Chapter 13.6

Question 1

Good Delivery of securities

Answer 1

• Securities must be in a form that permits ownership to be readily transferred
• The seller incurs expenses for shipment of securities

Question 2

Stock Power

Answer 2

A separate document attached to a stock certificate, which authorizes the transfer of ownership from one person to another

Question 3

Assignment on certificates

Answer 3

• Must have a guarantee acceptable to the transfer agent(B/D puts the guarantee on it)
• There must be a separate assignment for each certificate
• If a certificate is delivered with an incomplete signature, it could still be accepted as good delivery if a B/D is willing to accept it and guarantees the signature

Question 4

Partial Delivery

Answer 4

If the seller can only make a partial delivery, this must be acceptable to the buyer if the partial delivery certificates are in good deliverable form, but over delivery is not good delivery.

Question 5

The B/D will guarantee the customer’s signature and the signature and guarantee must be acceptable to the transfer agent. The following endorsements would be acceptable to the transfer agent:

Answer 5

Stock in the name of:

• An individual signed by the individual
• A husband and wife as joint tenants signed by the husband and wife
• A partnership, signed by one of several general partners
• A corporation signed by one or two authorized officers
• An estate signed by the estate’s legal representative

**However, stock held in custodian form under the UGMA act that has been signed by the minor is not acceptable by the B/D or transfer agent

Question 6

In order to be good delivery, a bond with mutilated coupons must:

Answer 6

Be authenticated by the issuer or transfer agent. B/D’s can’t authenticate or validate certificates

Question 7

Are Foreign securities subject to the uniform practice code?

Answer 7

Yes, they are subject to all of the provisions of the Uniform Practice Code

Question 8

How is accrued interest on corporate and municipal bonds computed?

Answer 8

From the last interest payment date up to but not including settlement date

Question 9

Bonds traded Flat:

Answer 9

Are bonds trading without accrued interest

• When interest is in default, the bonds trade without any accrued interest
• Income bonds are trade this way