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Series 7 > Trading Securities > Flashcards

Trading Securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Earlier in the day, you entered a customer order to buy 300 XYZ at 26.45 GTC. By late afternoon, you notice that XYZ is trading at your customer’s limit price. At the close of trading, you contact the order desk and get a Nothing Done report because of

A

stock ahead

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2
Q

Your client has entered a limit order to buy 600 shares of DMF at $50 per share. DMF declares a 10% stock dividend. How would this order be adjusted on the ex-date?

A

600 shares at $45.45.

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3
Q

In a proceeds transaction for a customer where the proceeds from the liquidation of one stock are used to purchase another stock, the 5% markup policy is computed on the basis of:

A

a combination of both the buy side and the sell side.

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4
Q

All of the following events would cause FINRA to terminate quotations in a SmallCap stock EXCEPT

A

having only 2 broker/dealers making a market in the stock

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5
Q

An immediate-or-cancel order (IOC):

A

II. may be executed in part or in full.

III. must be executed in one attempt.

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6
Q

If ALFA Securities, a broker/dealer, is a position-trading firm, which of the following statements is TRUE?

A

It is trading for its own account.

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7
Q

A customer places an order to sell short 100 DEF 52.25 STOP. After placing the order, DEF trades as follows: 53, 52.60, 52.20, 52.10, 52.25. Which trade triggers the order?

A

52.2.

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8
Q

All of the following considerations apply to the 5% markup policy EXCEPT:

A

the customer’s ability to pay.

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9
Q

A buy stop order may be used for all of the following EXCEPT:

A

to protect a profit in a long position.

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10
Q

Riskless and simultaneous transactions by a broker/dealer are:

A

permissible if they comply with the 5% policy.

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11
Q

A customer sells securities and uses the proceeds to buy more securities at the same cost. Under the 5% markup policy, the markup is calculated on:

A

the total of both sides.

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12
Q

All of the following are minimum requirements for listing on the NYSE EXCEPT:

A

earnings per share.

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13
Q

The 5% markup policy would apply to all of the following equity transactions EXCEPT:

A

primary market transaction.

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14
Q

Your broker/dealer has just negotiated a trade with another broker/dealer in a Nasdaq-listed stock. The automated system that will facilitate the reporting of the post-execution data electronically, such as price and volume, to FINRA is known as

A

Trade Reporting Facility (TRF)

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15
Q

ALFA Electronics has been trading around 70. A customer tells his registered representative that if 1,000 shares of the stock can be purchased in one attempt, the customer will take it. If not, the customer is not interested. How should the representative enter this order?

A

1,000 ALFA FOK at 70.

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16
Q

FINRA’s Trade Reporting Facility (TRF) electronically facilitates the reporting of trade data such as price and volume for

A

trades in Nasdaq-listed securities and exchange-listed securities when they occur off of the exchange trading floor

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17
Q

Which of the following transactions would NOT be subject to the 5% markup policy?

A

Your client enters trades to purchase 2 different mutual funds in the same fund family. The combined purchases do not qualify for any breakpoints. The client is charged a sales charge of 6.5%.

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18
Q

Which of the following applies to an open order to buy 600 WXYZ at 44?

A

I. The order may be partially filled at the limit price or better.
II. The order is entered in the order book.
III. It must be executed at the price specified or better.

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19
Q

All of the following securities trade in the over-the-counter market EXCEPT:

A

Open-end investment companies.

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20
Q

A customer places an order to sell short 100 DEF 52.50 STOP. After placing the order, DEF trades as follows: 53, 52.60, 52.20, 53 SLD, 52.10, 52.25. At which trade can the order be executed?

A

52.1.

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21
Q

In a buy stop limit order, once the stop price is hit:

A

a purchase can occur only at the limit or below.

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22
Q

Transactions involving which of the following would NOT be reported to the Consolidated Tape System (CTS) by an exchange or FINRA?

A

Listed options.

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23
Q

A customer has entered an option order with your broker/dealer. At which of the following locations could such an order be executed?

A

I. NYSE/AMEX
II. CBOE
III. Nasdaq OMX PHLX

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24
Q

The Three Contact Rule does NOT apply to the purchase or sale of a non-Nasdaq security provided there is at least:

A

2 priced quotations available electronically.

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25
Q

A technical analyst has been charting ABC stock and notes that the support/resistance levels are $20 and $30 respectively. If the analyst expects ABC to fall through support, which of the following orders should he enter?

A

Sell 100 ABC 19.50 stop.

26
Q

Last-sale information is always available for all of the following securities EXCEPT

A

OTC, non-Nasdaq

27
Q

Which of the following orders would be executed in a rising market?

A

I. Buy stops.

II. Sell limits.

28
Q

The 5% markup policy applies to which of the following?

A

II. Agency transactions.

III. Principal secondary market trade.

29
Q

The market wide circuit breaker (MWCB) rule uses which of the following as the pricing reference point to measure a market decline?

A

The S&P 500 index recalculated daily

30
Q

A quote on Nasdaq is as follows:

Bid Ask 10 10.50, 1300 x 1500

The market maker is obligated to execute all of the following customer transactions in their entirety EXCEPT:

A

sell 1,500 shares at 10.

