Chapt 5

Question 1

If trading is very active, certain transactions may not be reported. In leu of this…

Answer 1

tape will print the word “fast” to acknowledge that certain trades have been deleted

Question 2

an order that’s to be executed at the best possible price when the order reaches the ring

Answer 2

market order

Question 3

an order to buy at the limit price or lower or sell at the limit price or higher

Answer 3

limit order (resting order)

Question 4

becomes a market order if the contract trades at or below the stop price

Answer 4

sell stop order

Question 5

how does a stop order to sell commodity futures differ from a stop order to sell stock

Answer 5

the commodity futures order becomes a market order when there is a trade or offer at the stop price. a stop order for stock becomes a market order when there is only a trade

Question 6

becomes a market order if the contract trades at or above the stop price

Answer 6

buy stop order

Question 7

incorporates the provisions of both a stop order and limit order

Answer 7

stop limit order

Question 8

becomes a market order when the commodity trades at, or is offered at or below, the limit price

Answer 8

buy MIT order

Question 9

becomes a market order when the commodity trades at, or is bid at or above, the limit price

Answer 9

sell MIT order

used by a person who wants to establish a short position or liquidate a long position when the market rises to a certain level

Question 10

what is the difference between the limit and MIT order?

Answer 10

the limit order must be bought or sold at the limit price or better

whereas the MIT order may be bought or sold at any price once a trade occurs at the price specified in the order

Question 11

order placed to either sell at a limit price, buy at a higher price or sell at a lower price; in this case, discretion is given to a certain amount

Answer 11

discretionary order

Question 12

how is discretion given?: discretionary order to buy

Answer 12

given above the limit

Question 13

how is discretion given?: discretionary order to sell

Answer 13

given below the limit

Question 14

an order that gives the floor broker full discretion regarding the handling of the order and how to take a position; the broker cannot be held responsible for his action or inaction

Answer 14

not held order

Question 15

an order that’s to be executed as soon as the order is presented in the crowd and, if it cannot be executed at the limit price, it is canceled

Answer 15

fill-or-kill order (FOK)

Question 16

is similar to fill-or-kill orders but may receive partial execution

Answer 16

fill-and-kill order (FAK)

Question 17

an order where the customer is instructing the broker to execute one of two alternatives. the first chosen will cancel the other automatically

Answer 17

one cancels the other order (OCO)

Question 18

an order that moves a contract from one delivery month to another delivery month or from one exchange to another exchange

Answer 18

switch order

**customers must pay a full round-turn commission because it’s considered to be a new order

ex. cx doesn’t want to accept delivery so he will offset in a more distant delivery month

Question 19

an order that a floor broker or FCM executes on behalf of another floor broker or NFA member; often used to execute larger, block trades for CTAs or CPOs

Answer 19

give up order

Question 20

an ex-pit transaction where two hedgers will prearrange to exchange their cash and futures positions; this also includes the transfer of a customer’s account between clearing member firms

Answer 20

exchange for physicals order (EFP)