broker who is middleman in a transaction, earning a commission.

A nominal quotation given by an over-the-counter dealer represents a(n): A. firm bid or offer B. likely bid or offer C. approximate market value, with no bid or offer D. bid or offer limited to round lots of 100 shares

approximate market value, with no bid or offer A nominal quote is really no quote - it is simply an approximate price. The dealer is not obligated to trade at this quote and must identify it as a nominal quote.

Position trading by "over-the-counter" firms is: I. buying securities into, or selling securities from, the firm's inventory account II. buying customer positions from, or selling customer positions to, other market markers III. permitted under FINRA rules IV. a prohibited practice under FINRA rules

buying securities into, or selling securities from, the firm's inventory account permitted under FINRA rules

In riskless principal transaction, the dealer: I. buys a security into inventory in advance of filling a customer order to buy that security II. buys a security into inventory after receiving a customer order to buy that security III. charges a mark-up to the customer IV. does not charge a mark-up to the customer

buys a security into inventory after receiving a customer order to buy that security charges a mark-up to the customer A riskless principal or simultaneous transaction occurs when a dealer receives a buy order from a customer and then purchases the stock into inventory and resells it to the customer. The dealer wasn't holding the security when the order was received, so there is no "risk" to the dealer of falling prices giving the dealer an inventory loss. The dealer has no risk in the transaction and the mark-up charged must be disclosed to each customer.

Under FINRA rules, the best available market for a Pink Sheet issue is found: a. on NASDAQ Level I b. by obtaining quotes from at least 3 market makers c. on the Consolidated Quotations Service d. by averaging the quotes found in the Pink Sheets

by obtaining quotes from at least 3 market makers

If a firm effects trades solely on an principal basis, the firm: I. carries inventory II. does not carry inventory III. is a market maker IV. is not a market maker

carries inventory is a market maker If a firm effects trades solely on an principal basis, it carries inventory and is a market maker in the security.

The specialist (DMM) accepts which of the following orders on his book? a. day b. good through week c. good through month d. good til canceled

day

The OATS system is an: a. automated order routing and execution for customer market orders b. electronic trade negotiation system between dealers c. electronic order record maintenance system d. automated trade reporting and comparison system

electronic order record maintenance system

Quotes shown in the NASDAQ System (Single Book) are: I. firm II. Unfirm III. 1-sided IV. 2-sided

firm 2-sided

If a market maker gives a customer a quote of 34.00 - 34.50, it is considered a: A. subject quote B. workout quote C. firm quote D. nominal quote

firm quote An OTC quote is considered to be "firm" for 100 shares unless it is otherwise qualified. If a dealer gives a quote of 34 - 34.50, he or she is willing to buy 100 shares for $34 and he is willing to sell 100 shares at $34.50. A workout quote is an approximate price -the final price must be "worked out." A subject quote is subject to confirmation. A nominal quote is a "guess" at a likely price - it is really no quote.

The Pink Sheets: I. give bid and ask quotes for OTC stocks II. give bid and ask quotes for NASDAQ stocks III. show completed trades as they occur IV. do not show completed trades as they occur

give bid and ask quotes for OTC stocks do not show completed trades as they occur The Pink Sheets give bid and ask quotes for over-the-counter stocks that do not meet exchange listing standards. They do not show trades as they occur. All trade reporting for OTC equity securities occurs through the ORF - the Over-The-Counter Reporting Facility.

A bond trader believes that he has too much inventory in 25-year ABC corporation bonds. The dealer would most likely: a. increase the mark-up on the bonds b. hedge the bond positions c. lower the reoffering yield on the bonds d. place an "OW" for the bonds in Bloomberg

hedge the bond positions

The inside market found on NASDAQ level I, is the: a. lowest bid and lowest ask b. lowest bid and highest ask c. highest bid and lowest ask d. highest bid and highest ask

highest bid and lowest ask

A member firm may use a third party to execute over-the-counter agency transactions for customer orders: a. under no circumstances b. if the resultant price is reasonably related to the inside market at that time c. if the resultant price is equal to the best available market at the time d. if the resultant price is better than the best available market at the time

if the resultant price is better than the best available market at the time

An OTC equity trader has received a large influx of buy orders for ABC stock and, to fill them, has taken a short position in the firm's inventory account. The dealer would most likely: A. increase the ask price in the OTCBB B. decrease the bid price in the OTCBB C. decrease the mark-up to customers that buy D. place a "BW" in the OTCBB

increase the ask price in the OTCBB

The ACT system: a. is used to report backing away violations to FINRA for real-time resolution b. permits NASDAQ Order Entry firms to contract with a market maker to enter and maintain its limit orders c. routes market and limit orders electronically to market makers for locked-in execution and settlement d. intakes entries of completed trades for reporting, matching and clearance

intakes entries of completed trades for reporting, matching and clearance

In an over-the-counter agency trade, the member firm executing the order: I. is a broker II. is a dealer III. charges a mark-up IV. charges a commission

is a broker charges a commission In an over-the-counter agency transaction, the firm acts as a broker, matching a customer who wishes to buy with a seller (and vice-versa). For this service, the member firm earns a commission. In contrast, in an over-the-counter principal transaction, the member firm sells a security out of its inventory to a customer who wishes to buy; or buys a security into its inventory from a customer who wishes to sell. In this transaction, the firm acts as a dealer, and marks-up the stock to the customer who wishes to buy; or marks-down the stock from the customer that wishes to sell.