31
Q

Under the 5% markup policy, which of the following determines the amount of markup in a principal transaction?

A

Lowest ask.

32
Q

The Nasdaq market includes securities in the:

A

I. Global select market.

II. Global market.

33
Q

If a customer with an unrealized gain on a short stock position wishes to protect his profit, he should enter a:

A

buy stop order.

34
Q

All of the following may be cited to justify a markup on a stock sold from a broker/dealer’s inventory EXCEPT:

A

dealer’s cost.

35
Q

The 5% markup policy applies to:

A

principal OTC trades.

36
Q

To narrow the spread between the bid and the asked price of one of his stocks, a specialist enters a bid to buy for his own account, acting in this transaction as a:

A

dealer (or principal).

37
Q

A New York Stock Exchange specialist (designated market maker) is employed by:

A

a member of the exchange.

38
Q

A customer enters an order to sell 100 TCB at 49 stop limit. Prior to the order, TCB was trading at 49.25. Subsequent trades are reported on the Tape as follows:

TCB 48.75, 48.85, 49, 49.25

Which trade triggered the order?

A

48.75.

39
Q

A specialist (designated market maker) must refuse:

A

I. not-held orders.

II. good-for-a-month orders.

40
Q

An investor enters a day order to buy 200 shares of GGZ at 63. Three hours later, with GGZ trading above that price, he calls his registered representative wanting to change the order to a good-till-canceled order. The registered representative should:

A

I. leave the existing order on the order book.
II. enter a new limit order to buy 200 shares of GGZ at 63 GTC before the next day’s opening if the day order was unexecuted.

41
Q

Which of the following order types are available to customers for use in NYSE equity markets?

A

I. Immediate or cancel. (IOC)

II. Order cancels other. (OCO)

42
Q

An order ticket is marked as follows: Buy 20M GGZ 9% Debentures at 95 AON GTC. All of the following statements regarding this order are true EXCEPT:

A

the order will expire at the end of the day.

43
Q

A customer is long 300 shares of COD and simultaneously short 200 shares of COD. To sell the 300 shares held long, the order ticket must be marked:

A

100 shares long and 200 shares short.

44
Q

Which of the following is applicable to the NASDAQ OMX PHLX?

A

I. Regional exchange operated by Nasdaq

II. Offers trading in equity securities and options contracts

45
Q

Which of the following individuals normally trade on the floor of an exchange?

A

I. Two-dollar broker.

II. Registered market maker.

46
Q

A customer has an order to buy 400 ABC at 60 Stop. ABC declares a 25% stock dividend. On the ex-date, the order on the order book will read:

A

buy 500 shares at 48 stop.

47
Q

A client buys 100 shares of MCS at 20. If the stock rises to 30 and he wants to protect his gain, which of the following orders should be entered?

A

Sell stop at 29.

48
Q

Which of the following statements regarding quotes and information for stocks on the electronic “OTC Pink” are TRUE?

A

I. Quotes are not firm.

II. Updates may not be current or made intra-day.

49
Q

Which of the following orders may be used to acquire a security at a specific price or better?

A

I. A buy stop limit.

II. A buy limit.

50
Q

You receive a not-held order from a customer who wants you to buy 1,000 shares of ABC when the price is right. Under NYSE rules, this order is a:

A

day order.

51
Q

The opening quote for issues listed on the NYSE is set by the:

A

specialist (designated market maker).

52
Q

KLP common stock has been trading at or near to $25 per share all day. Your client would like to buy 500 shares of KLP at 25, but he is willing to accept fewer shares at that price. Which of the following orders fulfills his intentions?

A

Limit order to buy 500 shares of KLP at 25 IOC (immediate-or-cancel).

53
Q

FINRA can initiate a trading halt for all of the following EXCEPT:

A

listed stocks trading on an exchange.

54
Q

If your client has sold 100 shares of GGZ short and places a buy stop order at 80, the order is activated when the price of GGZ:

A

rises to 80 or above.

55
Q

A customer tells a broker to buy 1,500 shares of ABCD at 33.60 immediately for the full 1,500 shares. This is a(n):

A

fill-or-kill order.

56
Q

ABC corporation trading at $80 per share has just bid $50 per share for XYZ corporation, currently trading at $40 per share in a hostile takeover attempt. The most common risk or takeover arbitrage strategy would be to

A

buy shares of the target company (XYZ) and short shares of the aggressor (ABC).

57
Q

Which of the following describes Nasdaq Level 3 service?

A

Allows market makers to enter quotations into the system for a security in which they are registered.

58
Q

If a customer gives his broker/dealer an order to sell his stock if it falls to or below 69 and will not accept a price below 69, the order is:

A

a stop limit order.

59
Q

All of the following statements regarding Nasdaq Level 3 are true EXCEPT that:

A

this level is used by registered representatives only.

60
Q

The Nasdaq stock market permits listing for all of the following EXCEPT:

A

nonconvertible debt securities.

Series 7 (15 decks)

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