Series 24 - Session Five

Question 1

What is regular way settlement?

Answer 1

3 business days T+3

Question 2

What is cash settlement?

Answer 2

Just means same day

Question 3

What is seller’s option?

Answer 3

If the seller (for good reason) cannot deliver by settlement date, he must comunication his intent to delivery at least one day prior to delivery

Question 4

When stock is borrowed between members what three things apply?

Answer 4

1) dividends are paid to the lending dealer; 2) market to the market daily 3) returnable on demand

Question 5

For clearly erroneous trades, the member must notify NASDAQ market operations within what time frame?

Answer 5

30 minutes

Question 6

For clearly erroneous trades, appeals to market operations review committee must be made within what time frame?

Answer 6

30 minutes

Question 7

What constitutes “good delivery”?

Answer 7

1) at buyers office 2) accompanied by a packing slip 3) properly assigned 4) Round lots 5) partial delivery ok

Question 8

Bonds subject to a partial call are considered good delivery or not good delivery?

Answer 8

not good delivery

Question 9

Bonds subject to whole call are good delivery or not good delivery?

Answer 9

good delivery

Question 10

Reclamation deals with inadvertently accepting delivery of non in good order. What is the standard time frame for reclamation?

Answer 10

15 days

Question 11

What is rejectable?

Answer 11

1) torn, mutilated or no signature guarantee 2) if delivery is made prior to the settlement date

Question 12

What is a “when-issued” contract?

Answer 12

A written agreement between members to buy or sell a security prior to issue

Question 13

How do you calculate accrued interest?

Answer 13

360 day year/ 30 day month

Question 14

Do you include or exclude the last interest date and the settlement date in calculating accrued interest?

Answer 14

1) include last payment date 2) up to but not including settlement date

Question 15

Accrued interest is added with which side, the buy side or the sell side?

Answer 15

added to both

Question 16

A buy in is when securities are not delivered to the buying member on the settlement date. When can a buying member close out the position?

Answer 16

1) earliest is the 3 business days after settlement 2) seller must give 2 business days written notice

Question 17

Sell out occurs when the payment is not made to the selling member. When can the selling member close out the position?

Answer 17

Any time after the settlement date and no notice is required

Question 18

For dividends, all dates are set by the issuer except what date?

Answer 18

the ex-date is set by the SRO

Question 19

What is the ex-date?

Answer 19

2 business days prior to the record date. if you buy on this date or later, you will not get the dividend

Question 20

What are ADRs?

Answer 20

American Depository Receipts

Question 21

What is the purpose of ADRs?

Answer 21

to facilitate the trading of foreign securities in the US market

Question 22

When is the first date a stock trades without a due bill attached?

Answer 22

the ex-date

Question 23

When selling stock short on the ex-date, who gets the dividend.

Answer 23

the stock lender

Question 24

What are the characteristics of ADRs?

Answer 24

1) UPC delivery rules apply 2) dividends are declared in the foreign currency but paid in US dollars 3) holder has currency risk 4) holder can demand delivery of underlying shares 5) no pre-emptive rights 6) no voting rights

Question 25

For internal foreign securities what delivery rules are used?

Answer 25

those of the country where the security principally trades