Series 65: Exercise

Exercise

Choose the correct option

1. 1. High-frequency traders generally prefer which of the following?
2. I. Having computers located in close proximity to an exchange
3. II. “High latency”
4. III. Making a few trades in a short amount of time
5. IV. Short holding periods for securities purchased
6. A. I and II
7. B. II and III
8. C. I and IV
9. D. IIII and IV

1. 2. Which of the following is not a characteristic of high-frequency trading?
2. A. The majority of high-frequency trades are not profitable, but the number of trades that are profitable make high-frequency trading worthwhile.
3. B. High-frequency trading can exacerbate market anomalies.
4. C. High-frequency trading provides opportunities for market manipulation.
5. D. High-frequency trading usually involves many cancelled orders.
6. 3. Which of the following does low latency not measure?
7. A. The time it takes for information to reach a trader’s system
8. B. The time it takes for the algorithms to respond to information
9. C. The time it takes for a person to initiate an order
10. D. The time it takes for the order to reach an exchange and be implemented

Answers

1. 1. C. High-frequency traders are always seeking the best “low-latency