PN Domain 4: Reduction of Risk Potential (Quiz 2) Welcome to your Series 7 Practice Quizzes. Note: We designed four (4) parts of practice quizzes for each Domain. Each part has 25 questions. Domain 4 (part 3): Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions​​​​​​​​​​​​​​. (25 questions) Please click NEXT to start your Free Series 7 Practice Quizzes right away. Best of Luck! 1. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A representative enters a customer's immediate-or-cancel (IOC) order to sell 1,000 shares at $12. If only 500 shares can be sold at $12, which of the following will occur? A) Because 500 shares can be sold, the balance of the order will remain as a sell limit order for 500 shares at $12. B) None of these. C) Because the entire order cannot be filled, the entire order will be canceled unexecuted. D) The 500 shares will be sold at $12; the remainder of the order will be canceled unexecuted. None 2. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one has the greatest assurance of being executed? A) A limit order B) A buy stop order C) A market order D) A sell stop order None 3. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 All of the following kinds of orders may be turned over to the specialist (designated market maker) for execution except A) not-held orders. B) limit orders. C) stop orders. D) market orders. None 4. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 Each of the following types of orders will remain open (working orders) until certain conditions are met, except A) market orders. B) stop orders. C) good-till-canceled orders. D) stop limit orders. None 5. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 An order ticket is marked as follows: Buy 10 GGZ 9% debentures at 95 AON good til canceled (GTC). All of the following statements regarding this order are true except A) the order will expire at the end of the day. B) this is a buy limit order. C) if executed, the customer will pay $9,500 or less for the bonds. D) the trade will be filled in its entirety or not at all. None 6. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 AMZ Corporation has declared a cash dividend of $1.10. On the ex-dividend date, an open order to buy AMZ at 52 stop would A) remain at 52 stop. B) be automatically adjusted to 53.10 stop. C) be automatically adjusted to 51.90 stop. D) be automatically adjusted to 52.10 stop. None 7. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A designated market maker is permitted to do all of the following except A) accept a not-held order. B) represent a bid and offer simultaneously. C) buy and sell for a proprietary account. D) accept a limit order. None 8. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A customer sells short 100 shares of XYZ Corporation at $78 per share. The support and resistance levels for XYZ are at $70 and $80, respectively. If he wishes to protect his position, which of the following is the best place to put in a buy stop order? A) $80.10 B) $70.10 C) $78.10 D) $69.85 None 9. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A broker-dealer informs a customer that her order was not executed because of stock ahead. The order was most likely A) a margin purchase. B) a market order. C) a limit order. D) a short sale. None 10. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 An investor sold 100 shares of RAN common stock short at $50 per share. The RAN is now at $38. The investor is still bearish on the stock but would like to protect that gain. What would you recommend if this were your client? A) Enter a buy stop order at $55 B) Enter a sell order at $40 C) Enter a buy stop order at $40 D) Enter a sell stop order at $40 None 11. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A customer places an order to buy 300 DWQ at 140 stop, but not over 140.25. This is A) a buy stop order. B) a buy limit order. C) a market not-held order. D) a buy stop limit order. None 12. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 What type of order provides that market activity can cause activation, but it is possible that the trade itself may or may not be executed? A) A market order B) An open buy order C) A stop order. D) A stop limit order None 13. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one would be most appropriate for a client wishing to protect a profit on a short stock position? A) A buy stop order. B) A buy limit order. C) A sell limit order. D) A sell stop order None 14. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A day order is entered to buy 500 LMN at 24.35. By the close of the trading day the firm has been able to purchase 100 shares at 24.25 and 200 shares at 24.35. If the remainder of the order is unfilled, what is the outcome? A) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close. B) The customer may reject the incomplete order unless the remainder can be filled within three business days. C) The customer may demand that the firm deliver the remaining shares at 24.35. D) The customer may reject the incomplete order unless the broker-dealer can guarantee filling the remainder by the end of the day. None 15. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 There are a number of different types of orders that a registered representative can enter for a client. Of the following, which one would be most appropriate for a client wishing to protect a profit on a long stock position? A) A sell limit order. B) A sell stop order C) A buy stop order D) A market order None 16. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 All of the following statements about trading index options on the Chicago Board Options Exchange are true except A) market orders entered by a market maker have priority over public orders. B) market makers may trade for their own accounts. C) floor brokers may execute orders for others on a commission basis. D) limit orders are maintained in an order official's book. None 17. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A customer has his broker enter an order to buy GHI stock at the opening. Though transmitted promptly, the order does not reach GHI's trading post in time to be filled at the opening. How is the order handled? A) The order is handled as a market order. B) The order is executed in the day, at a price as close to the opening price as possible. C) The order is canceled. D) The order automatically becomes an at-the-open order in the following trading session. None 18. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 XYZ Corporation has set Friday, January 23, as the record date for its next quarterly dividend distribution. To receive the dividend, a customer, long 1 XYZ Feb 40 call, must issue exercise instructions on or before A) Monday, January 19. B) Wednesday, January 21. C) Tuesday, January 20. D) Friday, January 23. None 19. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 When referring to a stock, the term spread refers to A) the range between the high and low price for a particular year. B) the dealer's markup. C) the difference between the bid and asked prices. D) the range between the high and low price for a particular trading day. None 20. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 Your client feels that GGZ, currently trading around 39, would be a good buy at 38. Therefore, she places an order to buy 200 GGZ at 38 GTC. On the ex-date, when the stock splits 2:1, the order is still on the order book. How is the order adjusted on the ex-date? A) Buy 400 GGZ at 19 GTC B) Buy 200 GGZ at 19 GTC C) Buy 100 GGZ at 76 GTC D) Buy 400 GGZ at 38 GTC None 21. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 If a Nasdaq market maker is selling stock to a customer from inventory and the firm has held the shares to be sold for several months, what price should the dealer use as a basis for a markup? A) Price at which it purchased the securities B) Best offering price quoted in the interdealer market C) Broker/dealer's own current offer price D) Offer price shown in the electronic OTC Pink on the day of the current sale None 22. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 Last-sale information is always available for all of the following securities except A) Nasdaq. B) NYSE listed. C) over the counter (OTC), non-Nasdaq. D) CBOE listed option contracts. None 23. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 To fill a customer buy order for 800 WXYZ shares, your firm requests a quote from a market maker for 800 shares. The response is "bid 15, ask 15.25." If the order is placed, the market maker must sell A) 100 shares at $15.25 per share. B) 800 shares at $15 per share. C) 800 shares at no more than $15 per share. D) 800 shares at $15.25 per share. None 24. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 An over-the-counter (OTC) quote that must be reconfirmed with the OTC trading room before a broker-dealer takes action is A) third party. B) subject. C) representative. D) firm. None 25. Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7 A client of yours wishes to sell 400 shares of LMNO common stock. You contact your trading desk and receive the following quote: "We are currently quoting LMNO at 42-42.15, 6 by 4." You report this to the client who says, "Do it." The customer will receive A) $4,200. B) $16,800. C) $16,860. D) $4,215. None 1 out of 25 Time is Up! Time's up
