Chapter 17

Question 1

A _____ order is placed above the current market price of a security.

Answer 1

sell limit

Question 2

A _____ order is placed below the current market price of a security.

Answer 2

buy limit

Question 3

A _____ is always placed below the current market price of a security and is used to limit a loss or protect a profit on a long stock position.

Answer 3

sell stop

Question 4

A _____ is always placed above the current market price of a security and is used to limit a loss or protect a profit on a short sale.

Answer 4

buy stop

Question 5

Sally converts her XYZ bonds and enters an order to sell XYZ stock. The sell order ticket would be marked as:

Answer 5

long

Question 6

Painting the Tape

Answer 6

Traders effecting transaction back and forth to create a misleading appearance of activity.

Question 7

Order that only permits discretion related to the time and/or price of execution is a:

Answer 7

not-held order

Question 8

The decentralized, negotiated market is the:

Answer 8

over-the-counter market

Question 9

The __________ is the primary system for accessing the quotes of Nasdaq market makers.

Answer 9

Nasdaq Market Center Execution System

Question 10

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

Answer 10

market

Question 11

A markup is generally based on the _____ market, but not the _____.

Answer 11

inside; dealer’s cost

Question 12

The _____ regulates the Secondary Market.

Answer 12

Securities Exchange Act of 1934

Question 13

The capacity in which the firm is acting in a transaction is found on the:

Answer 13

confirmation

Question 14

The _____ provides quotes for the Third Market?

Answer 14

Consolidated Quotation System (CQS)

Question 15

If a client says “buy 500 shares of XYZ this morning if it looks good”, this is a:

Answer 15

not-held order

Question 16

Nasdaq will only show the inside market for a security in Level:

Answer 16

Level 1

Question 17

Nasdaq market makers have the ability to change their quotes in Level:

Answer 17

Level 3

Question 18

Capping

Answer 18

A manipulative activity that is designed to keep the price of a stock from rising.

Question 19

Nasdaq market makers have current quotes for specific securities in Level:

Answer 19

Level 2

Question 20

Pegging

Answer 20

A manipulative activity that is designed to keep the price of a stock from falling.

Question 21

Order is entered to sell 100 ABC at 50 stop. Trades occur at 50.10…50.03…50…49.98…49.90. What is the execution price?

Answer 21

$49.98

Question 22

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

Answer 22

limit

Question 23

Regulation SHO regulates:

Answer 23

short sales

Question 24

Order is entered to buy 5,000 RST at $97 stop-limit. Trades occur at 96.99…97…97.02…97.05. Execution price is:

Answer 24

nothing because no trade occurring after the trigger (97) satisfied the buy limit at $97.

Question 25

The highest bid and the lowest offer for a security is referred to as the:

Answer 25

Inside Market

Question 26

Order is entered to buy 5,000 RST at $73 stop. Trades occur at 72.95…72.99…73.02…73.08…73.12. Execution price is:

Answer 26

$73.08 because it is the best available price after the trigger. (Stop -> market after trigger is hit)

Question 27

If a fail-to-deliver of a _____ security lasts for 13 consecutive settlement days, it requires a _____.

Answer 27

threshold; buy-in

Question 28

Buy Limits, Sell Stops, and Sell Stop Limits are reduced on the ex-dividened date unless:

Answer 28

they are marked Do Not Reduce (DNR)