Answers
- 1. ANSWER: A. Rationale: Based on the NYSE Listed Company Manual, Section 102, a U.S. domestic issuer must have 400 round-lot holders and 1.1 million publicly held shares.
- 2. ANSWER: B. Rationale: Suppose an investor wants to protect the profit that she has made off the ABC Company. The ABC Company is currently trading at $50, which is at a profit for the investor. The investor would like to hold onto the stock unless it starts to decline so the profit will not be lost. It places a sell stop order at $45, which means that if the ABC Company falls and begins to trade at $45 or lower, the investor’s stop order will automatically turn into a market order for a quick sale.
- 3. ANSWER: B. Rationale: A “designated market maker,” formerly known as a “specialist,” is a New York Stock Exchange member who makes a market by offering to trade a specific stock out of his own inventory, and fulfills the purpose of maintaining order for the trading of that particular stock.
- 4. ANSWER: C. Rationale: A two-hour halt would only occur with a 20% drop in DJIA that occurs before 1:00 PM (a Level 2 halt).
- 5. ANSWER: B. Rationale: Listed companies are expected to be well-financed and offer a liquid market for its securities. Number of shares outstanding, board lot shareholders, and market makers are three indicators of the latter. The Capital Market is for small cap companies. Blue chip companies represented on NASDAQ’s Global Select must have four market makers.
- 6. ANSWER: B. Rationale: The use of additional MPIDs is considered a privilege by FINRA, not a right. Additional MPIDs can be requested by a FINRA Market Participant after they have received their first MPID (referred to as their “Primary MPID”).
- 7. ANSWER: B. Rationale: The NASDAQ Stock Market Trading Sessions (Eastern Time):
Pre-Market Trading Hours from 4:00 AM to 9:30 AM
Market Hours from 9:30 AM to 4:00 PM
After-Market Hours from 4:00 PM to 8:00 PM
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