Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

S7 > Ch.17 S7 > Flashcards

Ch.17 S7 Flashcards

1
Q

What does Level III Nasdaq give market makers the ability to do?

A

Change their quotes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is required for a not held order to be valid for more than one trading day?

A

A clients written authorization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

May the Designated Market Maker (specialist) accept a not held order?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What factors could justify a larger markup than 5%?

A

The type of security, the availability of the security, or the total transaction amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What can be found on Level II Nasdaq?

A

Current quotes of all market makers for a specific security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

A 13% decline in the S&P 500 would trigger a _____- minute trading halt on the NYSE

A

15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

According to NYSE rules, if the S&P 500 falls by 7% from the previous days close, trading will halt for _______ minutes.

A

15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Does the 5% policy apply when a BD is acting in an agency capacity, a principal capacity, or both?

A

Both

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the violation for a market maker failing to honor its firm quote?

A

Backing away

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does Regulation SHO regulate?

A

Short sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What happens if the S&P 500 declines by 20%?

A

The market is closed for the remainder of the trading day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Is this a not held order? “Sell some of my RST position today if the news is bad”.

A

No, because the client did not specify the number of shares to sell

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What type of order gives discretion as to price and time of execution, but does not require a power of attorney?

A

Not-held order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

A 7% decline in the S&P 500 would trigger a ____- minute trading halt on the NYSE.

A

15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What type of order gives discretion as to price and time of execution?

A

Not held

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

A _______ order indicates quantity, security, and whether to buy or sell and is executed at the best price available.

A

Market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the Nasdaq Market Center Execution System?

A

The automated quotation and execution system for Nasdaq

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

T/F: ECNs allow subscribers to post quotes and trade electronically and anonymously.

A

T

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Which market is the decentralized, negotiated market?

A

The OTC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

If the S&P 500 declines by 13% prior to 3:25 pm, trading is halted for _____ minutes.

A

15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Which level of Nasdaq will only show the inside market for a security?

A

Level I

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Prior to 3:25 pm, if the S&P 500 has declined by 7%, how long will trading be halted?

A

For 15 minutes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

A ________ order indicates quantity, security, and whether to buy or sell, but only at a particular price or better.

A

Limit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Where may quotes for non-Nasdaq (OTC) stocks be found?

