Trading Markets

Market Makers in the Third Market trade

Listed stocks

Retail member firms that route orders to market makers in return for compensation

Must get the customer's oral consent prior to each trade

The second Market is an

Negotiated Market

A customer owns 500 shares of ABC preferred stock trading at $90 per share. following a 3:1 common stock split the customer will have

500 shares at $90 per share

In January, 20XX a customer buys 100 shares of ABC stock at $50 per share and pays a $2 commission per share. The customer receives $2 in cash dividends during the year. The customer's cost basis in the stock is:

52/share

A customer enters an order to sell 100 abc at $80.25 stop limit after the order is entered, the tape shows the following trades.... 80.25...80.13..80.13..80.50

Elected at 80.25 Executed at 80.50

Trades of NYSE american AMEX listed securities that take place in all markets are consolidated and reported through the

Network B Tape

Which of the following is part of the second market

OTCBB

In a rising market which orders will be executed

Open sell limits and open buy stops

The individuals who make a secondary market in corporate bonds include all of the following EXCEPT

Registered representatives

Which order, if executed, would guarantee a specific price or better

Sell Limit

Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no later than:

Settlement date

which statement is TRUE regarding direct registration securities

dividend and interest payments on direct registration securities are received from the issue or transfer agent

An order ticket is marked sell short 100 ABC @ $50. this means that the customer

does not own the shares will borrow shares to deliver on settlement

ECNs trade

listed stocks

Typically a dual listed stock is one that trades in

multiple first markets

Which of the following call provisions must be considered when determining the purchase prices of a municipal bond trade effected on a yield basis

optional calls

Which of the following will NOT result in the establishment of a short position

selling unsettled shares that were purchased on the same day

Which statement is True

a securities dealer will buy stock at the big price and sell stock at the ask price

"Buy 100 shares of ABC if the market rises to $45, but don't buy the stock for more than $50." appropriate order

Buy ABC @ 45 stop 50 limit

If a customer does not give a broker his or her intstructions, cost basis reporting on form 1099-B for a stock holding where there have been multiple purchases at different times is done on a

FIFO Basis

The trading of securities directly between institutions in the over the counter market via ECNs occurs in which venue

Fourth Market

A corporation declares a cash dividend on Wednesday, December 1st. The record date is set at Tuesday, December 21st, with the dividend payable on Friday, December 31st. Based on this information, the ex date is set at Friday, December 17th. The "tax event" occurs on:

Friday, December 31st

A customer has purchased shares of stock over an extended period of time at varying prices. The customer now sells some of the shares. Which statements are TRUE regarding the tax treatment of the sale?

The Tax Code allows specific identification of the shares being sold FIFO accounting must be used to establish the cost basis of the shares sold, if no other tax election is available

A corporation declares a cash dividend on Friday, December 5th, payable to holders of record on Friday, December 19th. The local newspaper publishes the announcement on Monday, December 8th, while Standard and Poor's reports the dividend on Friday, December 12th. The ex date for regular way trades will be set at:

Thursday, december 18th

If a municipal bond is purchased regular way on Monday January 3rd when does the trade settle

Wednesday January 5th, 2 business days

If a customer has a gain on a short stock position that he wishes to protect which statement is true

a buy stop order will be entered

a customer places an order to buy bonds. the order reads "buy 5m ABC 9s M'45 @90 stop GTC, after the order is elected, at which of the following prices may the order be executed

at market