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
