TRADING MARKETS: QUIZ

Which of the following securities can be traded using the NASDAQ Market Center Execution System (Single Book)? A. NASDAQ Global Market issues B. NASDAQ Capital Market issues C. All NASDAQ issues D. All securities trading in the secondary market

C. All NASDAQ issues

Completed trades of NASDAQ stocks must be reported within: A. 10 seconds B. 45 seconds C. 60 seconds D. 90 seconds

A. 10 seconds

Regarding reporting of trades that take place in NYSE listed issues: I each trade must be reported within 10 seconds II each trade must be reported within 60 seconds III the executing member reports IV the initiating member reports A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE about the Pink Sheets? I Equity issues too small to be included on NASDAQ are found in the Pink Sheets II Equity issues listed on stock exchanges are found in the Pink Sheets III Bid and ask quotes are found in the Pink Sheets IV Last sale reports are found in the Pink Sheets A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following trades are reported through ACT's Trade Reporting Facilities (TRFs)? I NASDAQ Market Center trade of a NASDAQ listed stock II Super Display Book trade of an NYSE listed issue III Trade of an NYSE listed issue in the Third Market IV Trade of a listed option contract on the CBOE A. I and III B. I and IV C. II and III D. II and IV

A. I and III

If an investor has a gain on a short stock position, which of the following can be used to protect this gain? I Buy a call II Sell a put III Buy a put IV Place a buy stop order A. I, II, IV B. I, III, IV C. II, III, IV D. I, II, III, IV

A. I, II, IV

Which statement is TRUE regarding Super Display Book? Super Display Book is an automated trade execution system for: A. New York Stock Exchange listed issues B. NASDAQ Global Market listed issues C. NASDAQ Capital Market listed issues D. Over-The-Counter Bulletin Board listed issues

A. New York Stock Exchange listed issues

All of the following are considered in determining a fair and reasonable price in a municipal principal transaction EXCEPT: A. Price of the transaction B. Dollar amount of the transaction C. Best judgment of the dealer as to the value of the securities D. The fact that the municipal dealer is entitled to a profit in this transaction

A. Price of the transaction

An open order is on the member firm's internal order entry system to sell 200 XYZ at 30 Stop GTC. The company has declared a 50% stock dividend. On the morning of the ex date, the order on the book will be: A. Sell 300 XYZ at 20 Stop GTC B. Sell 300 XYZ at 30 Stop GTC C. Sell 300 XYZ at 40 Stop GTC D. Sell 300 XYZ at 60 Stop GTC

A. Sell 300 XYZ at 20 Stop GTC To adjust the order for the 50% stock dividend, the number of shares is multiplied by a factor of 1.50 (since there are 50% extra shares) while the order price is divided by a factor of 1.50. 200 shares x 1.50 = 300 The price would change to: $30 price / 1.50 = $20 adjusted order price

Rule 605 of Regulation NMS requires: A. each market center to prepare monthly electronic reports about its quality of executions and effective spreads B. each broker-dealer to prepare quarterly reports on its routing of non-directed orders, including the 10 largest venues where orders were routed C. market makers in OTC stocks to display any customer limit orders that are better-priced than the dealer's own quote D. any order execution facility to execute the order at the NBBO, even if that execution facility is posting an inferior quote

A. each market center to prepare monthly electronic reports about its quality of executions and effective spreads

A municipal term bond with 13 years remaining has been pre- refunded at 103 to a call date 3 years in the future. If a customer buys this bond, the yield shown on the confirmation will be computed to: A. the call date including the 3 point call premium B. the call date excluding the 3 point call premium C. maturity including the 3 point call premium D. maturity excluding the 3 point call premium

A. the call date including the 3 point call premium

Under SEC Rule 605 of Regulation NMS, market centers, in their monthly reports on order execution, must disclose all of the following information EXCEPT: A. trading volumes B. speed of executions C. rates of price improvement D. fill rates

A. trading volumes

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announcement of the offer, the stock closed on the NYSE up $2.50 at $18.75. If a customer were to sell 100 shares in the market at the opening of tomorrow's business day, he would receive? A. $187.50 B. $1,875.00 C. $2,000.00 D. $2,250.00

