Unit 19 Checkpoint Exam
Your customer buys 300 shares of Steel Tools common stock on Tuesday and will be an owner of record as of the close of business that same Tuesday. This must be A) a mutual fund. B) not possible. C) a quick settlement trade.0 D) a cash settlement trade.
d. a cash settlement trade This is called a cash settlement trade. It states that the trade is a common stock, so not a mutual fund. There is no formal quick settlement trade.
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 12 and March 11 C) December 11 and March 11 D) December 11 and March 12
C. December 11 and March 11 All option trades settle next business days. The exercise of an Index option settles the next business day.
A document that substitutes for the owners signatures on the back of a stock or bond certificate is called a A) signature substitution letter. B) security substitution letter. C) certificate power. D) stock or bond power.
D. stock or bond power A stock (or bond) power signed by the owners may be used in lieu of the customer's signature on the back of the certificate.
Shares held in electronic form at a clearing house under a broker-dealers account are A) in trust name. B) held in street name. C) held in safe keeping. D) are in custodial name.
b. 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 cash settlement trade settles A) the regular way, but no margin borrowing is permitted. B) in two business days. C) the next day. D) the same day as the trade.
d. the same day as the trade
A signature endorsement on a stock certificate would not be required for good delivery if the shares were A) are in custodial name. B) held in street name. C) in trust name. D) held in safe keeping.
B. 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.
A trade of an equity option settles in ( ) days, while an exercise of an equity option must be completed in ( ) days. A) 2,2 B) 2,1 C) 1,2 D) 1,1
C. 1,2 An option trade settles next business day (T+1); the exercise of an equity option settles in two days from exercise.
Good delivery of a stock certificate requires all of the following except A) the correct number of shares are delivered. B) proper endorsement by all owners. C) proper signatures of a firm principal on the certificate. D) certificates in good condition.
C. proper signatures of a firm principal on the certificate The broker-dealer does not sign the certificate. All the rest of these are requirements.
On Friday, July 1 your customer purchased 10 3% T-bonds maturing in 15 years. This trade will settle on A) July 6 B) July 3 C) July 2 D) July 5
D. 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) Thursday, March 22 B) Friday, March 23 C) Tuesday, March 20 D) Wednesday, March 21
D. 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.
