Trading Markets 3

A corporation declares a cash dividend on Tuesday, December 2nd, payable to holders of record on Tuesday, December 16th. The local newspaper publishes the announcement on Thursday, December 4th, while Standard and Poor's reports the dividend on Tuesday, December 9th. The ex date for regular way trades will be set at:

12

Accrued interest on municipal bonds is computed:

30/360

A customer enters an order to sell 100 shares of ABC at 53 stop limit when the market price of ABC is 54. The tape then shows the following: ABC: 53.50 52.00 52.50 54.00 53.00

52.00 Sell stop orders are placed lower than the current market and are elected (or triggered) at or below the stop price - here, the stop price is at 53. The first trade at 53.50 is above the stop price. The second trade at 52 is below the stop price and this is where the order is elected. Then the order becomes a limit order to sell at 53 or better (or higher). The next trade at 52.50 is not high enough to satisfy the limit. The next trade at 54 is the execution.

A customer places an order to buy bonds. The order reads "Buy 5M ABC 9s M '35 @ 90 GTC." At which of the following prices may the order be executed?

89, 90 The best answer is A. The customer places a limit order to buy 5M - or 5 $1,000 par bonds at 90% of par value or less, if possible. The order must be executed at 90% or less. If executed, the customer is buying $5,000 par value of bonds at 90% = $4,500 or less. The two possible choices where the order can be executed are 89 and 90.

Stocks that are listed on the New York Stock Exchange can also be typically listed and traded on all of the following exchanges EXCEPT:

American Stock Exchange

Which orders, if executed do NOT guarantee a specific price or better?

Buy & sell Stop

A trade takes place directly between a bank and an insurance company without the use of a broker. This trade took place in the:

Fourth Market

A corporation declares a cash dividend on Tuesday, December 2nd, payable to holders of record on Tuesday, December 16th. The local newspaper publishes the announcement on Thursday, December 4th, while Standard and Poor's reports the dividend on Tuesday, December 9th. The ex date for regular way trades will be set at:

Monday, December 15th The best answer is B. The regular way ex date for cash dividends is set at 1 business day prior to record date. Since the record date is Tuesday, December 16th, the ex date is 1 business day prior and is Monday, December 15th.

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

Network A tape The best answer is A. The Network A Tape reports trades of NYSE-listed issues, regardless of the market venue where the trade took place. The Network B Tape reports trades of NYSE American (AMEX) and regional exchange-listed issues, regardless of the market venue where the trade took place. Reports of trades of NASDAQ issues are made through the Network C Tape, regardless of the market venue where the trade took place. There is no Network D Tape.

Which of the following are part of the Second Market?

Pink OTC Market OTCBB

Ignoring accrued interest, if the order is executed as stated, the customer will pay:

The best answer is C. The customer is buying "5M" of bonds, or $5,000 par value at a price of 85% = $4,250 execution price. This is a buy limit order, where the customer does not wish to pay more than 85% for the bonds.

Fourth Market

Where big institutional investors (pension funds, insurance companies, mutual funds, etc.) trade directly through electronic communications networks (ECNs)

A securities dealer is quoting ABCD stock at 12.00 - 13.00 (10 x 15). This means that the dealer is willing to:

buy 1,000 shares at $12 and sell 1,500 shares at $13 Securities dealers quote stocks with a bid and ask. The bid is the price at which the dealer is willing to buy from the customer (therefore, the customer is selling to the dealer at the bid). The ask is the price at which the dealer is willing to sell to the customer (therefore, the customer is buying from the dealer at the ask). Within the brackets is the "size" of the quote - how many shares the quote is good for. This dealer is willing to buy 1,000 shares at $12 and is willing to sell 1,500 shares at $13. The "size" is 10 x 15 - this translates into 1,000 shares bid at $12 and 1,500 shares offered at $13 by the dealer.

Regular way trades of all of the following securities settle "next business day" EXCEPT:

municipal debt The best answer is D. Trades of government debt and listed options settle "regular way" next business day. Trades of corporate securities and municipal bonds settle "regular way" 2 business days after trade date.

For tax purposes, cash dividend payments by issuers to securities holders are taxable as of which date?

payable date

The Second Market is trading of:

unlisted securities "over-the-counter"

All of the following dates are needed to compute the total purchase price of a municipal bond traded in the secondary market that is quoted on a yield basis EXCEPT:

you don't need to remember your first date but you need to remember all of the others