B. $1,875.00 If the customer sold at the opening, he would receive $18.75 per share or $1,875.00 for 100 shares owned.

A stock is quoted at $18 - $19. If a customer sells 100 shares to the dealer, under the FINRA 5% Policy, a fair and reasonable mark-down is based upon which price? A. $17.50 B. $18.00 C. $18.50 D. $19.00

B. $18.00

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

B. Eurodollar bonds

A Specialist (DMM) on the NYSE shows the following orders for ABC stock on his book: $50.05 - $50.07 30 x 60 The Specialist/DMM in ABC stock receives a market order to buy 1,000 shares. The Specialist/DMM can take which of the following actions? I The Specialist/DMM can fill the order from his own account at $50.06 II The Specialist/DMM can fill the order from his own account at $50.07 III The Specialist/DMM can fill the order against the book at $50.06 IV The Specialist/DMM can fill the order against the book at $50.07 A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

For municipal transactions effected on a yield basis, how are these bonds generally priced? I Discount bonds are priced to maturity date II Discount bonds are priced to the near-term call date III Premium bonds are priced to maturity date IV Premium bonds are priced to the near-term call date A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE? I Orders and quotes for NMS stocks can only be accepted or posted in penny increments in exchange display books II Orders and quotes for NMS stocks can be accepted or posted in sub-penny increments in exchange display books III Trade executions of NMS stocks can only occur in penny increments IV Trade executions of NMS stocks can occur in sub-penny increments A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Under the short tender rule, a customer is prohibited from tendering common shares unless the customer is long a: I call option for that security and intends to exercise the call II call option for that security and has exercised the call III warrant for that security and intends to exercise IV warrant for that security and has exercised the warrant A. I and III only B. II and IV only C. I, II, IV D. I, II, III, IV

B. II and IV only

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

B. Super Display Book trade of an NYSE listed issue

DEFF stock is currently trading at $24, down $4 from yesterday's close. A client places a market order to short 100 shares of DEFF. Which statement is TRUE? A. The order cannot be accepted because the stock has declined by more than 10% during the trading day B. The order can be accepted, but can only be filled on an up-bid C. The order can be accepted, but can only be filled if the stock is not on the threshold list D. The order can be accepted and filled without conditions

B. The order can be accepted, but can only be filled on an up-bid

hich is NOT a good delivery for a 225 share trade of stock? A. Two 100 share certificates and one 25 share certificate B. Three 75 share certificates C. Four 50 share certificates and one 25 share certificate D. Nine 25 share certificates

B. Three 75 share certificates

The "trade-through" rule of Regulation NMS: A. prohibits an order from being routed to a market that will pay for the order B. prohibits a market maker on an exchange from executing a trade at an inferior price to that posted by another market at that moment C. requires member firms to execute any order received within 1 second of execution D. requires member firms to use automated clearing and settlement of all trades

B. prohibits a market maker on an exchange from executing a trade at an inferior price to that posted by another market at that moment

The only order listed that is reduced on ex date is an open: A. buy stop B. sell stop C. sell limit D. sell stop DNR

B. sell stop

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

B. will only sell all of the shares at the stated price

Under SEC Rule 606 of Regulation NMS, broker-dealers are required to compile statistical information on routing of customer non-directed orders to market venues, and make this information available to customers: A. monthly B. quarterly C. semi-annually D. annually

B. quarterly

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

C. $35.25

The Consolidated Quotations Service is open during the hours of: A. 9:00 AM ET - 4:00 PM ET B. 9:30 AM ET - 4:00 PM ET C. 9:00 AM ET - 6:30 PM ET D. 9:30 AM ET - 6:30 PM ET

C. 9:00 AM ET - 6:30 PM ET

All of the following securities deliveries are "good" EXCEPT: A. Trust securities with an assignment performed by the Trustee B. Guardian securities with an assignment performed by the legal guardian C. Custodian securities with an assignment performed by the recipient of the gift D. Partnership securities with an assignment performed by a partner designated in the Partnership Agreement

