unit 22

Question 1

cash account

Answer 1

pay in full(no borrowing)

Question 2

retirement and custodial can only be what account

Answer 2

cash

Question 3

Reg T

Answer 3

margin requirement set up by reserve board

Question 4

margin requirement

Answer 4

50%

Question 5

drop in market value for margin account could lead to

Answer 5

maintenance call

Question 6

which form is optional in margin

Answer 6

don’t lead loan to consent form

Question 7

Nasa policy on margin docs

Answer 7

docs must be received promptly after first margin trade

Question 8

risk disclosure document delivery

Answer 8

finra says has to be delivered prior to account opening

Question 9

maintenance margin

Answer 9

call for additional funds when equity in the account becomes deficient

Question 10

house maintenance higher or lower

Answer 10

higher

Question 11

the first call when equity in clients margin account beings to decline

Answer 11

house call

then it would be a maintenance call when SRO limit applies

Question 12

OTC markets between

Answer 12

BDS(no physical location)

NEGOTIATED MARKET

Question 13

exchanges what kind of market

Answer 13

auction market

Question 14

market maker

Answer 14

when bd functions in the dealer capacity

must maintain firm quote willing to buy or sell lot

firm quote means deal is made

market makers provide liquidity(ready to buy or sell when needeD)

can’t take compensation from issuer

Question 15

trade confirmation

Answer 15

disclose capacity
disclose if market market
disclose if control relationship
sent by the completion of the trade

Question 16

a market maker in over the counter market buys and sells

Answer 16

buys at the bid

sells at the offer(ask)

Question 17

PDM

Answer 17

dealers make markup or markdown

Question 18

thinly traded stock leads to

Answer 18

wider spread

Question 19

ABC

Answer 19

commission

disclosed on confirmation

Question 20

on order ticket

Answer 20

account number
solicited or un
long or short
who bd and agent is
type of order

Question 21

whats not on order ticket

Answer 21

no client name/address
current market price
bond rating

Question 22

short sales must always be in

Answer 22

margin account

Question 23

stop order

Answer 23

“stop me from losing money”

protects short position in rising market
investor benefits if stock falls
entered above cmv
becomes market order when triggered

Question 24

sell stop

Answer 24

can protect long position in falling market
investor benefits if stock rises
entered below cmv
becomes market order when triggered
can accelerate a decline in a falling market(testable)

Question 25

Stop limited order

Answer 25

become limit order when triggered

trigger-first trade at or through stop price

Question 26

block trade

Answer 26

10000 shares or more

Question 27

The hypothecation agreement gives permission

Answer 27

to the broker-dealer to pledge a customer’s margin securities as collateral.
The firm hypothecates customer securities to the bank, and the bank loans money to the broker-dealer on the basis of the loan value of these securities.

Question 28

The loan consent agreement does what

Answer 28

grant permission to the broker-dealer to lend out the customer’s securities, is optional.

Question 29

bid and ask relationship

Answer 29

if you want to sell then dealer gives you bid

if client wants to buy then dealer gives offer