A

Pink Market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Transactions effected on an exchange or OTC must be reported within _____ seconds.
10
26
Any quote qualified by the terms “subject”, “workout”, or “nominal” is not considered a ______quote.
Firm
27
Firms acting in the capacity of a broker will collect a ________.
Commission
28
On the floor of the exchange, who executed orders for the clients of their firm?
The Floor Broker (also called the Commission House Broker)
29
Is the 5% Policy based upon the current market value of the security or the dealers cost?
Generally, the current market value
30
Is this a not held order? “Buy 500 shares of XYZ this morning if it looks good”.
Yes
31
OTC markets use a _________ system, while most exchanges use a ______ or __________ system.
Market maker ; DMM ; Specialist System
32
The highest bid and the lowest offer for a security is referred to as the _________.
Inside Market
33
If an order has been entered as Immediate or Cancel, is a partial execution acceptable?
Yes, the order must be executed immediately, but not completely.
34
A market is generally based on the ______ market, but not the ____________.
Inside ; dealers cost
35
On the floor of the exchange, the ______ maintains a fair and orderly market.
DMM
36
T/F: Level III Nasdaq is available to the public.
F; Level III is exclusively for market makers
37
Define trading ahead.
Buying or selling securities just before the release of a research report by the firms research department
38
What orders may be placed in the Designated Market Makers (Specialists) Book?
Stop and limit orders placed away from the market
39
How is a firm acting if it’s trading for, or from, it’s own inventory?
As a principal /dealer
40
T/F: Market Makers are obligated to honor their quotes for both size and price (they are firm quotes).
T
41
T/F: stocks quoted in the Pink Market are often thinly traded.
T
42
The _____________ is where trades of NYSE listed securities occur in the OTC market.
Third market
43
If an investor is short stock, a buy stop order can be used to limit ______ risk.
Upside
44
What is an ECN?
Electronic Communication Network; any one of several systems which permit the entry and dissemination of quotes
45
What trades would be covered by the 5% policy?
Secondary market trades of stocks, corporate bonds, and treasuries
46
T/F: not held orders may be entered by both retail and institutional clients.
T
47
Stop orders become _______ orders once they are triggered/activated.
Market
48
The ______________ is the primary system for accessing the quotes of Nasdaq market makers.
Nasdaq Market Center Execution System
49
For agency trades, _________ must be disclosed.
Commissions
50
Sell order tickets are marked long when clients have unconditional contracts to buy, but the trades have not _______.
Settled
51
Sally converts her XYZ bonds and enters an order to sell XYZ stock. How would the sell order ticket be marked?
Since the tender for conversion has been entered prior to the sale, the order ticket may be marked long
52
What information is found on a confirmation and NOT an order ticket?
Firm capacity, accrued interest, commission, and CUSIP number
53
T/F: the capacity in which the firm is acting in a transaction is found on the order ticket.
F; firm capacity is found on the confirmation
54
If the S&P 500 declined by 7% after 3:25 pm, how long will trading be halted?
After 3:25 pm, the 7% limit does not apply; trading will continue until the close or a 20% decline (Level 3 halt)
55
T/F: The capacity in which a firm acts appears on both the confirmation and the order ticket.
F; firm capacity is disclosed on the confirmation, not the order ticket.
56
The _____________ is where trades occur between institutions without the use of BDs.
Fourth Market
57
Is interpositioning an acceptable practice?
No, it is generally prohibited
58
T/F: For principal trades, commissions must be disclosed.
F; principal trades charge a markup or markdown which must be disclosed in the confirmation
59
What type of order only permits discretion related to the time and/or price of execution?
A not held order
60
T/F: Investors generally place stop orders to limit a loss or protect a profit on a stock position.
T
61
If the S&P 500 declines by 13% after 3:25 pm, trading will continue until there is a _____% decline.
20%
62
T/F: an order ticket will identify the broker on the other side of the trade (contra broker)
F
63
How long will a Day Limit order remain on the display book?
Until executed or the end of the day (if unexecuted)
64
In order to sell short, Regulation SHO requires that securities be easy or hard to borrow?
Easy to borrow (called the locate requirement)
65
According to FINRA, the guideline for determining commission or markup on transactions is ___%
5%
66
Is this a not held order? “But 5,000 shares of LNC sometimes this week.”
No, because not held orders are effective for one day
67
What’s re the two ways order tickets can be marked when selling securities?
Long (selling shares that are owned) or short (selling stock that is being borrowed)
68
T/F: The Locate Requirement of Regulation SHO applies when a sell order ticket is marked long or short.
F; the Locate Requirement only applies when a sell order ticket is marked short
69
Do stop orders guarantee a specific price when buying or selling?
No, stop orders execute at the market price (which is uncertain) once they are activated
70
If the S&P 500 has declined by 7% after 3:25 pm, trading will continue until they’re is a ____% decline.
20%
71
To what is a firm entitled when acting in the capacity of a principal or dealer?
Markup when selling to a customer and markdown when buying from a customer.
72
According to NYSE rules, if the S&P 500 falls by 13% from the previous days close, trading will halt for _____ minutes.
15 minutes
73
T/F: An all or none order qualifier requires all of the bonds to be purchased.
T
74
What is interpositioning?
The placement of another BD between a customer and the best market
75
FINRAs 5% Policy addresses transactions executed in the ______ market.
Secondary
76
What is exempt from the 5% policy?
Trading of municipal bonds, new issues, registered secondary offerings, and mutual funds
77
If an investor is long stock, a sell stop order can be used to limit _________ risk.
Downside
78
T/F: the 5% policy is a rule that may not be exceeded.
F; it’s a guideline, not a rule.
79
What are some of the different functions of Designated Market Makers?
Maintaining liquidity and buying and selling from their own account.
80
What is the system that provides quotes for the third market?
Consolidated quotation system (CQS)
81
Market makers must report trades within ______ seconds.
10
82
What happens if the S&P 500 declines by 20% at any time during the day?
The market is closed for the remainder of the trading day
83
T/F: Nasdaq is a securities exchange registered with the SEC
T
84
How long will a GTC limit order remain on the Display Book?
Until executed or cancelled by the customer
85
If the S&P 500 falls by 20% from the previous days close, trading halts for ____________.
The remainder of the day
86
How is a firm acting if it effects trades on behalf of its customers, without taking the other side of the trade?
Agent or broker

S7 (18 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions