SIE Domain 3 (Quiz 1): Understanding Trading, Customer Accounts, and Prohibited Activities

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Domain 3 (Set 1): Understanding Trading, Customer Accounts, and Prohibited Activities. (25 questions)

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SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following best describes how a sell stop at 39 order would be filled?

A) The next price above 39 after the market rises to 39

B) The next available price after the market price rises to 39

C) The next price below 39 after the market falls to 39

D) The next available price after the market price falls to 39

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following best describes how a market order to sell would fill if placed when the price of the stock is a 40?

A) The next available price

B) The next available price below 40

C) The next available price above 40

D) Only at 40

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

A market order to buy must be executed when and at what available price?

A) Immediately, at the highest

B) Within 24 hours, at the highest

C) Immediately, at the lowest

D) Within 24 hours, at the lowest

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Caleb McCann got a tip from his brother Nate on XYZ stock two months ago. Caleb hasn't previously been investing in the stock market but has been watching this stock since he got the tip from his brother. Caleb is now very bullish on XYZ and wants to place a trade. Which of the following would you recommend?

A) Sell XYZ to close a long position

B) Buy XYZ to close out a short position

C) Sell XYZ to open a short position

D) Buy XYZ to open a long position

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Your client, Jane Anderson, has owned QRS for a few years but has now turned bearish on QRS. What transaction would you recommend?

A) Buy QRS to open

B) Buy QRS to close

C) Sell QRS to open

D) Sell QRS to close

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following would be required for a good 'til canceled order to remain in force for more than six months?

A) Nothing; it stays on the books until the customer cancels it

B) The customer would need to reconfirm the order

C) The broker-dealer would need to reconfirm the order for it to remain in force

D) The specialist on the NYSE would need to reconfirm the order

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

John Christensen places a buy limit order at 42 when the market price of the stock is at 45. Which of the following best describes how the order would fill?

A) The order can only be filled at a price of 42 or lower

B) The order would be filled between when the stock price is between 42 and 45

C) The order would be filled immediately because the market price is already above 42

D) The order would be filled at the next available price after the stock price drops to 42

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following best describes how a market order to buy would fill if placed when the market price of the stock was at 40?

A) The next available price

B) The next available price above 40

C) The next available price below 40

None

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following best describes how a buy stop at 39 would fill?

A) The next available price after the market price rises to 39

B) The next price above 39 after the market price rises to 39

C) The next price below 39 after the market price falls to 39

D) The next available price after the market price falls to 39

None

10.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Your client, Mary Quinn, wants to place an order to sell a stock in her portfolio when the current price is 45, but she is only willing to sell if she can sell for at least 47. Which order should she place?

A) A sell stop limit order

B) A sell stop order

C) A market order

D) A sell limit order

None

11.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following executions would the customer accept?

A) 21.25

B) 22.50

C) 22.90

D) 23.50

None

12.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend?

A) Sell ABC to open

B) Sell ABC to close

C) Buy ABC to open

D) Buy ABC to close

None

13.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

A customer is given a quote for ABC as: 17.00 – 17.25 6 × 12. This quote indicates the customer can

A) purchase 1,800 shares at $17.25 per year.

B) sell 600 shares for $17 per share.

C) sell 1,200 shares at $17.25 per share.

D) purchase 1,200 shares for $17 per share.

None

14.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following best describes the size of a quote?

A) It tells the number of shares that were traded in the OTC market the prior day.

B) It tells the number of shares that were traded on the NYSE that day.

C) It tells the number of shares the broker-dealer is willing to buy or sell at that price.

D) It tells the number of shares the broker-dealer has in inventory.

None

15.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

How long can a good 'til canceled order remain in force without being reconfirmed by the customer?

A) 36 months

B) 6 months

C) 24 months

D) 12 months

None

16.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Who must reconfirm a good 'til canceled order for it to stay in force more than six months?

A) No one; they will remain in force until the customer cancels it

B) The specialist on the NYSE

C) The customer who placed the order

D) The broker-deaker who accepted the order

None

17.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

If left unexecuted, a good til cancel (GTC) order will automatically be canceled when?

A) On the first business day of April and the first business day of October

B) On the cancel date specified by the customer at the time the order is entered

C) On the last business day of April and the last business day of October

D) On the last business day of June and the last business day of December

None

18.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Your client, Randall Stephens, has been bearish on LMN stock and sold it short several months ago. He now believes the company is in a good position for a turnaround and wants to change his strategy on LMN. What should he do to implement his new strategy?

A) Buy to close his existing position and open a new long position in the stock

B) Sell short QRS to close his existing position

C) Sell an equal number of shares to his existing position

D) Buy an equal number of shares to his existing short position

None

19.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Unless otherwise specified, the size of a firm quote is

A) 500 shares.

B) 100 shares.

C) 10,000 shares.

D) 1,000 shares.

None

20.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

"An order is entered by a customer to sell at 30 stop limit. Once the order is entered, the stock trades in the following sequence: 32, 29, 31, and 33. The order would be executed and the investor would receive a price of"

A) 29.

B) 30.

C) 32.

D) 31.

None

21.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

If a shareholder does not wish to attend an annual stockholders' meeting, but still wishes to vote, the shareholder may confer a limited power of attorney on another party to vote the shares. This power is known as

A) a stand-in.

B) a proxy.

C) a voting power.

D) a substitute.

None

22.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

A GTC order is left unexecuted at the end of the trading day on the last business day of April. Which of the following is true?

A) The order will be automatically canceled.

B) The order will only continue working through the opening of the next business day.

C) The customer must give specific instructions to cancel the order so that it will not continue as a good working order.

D) The order will be automatically renewed.

None

23.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

The ask price represents

A) the price the broker-dealer is willing to sell for.

B) one of the prices set by FINRA.

C) one of the prices set by the SEC.

D) the price the broker-dealer is willing to buy for.

None

24.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

Which of the following would lead to a standardized cost-base adjustment for stockholders?

A) Spin-off

B) Dividend

C) Takeover

D) Merger

None

25.

SIE, Understanding Trading, Customer Accounts and Prohibited Activities,SIE

A customer enters a market order. This type of order can be

A) a buy or sell order to be executed at a specified limit.

B) a sell order only to be executed at a specified price.

C) a buy or sell order to be executed at the next available price.

D) a buy order only to be executed at the next available price.

None

1 out of 25

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