UNIT 01.03-002 Flashcards
For a NONEXEMPT security, Regulation T requires payment to be made in how many business days AFTER regular way settlement?
Two days
Regular way settlement is trade date plus two business days. Regulation T requires payment no more than two business days later.
Which of the following statements describe the Securities Exchange Act of 1934?
It ______ the SEC.
It requires ________ of broker-dealers with the SEC.
It created the SEC.
It requires registration of broker-dealers with the SEC.
The Securities Exchange Act of 1934 (the people act) requires registration of people and exchanges transacting securities business in order to prevent manipulative and deceptive practices. The Act of 1934 also created the SEC and mandated the creation of SROs.
Under the Uniform Practice Code, REGULAR WAY transactions for COMMON STOCK settle on
the ______ business day following the trade date.
the second business day following the trade date.
Under the Uniform Practice Code, regular way trades settle two business days after the trade date (T+2). Cash settlement for a trade occurs on the same day as the trade date.
The FIRST DATE on which the buyer would NOT be entitled to RECEIVE A DECLARED DIVIDEND being paid by a corporation is
the ex-date.
To receive a previously declared dividend, the stock would have to be purchased before the ex-(dividend) date. The stockholder purchasing the stock on or after the ex-date would purchase the stock “ex-dividend,” or without the dividend. Ex-date rules are heavily covered in the SIE. Keep that SIE material handy for these basic industry questions.
Each of the following situations represents a potential violation by a registered representative except
disclosing material information about an investment to a client.
Disclosing material information about an investment is a registered representative’s responsibility. Beyond that, recommendations must be tailored to meet the needs of individual customers.
A client wants to place an order to buy 200 shares of ABC stock. Which of the following is true?
Regular way settlement is T+2 business days.
Always assume regular way settlement (T+2 business days) for corporate securities unless the question states otherwise. This trade can take place in a cash account or a margin account.
Several customers have failed to make payment for their trades within the time period required under Regulation T, and the broker-dealer is faced with selling out their securities. Which of the following customers need not have their positions closed out?
Joe Bennett, who owes $850 on a closed-end fund purchase
Mr. and Mrs. J.F. Wilson, who owe $540 on a zero-coupon bond trade
If a customer has not made payment in accordance with Regulation T (two business days after settlement date), his broker-dealer need not close out his positions or freeze his account if the amount owed does not exceed $1,000.
Which of the following describe how prices are arrived at in the securities markets?
By auction in the ________
By negotiation in the ________
By auction in the exchanges
By negotiation in the OTC markets
Prices are set by open outcry, known as double auction, in the exchanges, because the traders are physically present and can bid against each other.
In the OTC market, where there is no central trading location, so prices have to be arrived at by one-on-one negotiation.
SuperTech Industries is an EXCHANGE-LISTED security. Great Plains Brokerage, a FINRA member broker-dealer, maintains an INVENTORY and makes a market in Supertech. In this example Great Plains is functioning in which of the following markets?
Third market
In this example the broker-dealer is acting in the third market, which is part of the secondary (not second) market.
For an owner to be paid a dividend, his name should be recorded on the stock record book of the issuer’s transfer agent by the _______ date.
the record date.
To receive a dividend, the buyer must be on the issuer’s books as the owner on the record date. Ex-date rules are heavily covered in the SIE. Keep that SIE material handy for these basic industry questions.
