Chapter 2 Practice Questions
1.What is the definition for a block trade in a NMS equity security?
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.A floor broker has a buy order for 2,000 shares at 50 and a sell order of 3,000 shares at 50. The floor broker would like to cross the order for 2,000 shares. According to NYSE Rule 76, the floor broker must do what before proceeding with a crossing order?
A.The broker must announce to the trading crowd an offer of 2,000 shares at 50.01.
B.The broker must announce to the trading crowd an offer of 2,000 shares at 50.
C.The broker must announce to the trading crowd an offer of 2,000 shares at 50.25.
D.The broker does not need to do anything additional and may proceed with the cross order.
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.designated market maker/specialist
C.broker-dealer
D.two-dollar broker
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 SEC Rule 203, a broker-dealer trading in threshold securities must generally close out a fail to deliver position after what period of time?
A.5 consecutive settlement days
B.8 consecutive settlement days
C.10 consecutive settlement days
D.13 consecutive settlement days
7.When an investor sells a security that he or she does not own and has not borrowed or made arrangements to borrow the security before the sale, it is known as:
A.Naked short selling
B.Normal short selli