Chapter 1 - Market Participation and Market Structure Flashcards
A customer has an account with a discount broker-dealer that specializes in online trading. If the customer is being charged a commission, the firm is MOST likely acting in what capacity?
Agent capacity
The market makers for stocks that are not listed on either the NYSE or Nasdaq:
The Pink Marketplace
The market in which an issuer raises capital by selling its securities to investors is referred as the:
Primary Market
A quotation system for securities that are not listed on either the NYSE or Nasdaq
The OTCBB (Over-the-Counter Bulletin Board)
Which of the following organizations provides clearing services for equity securities?
A) The National Securities Clearing Corporation (NSCC)
B) The Fixed Income Clearing Corporation (FICC)
C) The Options Clearing Corporation (OCC)
D) A transfer agent
A) The National Securities Clearing Corporation (NSCC)
If ABC Brokerage purchases 600 shares of stock from a customer and places the securities into its inventory, it likely acted as a(n):
Dealer
A broker-dealer is clearing its trades through another broker-dealer but is not disclosing specific information regarding its clients. Who is responsible for maintaining the account records?
The introducing broker-dealer
Securities listed on an exchange, but not traded in the OTC market BEST describes:
the third market
The department of a brokerage firm that advises a corporation regarding the structure and timing that also helps with the underwriting.
Investment banking
A broker-dealer acting in an agency capacity will charge customers a:
commission
A ____ receives a commission.
broker
When an issuer is borrowing money, it is called:
debt
A ____ charges a fee.
Investment Advisor
A ____ maintains an inventory of securities.
market maker
Representation of ownership in a corporation is known as:
equity
To be an accredited investor, an individual must have a net worth of _____ or annual income of _____.
$1,000,000; $200,000
A qualified institutional buyer cannot be a:
natural person
A qualified institutional buyer must own and invest a minimum of:
$100 million
An issuer may hire a(n) _____ to assist in selling its securities publicly to raise capital.
underwriter
The _____ market is where issuers raise money by selling securities to the public.
primary
The _____ market is where the trading of existing securities between investors occur.
secondary
Registered exchange with an unlimited number of market makers.
NASDAQ
Market makers stand ready to buy or sell securities at their quoted prices, while _____ execute trades for the firm’s clients.
traders
_____ stand ready to buy or sell securities at their quoted prices, while traders execute trades for the firm’s clients.
Market makers
A transaction executed directly between two institutions is considered a _____ market trade.
fourth
(True or False) The clearing firm must maintain all client information for a fully disclosed account.
True.
(True or False) Specific client information is held by the clearing firm in an omnibus account.
False.
(True or False) The executing firms are subject to counterparts risk when clearing trades through the DTCC.
False.
(True or False) The Options Clearing Corporation only works with broker-dealers
True.
The buyer for all sellers and the seller for all buyers is the:
Options Clearing Corporation
When trades from multiple firms clear and settle through one firm it is know as a:
prime brokerage
Clearing firm that is responsible for individual client information.
Fully-disclosed
Introducing firm is responsible for individual client information is known as:
Omnibus account