C. Custodian securities with an assignment performed by the recipient of the gift

A customer wants to speculate on a market decline by selling short a thinly traded security that is on the "threshold list" without borrowing the shares for delivery on settlement. The customer should be told that: I this is a prohibited practice known as a "covered short sale" II this is a prohibited practice known as a "naked short sale" III if the security is not delivered on settlement, the security must be bought and replaced in 13 consecutive settlement days IV if the security is not delivered on settlement, the customer's account must be frozen for 90 days A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Dark Pools are: I sources of displayed liquidity II sources of undisplayed liquidity III regulated IV unregulated A. I and III B. I and IV C. II and III D. II and IV

C. II and III

In a riskless principal transaction, the dealer: I has risk II has no risk III earns a mark-up IV does not earn a mark-up A. I and III B. I and IV C. II and III D. II and IV

C. II and III

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 A. I and III B. I and IV C. II and III D. II and IV

C. II and III

The NYSE Specialist (DMM), when trading for his own account, trades: I the market trend II against the market trend III to dampen market volatility IV to enhance market volatility A. I and III B. I and IV C. II and III D. II and IV

C. II and III

What regulation requires market centers to accept automated executions that do not discriminate against any class of users? A. OATS B. TRF C. NMS D. TRACE

C. NMS

All of the following are considered in determining fair and reasonable compensation under the FINRA 5% Policy EXCEPT: A. Size of the transaction B. Level of service provided by the member firm C. Profit to the dealer on the transaction D. Total dollar amount of trade

C. Profit to the dealer on the transaction

An open order is on the member firm's internal order entry system to sell 400 XYZ at 40 Stop GTC. The company has declared a 25% stock dividend. On the morning of the ex date, the order on the book will be: A. Sell 400 XYZ at 32 Stop GTC B. Sell 400 XYZ at 40 Stop GTC C. Sell 500 XYZ at 32 Stop GTC D. Sell 500 XYZ at 40 Stop GTC

C. Sell 500 XYZ at 32 Stop GTC

The only call provision that must be considered when determining the purchase price of a municipal bond trade effected on a yield basis is a(n): A. extraordinary optional call B. extraordinary mandatory call C. optional call D. mandatory call

C. optional call

Stopping stock is allowed only for: A. dealer orders B. member orders C. public orders D. agent orders

C. public orders

If a customer directs that a marketable order be sent to a specific trading venue, then the trade must be: A. rejected B. sent to the NYSE for execution C. sent to the market specified by the client D. sent to the market with the largest display size

C. sent to the market specified by the client

An NMS stock can only be sold short on an up bid if its price falls by at least: A. 1% B. 2% C. 5% D. 10%

D. 10%

he trade-through rule of Regulation NMS applies to: I NYSE listed issues II NYSE American (AMEX) listed issues III NASDAQ listed issues A. I only B. I and II C. II and III D. I, II, III

D. I, II, III

Which of the following are considered in determining a fair and reasonable price in a municipal agency transaction? I Availability of the security II Dollar amount of the transaction III Value of services rendered by the municipal broker IV The fact that the municipal firm is entitled to a profit in this transaction A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

D. I, II, III, IV

Which orders guarantee price but not execution? I Buy Limits II Buy Stops III Sell Limits IV Sell Stops A. I and II B. III and IV C. I and III D. II and IV

D. II and IV

Under NYSE rules, every "responsible broker or dealer" who communicates bids and offers on the exchange floor (also known as "addressing the crowd") must comply with all of the following rules EXCEPT: A. any bid or offer for less than the normal trading unit has no standing in the trading crowd B. the highest bid and the lowest offer have precedence in all cases C. bids and offers must be publicly announced D. bids and offers are set by floor officials during unusual situations

D. bids and offers are set by floor officials during unusual situations

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

D. prohibited

Block trades for sales of NYSE listed issues that are too large for Super Display Book are: A. given directly to the Specialist/DMM for execution B. given to Floor Brokers, who may only execute them as "Fill or Kill" orders C. only executable during normal trading hours D. routed to Third Market Makers who effect the transaction on a principal basis

D. routed to Third Market Makers who effect the transaction on a principal basis

A regular way municipal bond trade is performed on Tuesday, January 13th. The interest payment dates are January 15th and July 15th. All of the following statements are true EXCEPT: A. settlement takes place on January 15th B. the trade is "flat" C. the seller must deliver the bonds to the buyer's office D. the buyer must pay accrued interest to the seller

D. the buyer must pay accrued interest to the seller