Series 99: Chapter 2 Practice Questions

Chapter 2 Practice Questions

1. 1. The Trade Reporting and Compliance Engine (TRACE) developed by FINRA can best be described as a system that:
2. A. Tracks late trades by members in OTC equity securities
3. B. Accommodates reporting of transactions in debt securities
4. C. Facilitates transfer of securities and payments between broker members
5. D. Only reports trades in money market instruments
6. 2. Market Maker A currently quotes ABCD Corporation on NASDAQ at 12.15 – 12.25. Market Maker A receives an order to sell 1,000 shares at the market price. What is Market Maker A committed to buy without backing away?
7. A. 1,000 shares of ABCD @ 12.25
8. B. 100 shares of ABCD @ 12.25
9. C. 1,000 shares of ABCD @ 12.15
10. D. 100 shares of ABCD @ 12.15
11. 3. Seth Ragucci places an order for 15 shares of Dropped Call Wireless common stock. Seth’s broker must send Seth a trade confirmation:
12. A. No later than the day after settlement
13. B. At or before the completion of the transaction
14. C. By the close of business on the day of the transaction
15. D. No later than one day after the transaction
16. 4. The cost basis on gifted shares of stock that have appreciated in value from the initial purchase is:
17. A. The giftor’s original cost basis of securities.
18. B. The fair market value on the date of gift.
19. C. The fair market value 30 days after the date of gift.
20. D. An average between the fair market value on the date of gift and the giftor’s original cost basis.
21. 5. Which of the following statements are true regarding stop orders?
22. I. Stop orders become market orders to either buy or sell once a target price is reached.
23. II. If the stop order is triggered, the order is guaranteed to execute, but there is no guarantee on the execution price.
24. III. Sell stop orders are typically used to limit loss on a short position.
25. IV. Buy stop orders are typically used to limit loss on a long position.
26. A. I and II
27. B. III and IV