Trading Markets: Trading Markets Basics Review Questions

A securities firm does a trade for a customer and charges a commission. In what capacity did the firm act? A: Agent B: Dealer C: Principal D: Market Maker

A: Agent

The trading of securities on regional stock exchanges is most similar to trading, as it takes place, on the: A: NYSE B: CBOE C: NASDAQ D: MSRB

A: NYSE

Which of the following are First Markets? A: NYSE and NASDAQ B: Pink OTC Market C: NYSE only D: OTCBB

A: NYSE and NASDAQ

A person who makes a secondary market in securities is called a(n): A: market maker B: registered representative C: underwriter D: retail broker

A: market maker

Which stocks are NOT traded on ECNs? A: NYSE issues B: OTCBB issues C: NASDAQ issues D: NYSE American issues

B: OTCBB issues

Which of the following is NOT part of the Secondary Market? A: First Market B: Primary Market C: Second Market D: Third Market

B: Primary Market

Which statement is TRUE? A: Trades of NYSE listed issues, regardless of the market venue where the trade took place, are reported via the Network C Tape B: Trades of NYSE listed issues, regardless of the market venue where the trade took place, are reported via the Network A Tape C: Trades of NYSE American (AMEX) listed issues, regardless of the market venue where the trade took place, are reported via the Network A Tape D: where the trade took place, are reported via the Network B Tape

B: Trades of NYSE listed issues, regardless of the market venue where the trade took place, are reported via the Network A Tape

Customers who trade NYSE-listed securities during extended trading hours are subject to: A: a lower degree of price volatility than that experienced during regular trading hours B: a higher degree of price volatility than that experienced during regular trading hours C: a similar degree of price volatility to that experienced during regular trading hours D: no price volatility since all executions are done at the issue's 4:00 PM closing price

B: a higher degree of price volatility than that experienced during regular trading hours

A broker-dealer will sell stock at the: A: bid price B: ask price C: midpoint price D: price of the last reported trade

B: ask price --bid price is the price @ which dealer would buy --ask price is the price @ which dealer would sell

High trading volume and narrow bid/ask spreads would be characteristic of a(n): A: consolidated market B: efficient market C: inefficient market D: centralized market

B: efficient market

Retail member firms that route orders to market makers in return for compensation: A: are engaging in a prohibited practice under SEC rules B: is permitted to do so, subject to best execution requirements and disclosure requirements C: must get the customer's oral consent prior to each trade D: must get the customer's written consent prior to each trade

B: is permitted to do so, subject to best execution requirements and disclosure requirements

The Third Market is a(n): A: auction market B: negotiated market C: unregulated market D: primary market

B: negotiated market

Stocks that are listed on the New York Stock Exchange can also typically be listed and traded on: A: the American Stock Exchange (NYSE American) B: the Chicago (Midwest) Stock Exchange C: the Chicago Board Options Exchange D: Instinet

B: the Chicago (Midwest) Stock Exchange

Stock options trade on the: A: NASDAQ B: CME C: CBOE D: CBOT

C: CBOE --Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) trade futures

Quotes from all market centers in AMEX (NYSE American) listed securities are found on (the): A: UQDF(UTP Quote Data Feed) B: ADF (Alternate Display Facility) C: CQS(Consolidated Quotations Service) D: Pink Sheets

C: CQS(Consolidated Quotations Service) -shows all quotes from AMEX and NYSE

What securities are traded in the secondary market? A: Hedge funds B: U.S. Government savings bonds C: Municipal bonds D: Municipal bond funds

C: Municipal bonds

Which of the following securities is NOT traded in the secondary market? A: Preferred Stocks B: American Depositary Receipts C: Mutual Funds D: Municipal Bonds

C: Mutual Funds

Which of the following securities is actively traded in the secondary market? A: Open end funds B: Annuities C: Real estate investment trusts D: Direct participation programs

C: Real estate investment trusts

The trading of listed securities over-the-counter occurs in the: A: First Market B: Second Market C: Third Market D: Primary Market

C: Third Market

The individuals who make a secondary market in corporate bonds include all of the following EXCEPT: A: Market Makers B: Traders C: Underwriters D: Dealers

C: Underwriters

All of the following statements are true if a customer places an order for an NYSE-listed issue EXCEPT the order: A: must be directed by the member firm to the NYSE trading floor for execution if the customer so requests B: can be directed by the member firm to any trading venue posting the best price if the customer does not direct the order to a specific market C: can be matched internally by the member firm and is not required to be sent to a public trading venue D: can be directed by the member firm to a trading venue posting the best price that "pays for order flow" as long as this is disclosed to the customer

C: can be matched internally by the member firm and is not required to be sent to a public trading venue

Execution of a trade routed to an ECN is: A: guaranteed since the ECN is a market maker in the security B: only guaranteed during regular market hours C: subject to the "best execution" rule D: assured only for trades below 10,000 shares

C: subject to the "best execution" rule

A dual listed stock is one which trades in: A: the second market B: the secondary market C: two different U.S. market venues D: the primary and secondary markets

C: two different U.S. market venues

Which of the following is NOT part of the secondary market? A: First Market B: Third Market C: Fourth Market D: Fifth Market

D: Fifth Market

Which of the following is part of the Second Market? A: NYSE B: NASDAQ C: AMEX (NYSE American) D: OTCBB

D: OTCBB

Which of the following is NOT an ECN? A: INSTINET B: ISLAND C: ARCHIPELAGO D: PENINSULA

D: PENINSULA --NYSE purchased archipelago --NASDAQ purchased instinet and island

The Fourth Market is direct trading of securities between: A: brokers buying for their own accounts B: NYSE customers C: NASDAQ customers D: institutions

D: institutions --trading occurs on electronic communications network (ECN)

The Primary Market is the: A: trading of exchange listed securities on that exchange floor B: trading of securities that are not exchange listed in the over-the-counter market C: trading of exchange listed securities in the over-the-counter market D: sale of new issues for the first time

D: sale of new issues for the first time