UNIT 01.03-001 Flashcards
Which of the following terms describe a third-market transaction?
_____ securities trading ____
LISTED securities trading OTC
A third-market trade takes place when listed securities are traded over the counter.
LISTED securities primarily trade in which of the following venues?
Exchanges
Listed securities trade primarily on exchanges. They are also called exchange-listed securities.
The REGULAR WAY ex-dividend date for CASH DIVIDENDS paid by a corporation is the ________ business day ______ the record date.
the FIRST business day PRECEDING the record date.
The regular way ex-dividend date is one business day before the record date. Ex-date rules are heavily covered in the SIE.
Keep that SIE material handy for these basic industry questions.
A stock exchange uses
an auction method to trade stock.
Exchanges use the auction method to trade stock. Orders to buy and sell are made by open outcry.
In general, the Conduct Rules permit selling concessions and discounts to __________ engaged in the investment banking or securities business.
to FINRA member firms engaged in the investment banking or securities business.
The Conduct Rules permit FINRA member broker-dealers to allow concessions and discounts only to other members.
During the course of a routine examination of your member firm, FINRA has requested copies of books and records regarding transactions of a particular client. You and your member firm
must provide all copies of the books and records requested.
For the purpose of a routine examination, investigation of a complaint, or any proceeding by FINRA, no member firm or any associated person may fail to provide information or to permit inspection of books, records, or any account documentation. A court order is not required.
When an order is accepted to purchase mutual fund shares, that order must be reviewed by a _______
principal.
All orders received by a registered representative must be reviewed by a principal of that firm. Once executed, an order cannot be canceled.
The over-the-counter market could be characterized as what type of market?
Dealer
The OTC market is an interdealer market.
A broker-dealer that buys a security for a customer and charges a commission for the service is acting as
a broker.
This is a broker-dealer acting as a broker (or agent) for a customer. A dealer would sell from their inventory for a mark-up (not a commission). Issuers and underwriters are found in the primary market.
When investors trade securities, the activity happens primarily in which of the following markets?
Secondary markets
This trading activity occurs in the secondary markets. Primary markets are used by issuers raising capital by selling their securities to investors. There are no “preliminary” or “sequential” markets in this context.
