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series 7 take 2 > trading securities > Flashcards

trading securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

what are the 4 secondary trading markets?

A
  • exchanges
  • over the counter
  • third market
  • fourth market
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2
Q

describe exchange trading

A
  • listed securities
  • trade at physical location
  • trade on an auction market
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3
Q

describe over the counter trading

A
  • not listed securities
  • no physical location
  • trading is negotiated between buyer and seller
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4
Q

describe third market trading

A
  • listed securities traded OTC
  • no physical location
  • trading is negotiated between buyer and seller
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5
Q

describe fourth market trading

A
  • listed and unlisted securities
  • direct trading between financial institutions
  • use ECNs to trade
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6
Q

describe dark pool trades

A
  • private trading done on the fourth market after hours by institutions
  • instinet
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7
Q

what are two types of ECNs

A
  • superdot - nyse

- instinet - 4th market institutions

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8
Q

describe floor brokers

A

broker working for an individual broker/dealer on the exchange floor

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9
Q

describe two-dollar brokers

A

employees of nyse who help other brokers on floor and charge fees for their assistance

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10
Q

describe a specialist

A

designated market maker (DMM)

  • buy and sell to make market move
  • maintains fair and orderly market
  • provide liquidity
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11
Q

what is a market order

A

are orders that are executed immediately at best available price

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12
Q

market orders are guaranteed to be ___, ___ is not guaranteed.

A
  • filled

- price

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13
Q

what order are market orders filled?

A

1st-priority-time
2nd-precedence-size
3rd-parity-heads or tails

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14
Q

when are limit orders executed?

A

they are executed at a specified price or better

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15
Q

describe a buy limit

A

buy for $20 or better

  • entered below CMV
  • no fill guarantee
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16
Q

describe a sell limit

A

sell for $20 or better

  • entered above CMV
  • no fill guarantee
17
Q

purpose of stop orders

A
  • provide protection

- limit losses (called “stop loss” orders)

18
Q

describe buy stop orders

A

buy @ 35 stop

  • triggered @ 35
  • become market order and executed at next price
  • entered above CMV
  • PROTECTS SHORT POSITION
19
Q

describe sell stop orders

A
  • sell @ 35 stop
  • triggered @ 35
  • become market order and executed at next price
  • entered above CMV
  • PROTECTS LONG POSITION
20
Q

describe buy stop limit orders

A
  • buy @ 25 stop limit 26
  • 25 if trigger price
  • order will be filled at 25 but not more than 26
  • entered above CMV
21
Q

describe sell stop limit orders

A
  • sell @ 25 stop limit 24
  • 25 is trigger price
  • order will be filled at 25 but no less than 24
  • entered below CMV
22
Q

cheat for remembering if orders are filled above or below the CMV

A

SLoBS
BLiSS

sell limits and buy stops
buy limits and sell stops

23
Q

describe day orders

A

cancel any unexecuted portion at end of the day

24
Q

describe GTC (good till cancelled) orders

A

any unexecuted portion remains working until the last trading day of April or October

25
Q

describe Fill or Kill (FOK) orders

A

entire order executed immediately or entire order is cancelled

26
Q

describe immediate or cancel (IOC) orders

A
  • execute any portion available immediately

- cancel any balance remaining

27
Q

describe all or none (AON) orders

A
  • execute all if available

- become a GTC order if not all of order can be filled

28
Q

describe market at open orders

A
  • execute orders at or near the open of the day

- not guaranteed exact opening price

29
Q

describe market at close orders

A
  • execute orders at or near the end of the day

- not guaranteed exact closing price

30
Q

describe market not-held orders

A

held by floor broker having time and price authority

-order not guaranteed

31
Q

specialists (DMM) order display books contain?

A
  • limits (high bid price/low ask price)

- stops and stop limits

32
Q

describe the 3 market halts

A

based on declines in the S&P 500

  • level 1-7% decline = 15 min halt
  • level 2-13% decline = 15 min halt
  • level 3 -20% decline = market done for day
33
Q

what kind of securities trade OTC?

A
  • unlisted stocks and bonds
  • govt securities
  • municipal securities
34
Q

describe principal market makers

A
  • maintain inventory
  • maintain liquidity
  • mark up or down
  • charges not disclosed
35
Q

describe agents as a non-market makers

A
  • represents clients
  • charge commission
  • charges are disclosed
36
Q

describe the markup policy

A

usually 5%

  • guide for listed and unlisted transaction charges
  • markup policy can vary depending on the effort used to finalize deal

series 7 take 2 (17 decks)

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