Series 14: Chapter 2 Practice Questions

Taken from our Series 14 Online Guide

Chapter 2 Practice Questions

1. For exchange-traded stocks, a block trade is one that exceeds:

A. 10,000 shares OR $200,000

B. 10,000 shares AND $100,000

C. 10,000 shares AND $200,000

D. 10,000 shares OR $100,000

2. When a fail-to-deliver occurs in an OTC trade, which party performs a buy-in, and what is the soonest it may initiate the buy-in?

A. The buyer; T + 3

B. The seller; T + 3

C. The buyer; T + 5

D. The seller; T + 5

3. Which of the following orders becomes a market order when a stock has begun to trade at or through a price specified by a client?

A. Stop-limit order

B. Stop order

C. Limit order

D. Market order

4. A New York Stock Exchange member who makes a market in a specific stock and maintains an orderly market for the shares of that stock is considered a:

A. transfer agent

B. broker-dealer

C. two-dollar broker

D. designated market maker

5. Third market transactions must typically be reported within what period of time?

A. 10 seconds

B. 60 seconds

C. 90 seconds

D. 120 seconds

6. According to Regulation SHO, Rule 204, a broker-dealer engaged in a long sale must generally close out a fail-to-deliver by:

A. T + 3

B. T + 5

C. T + 10

D. T + 13

7. When an investor sells a security that he or she does not own and has not borrowed or made arrangements to borrow before the sale, it is known as:

A. Naked short selling

B. Normal short selling

C. Market manipulation

D. Front running

8. A broker-dealer receives a customer order to purchase 100 shares of XYZ Co. The broker-dealer fills the order by purchasing 100 shares of XYZ for its own account, then selling the shares to the customer with a markup. If the broker-dealer chooses to report this trade to a FINRA/Nasdaq TRF as one transaction, it should be marked as:

A. An agency transaction

B. A principal transaction

C. A riskless principal transaction

D. A trade

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