Chapter 12 - Orders and Trading Strategies Flashcards
A buy or sell order that may not be executed.
A limit order
An order that will only be executed at a specific price or lower.
A buy limit order
A buy or sell order that will be immediately executed.
A market order
An order that will only be executed at a specific price or higher.
A sell limit order
An order that can be used to hedge a long position.
A sell stop order
An order that once activated, it may not be executed.
A stop limit order
An order that once activated, it will be immediately executed.
A stop order
An order that can be used to hedge a short position.
A buy stop order
If a broker-dealer expects a seller to deliver the securities by the settlement date, how may the order ticket be marked?
Long
Sell limit orders are placed _____ the market.
above
Factors that may be used when determining the markup of a security under the 5% Policy (3):
- Type of Security
- Price of Security
- Availability of the Security in the Market
A markup is generally based on the _____ market, but no the _____ cost.
inside; dealer’s
Stop orders become _____ orders once they are triggered/activated.
market
Type of account where uncovered option positions are created.
Margin account
Stop-limit orders become _____ orders once they are triggered/activated.
limit
If a client consents to a trade before execution, the order ticket is marked:
discretion not exercised
A _____ order indicates quantity, security, and whether to buy or sell, but only at a particular price or better.
limit
If a trade is initiated by a customer, how is the order ticket marked?
Unsolicited
Orders to sell all exchange-listed and over-the-counter equities must be marked _____ or _____.
long; short
A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a(n):
principal capacity and charged the client a markup.
In judging the fairness of a firm’s markup, industry rules would NOT consider:
A) Whether the security was debt or equity
B) The availability of the security in the market
C) The pattern of markups
D) Whether the client was a retail or institutional customer
D) Whether the client was a retail or institutional customer
If an investor wants to receive immediate execution, he should enter a:
market order
A customer opens a new margin account and her initial transaction is a short sale of 100 shares of XYZ at $16. What is her minimum deposit requirement?
$2,000
For the first short sale in a new margin account, the minimum deposit requirement is $2,000.
The 5% Markup Policy applies when a member is acting as a(n):
A) Investment banker
B) Sponsor of a mutual fund
C) Dealer when selling a security from inventory
D) Underwriter of a security
C) Dealer when selling a security from inventory
