Unit 16 - Knowledge/Quiz/Exam Questions

ABC stock is currently trading at $63. Julia Miller would like to purchase ABC stock, but not at $63. If the price of ABC stock were to fall to $58 or less, then Miller wants to buy the stock. Which type of order should Miller place considering her objective. A. Market order B. Buy limit C. Buy stop D. Buy stop limit

B. Buy limit

A client entering a sell limit order at 43 would accept which of these trades? A) 42.90 B) 42.50 C) 44 D) 42

C) 44

Narcissus, Inc., a social media company, has shares selling at $52. Your customer likes the company but thinks it is currently a bit too high and would like to buy the stock if the price declines to $50 per share. Which of the following orders meets this customer's request? A) Buy stop at 55, limit 50 B) Buy puts with a 50 strike C) Buy limit @ 50 D) Buy stop at 50

C) Buy limit @ 50

Distinguishing between a sell stop order and a sell stop limit order, which of the following are true? I. The sell stop limit order becomes a sell limit once triggered. II. The sell stop order becomes a sell limit order once triggered. III. The sell stop limit order becomes an order to sell at the market when triggered. IV. The sell stop order becomes an order to sell at the market when triggered. A) I and III B) II and III C) I and IV D) II and IV

C) I and IV

Which of the following orders need not be immediately filled in their entirety? I. Immediate or cancel (IOC) II. Fill or kill (FOK) III. Market at open IV. Buy stop limit A) II and III B) I and III C) I and IV D) II and IV

C) I and IV

Who must reconfirm a good 'til canceled order for it to stay in force more than six months? A) The specialist on the NYSE B) No one; they will remain in force until the customer cancels it C) The customer who placed the order D) The broker-deaker who accepted the order

C) The customer who placed the order

Your customer places an order to buy 500 shares of Narcissus, Inc., (the ticker is NCS) at $50 per share fill-or-kill (FOK). When the order is entered, there are 450 shares available at $50 per share. What happens to the order? A) She will buy 450 shares, the rest of the order will be canceled B) She will buy 450 shares, and the remainder of the order remains open until filled. C) The order will be canceled and nothing is done. D) She will do nothing, but the order stays open until the end of the day if more inventory becomes available.

C) The order will be canceled and nothing is done.

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

C) stop order.

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

D) The next available price

A GTC order is left unexecuted at the end of the trading day on the last business day of April. Which of the following is true? A) The order will be automatically renewed. B) The customer must give specific instructions to cancel the order so that it will not continue as a good working order. C) The order will only continue working through the opening of the next business day. D) The order will be automatically canceled.

D) The order will be automatically canceled.

A bearish sentiment means that a person believes A) the company will devour its competition. B) the firm appears to be slow and lumbering. C) the security will increase in value. D) the security will decline in value.

D) the security will decline in value.

Your client, Mary 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 limit order B) A sell stop limit order C) A sell stop order D) A market order

A) A sell limit order

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 open a long position B) Sell XYZ to open a short position C) Sell XYZ to close a long position D) Buy XYZ to close out a short position

A) Buy XYZ to open a long position

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 C) Sell limit 55 AON D) Sell limit 55 FOK

A) Sell limit 55 GTC (The GTC will live past today, all others will cancel if not executed by eod)

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

A) The next available price after the market price falls to 39

A customer enters a market order. This type of order can be A) a sell order only to be executed at a specified price. B) a buy or sell order to be executed at the next available price. C) a buy order only to be executed at the next available price. D) a buy or sell order to be executed at a specified limit.

B) a buy or sell order to be executed at the next available price.

when an investor is long a stock, A. the investor is bearish B. buying the stock in the secondary market will close the position C. there's a limited gain potential D. the investor is bullish

D. the investor is bullish

Your customer is quite nervous about the stock market but expresses his belief that equities are still the place to save for retirement over the long term. He places a trade for 500 shares of an equity index fund. Overall your customer is likely A) a bear. B) unsure of where the market is going. C) a bull. D) a tiger.

A) a bear.

Narcissus, Inc., a social media company, has shares selling at $50. Your customer is bearish. He would like to sell the stock short, but not until it retreats at least 10% from its current price. In order to catch the drop he could A) enter a sell short at stop 45. B) enter a buy stop at 45. C) sell calls at strike price of 45. D) enter a sell long at 50.

A) enter a sell short at stop 45. (The uncovered call does not help. If exercised he would have to buy the shares before he delivers them, leaving him flat (no position). The buy stop at 45 would trigger immediately and would become a market order to buy. As there is nothing that indicated he owns the shares now, the sell long would be rejected. The sell stop short at $45 would become a market order to sell the stock short when it trades at 45.)

A buy stop order at 39 could fill at which of the following prices? I. 38 II. 39 III. 40 IV. 41 A) I and II B) I, II, III, and IV C) II and III D) III and IV

B) I, II, III, and IV

If 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 cancel date specified by the customer at the time the order is entered D) On the first business day of April and the first business day of October

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

Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend? A) Sell ABC to close B) Sell ABC to open C) Buy ABC to open D) Buy ABC to close

B) Sell ABC to open

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

B) The customer would need to reconfirm the order

John Christensen 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 can only be filled at a price of 42 or lower C) The order would be filled immediately because the market price is already above 42 D) The order would be filled at the next available price after the stock price drops to 42

B) The order can only be filled at a price of 42 or lower

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) 50 B) 49 C) 53 D) 51

D) 51

Your customer, Ellesha, places a sell stop at 50 on DEZ stock while it is trading at $53 per share. After the order is elected, Ellesha may sell her shares at which of the following prices? I. $48 II. $49 III. $50 IV. $51 A) I and II B) I, II, and III C) III and IV D) I, II, III, and IV

D) I, II, III, and IV

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) Within 24 hours, at the highest D) Immediately, at the lowest

D) Immediately, at the lowest

your customer places a trade to buy 1,000 shares of Seabird Airlines at a limit of 32 FOK. When the order reaches the floor of the exchange, there are 500 shares available to buy at 32. What is the likely outcome of the trade? A. 500 shares filled, 500 share order remains until filled or canceled at the end of the day B. 500 shares filled, the rest of the order is canceled C. 500 shares filled at 32, 500 at the market D. order canceled, nothing done

D. order canceled, nothing done