Series 7 Domain 4 (Quiz 2): Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions

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Domain 4 (part 2): Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions. (25 questions)

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Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A significant increase in which of the following types of orders may cause a bull market to accelerate?

A) Buy stops

B) Short sales

C) Sell stops

D) Buy limits

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Stop orders may be used for each of the following except

A) to establish positions.

B) to protect profits on short positions.

C) to lock in a specific price to close out a position.

D) to protect profits on long positions.

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

One of your customers submits a market on close (MOC) order to sell 300 shares of IYH common stock, traded on the NYSE. The order is entered just before noon ET. At 3:00 pm, trading in IYH is halted for the remainder of the day. What does this do to the customer's order?

A) The order is cancelled.

B) The customer receives the price of the last trade before the halt.

C) The order is carried over to the following business day.

D) The order is carried over to the next day that IYH stock is traded.

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A buy stop order is elected (triggered) when the underlying stock trades

A) anywhere below the stop price.

B) at or below the stop price.

C) through the stop price only.

D) at or above the stop price.

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

On the morning of the ex-date for a cash dividend, which of the following orders on the order book will not be reduced?

A) Buy limit

B) Sell stop limit

C) Sell limit

D) Sell stop

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A client enters a buy stop order for 100 shares of XYZ at 40. Trades then occur at 38, 39, 39.90, 40.05, 40.10, and 39.78. At what price is the order triggered?

A) $40.10

B) $39.00

C) $39.78

D) $40.05

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A market order to purchase 100 shares of XYZ common stock is

A) executed at the market close.

B) executed at the lowest price of the day.

C) good for that day only.

D) valid at the stipulated price only.

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

At 2:15 pm ET, a customer gives his registered representative a market order to buy 100 shares of ABC at the close. What should the registered representative do with the order?

A) Hold it at his desk until just before market close.

B) Send the order to the floor immediately.

C) Execute the order at the closing price first thing next morning.

D) Send in the order after the close to ensure he receives the closing price.

None

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

If a customer with an unrealized gain on a short stock position wishes to protect her profit, she should enter

A) a sell stop order.

B) a buy limit order.

C) a sell limit order.

D) a buy stop order.

None

10.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A customer entered an order to sell short 100 shares of ABC. The stock closed on Friday at $48. The stock will trade ex-dividend $0.50 on Monday. At what price can the order be executed at the opening?

A) $47.51

B) Any price

C) $47.49

D) $47.50

None

11.

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 MAS short when the stock was trading at 21. If MAS is now trading at 16, and the investor wants to protect her gain, which of the following orders should she place?

A) Sell limit at $16

B) Buy limit at $16

C) Sell stop at $16.25

D) Buy stop at $16.10

None

12.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

An investor submits an immediate-or-cancel order to buy 500 shares of stock at 32.20. When the order reaches the trading floor, the quote is 32.18 – 32.26, 6 × 6. The investor

A) bought 500 shares at 32.20.

B) bought 500 shares at 32.18.

C) did not buy any shares.

D) bought 500 shares at 32.26.

None

13.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A customer, concerned about a possible pull-back in XYZ stock, instructs her broker to "Sell my XYZ stock if it falls to 40, but I don't want less than 39.75 for my shares." The broker should enter

A) a sell limit order.

B) a market order to sell.

C) a sell stop order.

D) a sell stop limit order.

None

14.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

When a major decline occurs within a few minutes of the close, trading is halted on all markets for the remainder of the trading day. Under the market-wide circuit breaker (MWCB) rules, market-on-close (MOC) orders pending at the time trading is halted

A) should be held for execution on the following trading day unless canceled by the customer.

B) are converted to market orders and executed at the opening on the following trading day.

C) should be held for execution on the following trading day.

D) must be canceled.

None

15.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Each of the following statements concerning fill-or-kill (FOK) orders and all-or-none (AON) orders are true except

A) an AON order must be canceled if the whole order cannot be executed immediately.

B) an AON order must be filled in its entirety.

C) an FOK order must be canceled if the whole order cannot be executed immediately.

D) an FOK order must be filled in its entirety.

None

16.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

An investor submits an immediate-or-cancel order to sell 500 shares of stock at 32.20. When the order reaches the trading floor, the quote is 32.18 – 32.26, 6 × 6. The investor

A) sold 500 shares at 32.18.

B) sold 500 shares at 32.26.

C) sold 600 shares at 32.26.

D) did not sell any shares.

None

17.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Which of the following orders on the order book will not be filled if the stock rises?

A) Buy stops

B) Sell stop

C) Sell limit

D) Buy stop limit

None

18.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A technical analyst has been charting XYZ stock and notes that it fluctuates between $36 and $41. The last trade was at $39. If the analyst expects a breakout through resistance, which of the following orders should be placed?

A) Buy XYZ 35 Stop GTC

B) Buy XYZ 35 GTC

C) Buy XYZ 42 Stop GTC

D) Buy XYZ 42 GTC

None

19.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A buy stop order may be used for all of the following except

A) to protect a profit in a long position.

B) to protect against loss in a short position.

C) to acquire a long position as a stock breaks through resistance.

D) to protect a profit in a short position.

None

20.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A technical analyst has been charting ABC stock and notes that the support/resistance levels are $20 and $30, respectively. If the analyst expects ABC to fall through support, which of the following orders should he enter?

A) Buy 100 ABC 20.50 stop

B) Sell 100 ABC 19.50 stop

C) Sell 100 ABC 29.75 stop

D) Buy 100 ABC 30.25 stop

None

21.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A client enters a buy stop order for 100 shares of XYZ at 40. Trades then occur at 38, 39, 39.90, 40.05, 40.10, and 39.78. What is the likely price the client paid for the stock?

A) $40.05

B) $39.78

C) $40.10

D) $39.00

None

22.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Which of the following order types is permitted in Nasdaq and NYSE equity markets?

A) Stop orders.

B) Fill or kill (FOK)

C) Good til canceled (GTC)

D) Market

None

23.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Each of the following is true about stop orders except

A) they can accelerate the advance or decline of a stock's price if executed.

B) they become market orders when there is a trade at, or the market passes through, a specific price.

C) they are the same as limit orders.

D) they can limit a loss in a declining stock.

None

24.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

Which of the following orders is reduced on the order book on the ex-dividend date for a cash dividend?

A) Buy stop order

B) Sell limit order

C) Buy stop limit order

D) Limit order to buy

None

25.

Series 7, Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions,Series 7

A customer has an order to buy 400 ABC at 60. ABC declares a 25% stock dividend. On the ex-date, the order on the order book will read

A) buy 500 shares at 30.

B) buy 425 shares at 50.

C) buy 500 shares at 48.

D) buy 400 shares at 60.

None

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