Chapter 13 - Settlement and Corporate Actions

Question 1

Order ticket details regarding how a trade is to be executed.

Answer 1

Order entry

Question 2

Occurrence of a trade in the market center.

Answer 2

Execution

Question 3

Executing firms agree to the details of a trade: any unrecognized trades may result in a DK notice

Answer 3

Clearing

Question 4

The day on which the customer’s name is placed on or taken off the issuer’s books.

Answer 4

Settlement

Question 5

Safeguarding of client and firm assets.

Answer 5

Custody

Question 6

A member firm’s _____ makes the final determination as to whether a security is in good deliverable form and may be transferred to the new owner.

Answer 6

transfer agent

Question 7

(True or False) Book entry requires physical delivery of securities.

Answer 7

False

Question 8

(True or False) A stock power can be used in lieu of a signed certificate.

Answer 8

True

Question 9

(True or False) Stock transactions must be delivered in multiples of 100.

Answer 9

True

Question 10

(True or False) Restricted securities can be used for good delivery.

Answer 10

False

Question 11

A company’s attempt to improve marketability of a stock.

Answer 11

Stock split or stock dividend

Question 12

An intent to purchase shares of another owner:

Answer 12

tender offer

Question 13

Shareholders receive new shares of a business unit of a company.

Answer 13

Spin-off

Question 14

Provides securities settlement and clearing services in the US.

Answer 14

The Depository Trust and Clearing Corporation

Question 15

For good delivery, what unit value is required for bonds?

Answer 15

$1,000

Question 16

When do companies issue proxy statements?

Answer 16

Whenever there is a voting issue for their shareholders.

Question 17

Name changes, mergers, reverse splits, liquidations, bond redemptions, and partial or full calls are:

Answer 17

common mandatory corporate actions

Question 18

A stockholder who allows a broker-dealer to disclose his name as the owner of record is a:

Answer 18

nonobjecting beneficial owner

Question 19

In a cash account, the payment date for all securities purchases is _____ business days after the _____ date.

Answer 19

two; settlement

Question 20

Necessary for the transfer agent to remove the legend from a stock if transfer from a stock if transfer is restricted.

Answer 20

Opinion letter

Question 21

Who has the authority to remove the restriction or legend on a security.

Answer 21

The transfer agent

Question 22

What form is used to file year-end audited financial statements with the SEC?

Answer 22

Form 10-K

Question 23

Account that allows clients to take advantage of leverage through borrowing either cash or securities.

Answer 23

Margin account

Question 24

A broker-dealer may charge customers for services such as safekeeping of securities and transfer of securities:

Answer 24

as long as the charge is reasonable and does not unfairly discriminate between customers.

Question 25

An investor purchases a US Treasury bond in the secondary market. When is settlement?

Answer 25

The next business day