Which of the following persons trades securities over-the-counter? a. two dollar broker b. market maker c. specialist (DMM) d. registered representative

market maker

Over-the-counter dealers are also called: A. registered representatives B. specialists (DMMs) C. market makers D. two-dollar brokers

market makers Over-the-counter dealers are called market makers. Specialists (now renamed DMMs - Designated Market Makers) are the market makers on stock exchange floors.

All of the following orders can be placed in theNASDAQ System (Single Book) EXCEPT: a. market order b. marketable limit order c. limit order d. not held order

not held order

Over-the-counter trades perform all of the following functions EXCEPT: a. establish spreads b. take positions c. give quotes d. perform clerical duties

perform clerical duties

A firm's market making desk, aware that the firm is about to publish a bullish research report on ABCD stock purposefully increases its long position in order to satisfy anticipated retail demand. This action is: a. permitted without restriction b. permitted as long as the research report is released within 48 hours of the first trade made to increase the firm's position c. permitted as long as NASDAQ is notified, in writing, of the impending research report d. prohibited

prohibited

All of the following statements are true regarding quotes provided on NASDAQ Level II EXCEPT: A. bid and ask quotes are shown B. the size of the quote is shown C. quotes are shown for NYSE listed issues D. quotes are shown for round lots and mixed lots

quotes are shown for NYSE listed issues NASDAQ Level II shows all bid and ask quotes for NASDAQ stocks with the size of the quote. The minimum quote size is 100 shares (1 round lot). Quotes for odd lots (less than 100 shares) can be entered into the system, but are not displayed until there are other odd lot orders at the same price that aggregate to 100 shares or over. A mixed lot is an order that has both a round lot and an odd lot component (such as an order for 143 shares - which is composed of a 100 share round lot and a 43 share odd lot). Just like odd lots, any portion of the order that is less than 100 shares is not displayed until there are other odd lot orders at the same price that aggregate to 100 shares or more.Quotes for NYSE listed issues are not found on NASDAQ - rather they are found on CQS - the Consolidated Quotations Service.

Dark pools are: I. regulated as broker-dealers II. regulated as exchanges III. subject to regulation ATS IV. not subject to regulation ATS

regulated as broker-dealers subject to regulation ATS

Proceeds transactions are: I. matching a buy order from one customer to a sell order for the same security from another customer II. selling a security for a customer, and buying another security for the same customer III. permitted under FINRA rules IV. prohibited under FINRA rules

selling a security for a customer, and buying another security for the same customer permitted under FINRA rules In a proceeds transaction, a customer directs that the firm sell a position owned by the customer, and use the "proceeds" to buy another position. In effect, the firm is performing 2 trades for the customer. Choice I describes an agency cross transaction. Both of these types of transactions are permitted under FINRA rules.

Dark Pools are: I. sources of displayed liquidity II. sources of undisplayed liquidity III. regulated IV. unregulated

sources of undisplayed liquidity regulated

If a member firm routes a customer market order for a Global Market listed issue to NASDAQ's automated trading system, the order will be sent to: A. Super Display Book B. the NASDAQ Market Center Execution System (Single Book) C. OTCBB D. Order Support System

the NASDAQ Market Center Execution System (Single Book) The automated order execution system for NASDAQ issues is now called the NASDAQ Market Center Execution System, or simply, the "System." The previous name, now obsolete, was Single Book. Super Display Book is the NYSE's automated trading system. The Order Support System (OSS) is the CBOE's automated trading system. The OTCBB (Over-The-Counter Bulletin Board) gives dealer offerings of stocks that are not listed on an exchange

A broker-dealer holds a limit order to buy 100 shares of ABC stock at $20.00 for a customer. Which of the following trades are acceptable? I. the purchase of 100 shares of ABC for the firm's trading account at $19.50 prior to executing the customer's order II. the purchase of 100 shares of ABC for the firm's trading account at $20.50 prior to executing the customer's order III. the long sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00 IV. the short sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00

the purchase of 100 shares of ABC for the firm's trading account at $20.50 prior to executing the customer's order the long sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00 the short sale of 100 shares of ABC out of the firm's trading account to the customer at $20.00

Comparing the first and second markets, which statement is FALSE? a. the first market is an auction market b. the second market is a negotiated market c. the first market has listing standards d. the second market has listing standards

the second market has listing standards

An index arbitrage trading desk places sequential buy orders at the market opening for securities included in the index to raise their price against the current index value. Which statement is TRUE? a. these transactions can only be effected on an upbid b. this is an illegal practice known as Marking to market c. this is an illegal practice known as Marking the open d. this is an illegal practice known as Painting the tape

this is an illegal practice known as Marking the open

When a firm "position trades," it: I. trades in an agency basis for customers II. trades on a dealer basis for its own account III. takes inventory positions, both long and short IV. interpositions itself between a customer and another dealer

trades on a dealer basis for its own account takes inventory positions, both long and short

A dealer offering an OTC stock in the Pink Sheets publishes a quote for 1,000 shares "AON" This means that the dealer: A. is willing to sell part or all of the shares at the stated price B. will only sell all of the shares at the stated price C. does not own the shares being offered and is "interpositioning" in this transaction D. is willing to sell more than 1,000 shares for a higher price than the published quote

will only sell all of the shares at the stated price A quote that is published as "AON" means All or None. The dealer will sell all of the securities at that price, but will not accept a partial order at that price.