CH5

Question 1

market participants

Answer 1

all stockbrokers buying and selling

Question 2

3 basic orders clients can give brokers

Answer 2

Market order, limit order, stop order

Question 3

Simplelest instruction that client can give broker

Answer 3

market order

Question 4

market order?

Answer 4

client only specifies the volume of shares that must be purchased or sold in a specific company. ( No price specified )

Question 5

best price possible for market order

Answer 5

current market price

Question 6

When is a market order submitted

Answer 6

during the continuous trading session.

Question 7

limit order?

Answer 7

client specifies the volume of shares to be traded as well as the price limit.

Question 8

execution and validity constraints can be set on ?

Answer 8

Market and limit orders.

Question 9

In a buy limit order, the price specifies

Answer 9

the highest the client is willing to pay for the shares.

Question 10

In a sell limit order , the price specifies

Answer 10

The lowest the client is willing to accept for the shares.

Question 11

Are price limits always executed at the price limit?

Answer 11

Yes, at the price limit or better.

Question 12

What happens if the full limit order can not be executed in full.

Answer 12

The remaining un-executable volume of shares will remain as a passive order in the order book until executed.

Question 13

stop loss order

Answer 13

That stop orders can be used to protect a profit or limit a loss.

Question 14

what does a stop order to sell at 580c (stop price ) mean

Answer 14

Broker must only sell the share if its price drops to 580c and at e.g 650c the broker must not sell the share.

Question 15

The non basic order to brokers

Answer 15

Bear transactions (short sales)

Question 16

The 2 execution constraints

Answer 16

1. Execute and eliminate
2. Fill or kill

Question 17

Execute and eliminate constraint

Answer 17

order must be matched immediately and as completely as possible with the existing orders in the order book.

Question 18

the two types of constraints

Answer 18

1. Execution constraints
2. Validity constraints

Question 19

the two main execution constraints

Answer 19

1. Execute and eliminate
2. Fill or kill

Question 20

Validity constraints

Answer 20

1. Good for day
2. Good till date
3. Good till time
4. Good till date/ time

Question 21

What type of system does the JSE operate on

Answer 21

an order driven, central order book trading system

Question 22

How many auctions are there during a trading day , and what are they called

Answer 22

3.
opening , intra day, and closing auctions

Question 23

min brokerage fee range

Answer 23

R90 - R150

Question 24

STRATE Settlement cost

< 176 000

Answer 24

R10.19

Question 25

STRATE Settlement cost 176 000 - 1 270 000

Answer 25

0.005787% of the transaction amount 0. 0 0 57 87

Question 26

> 1 270 000

Answer 26

R73.49

Question 27

Costs associated with a share transaction

Answer 27

1. Brokers fee 2. STRATE Settlement cost 3. Investor protection levy 4. VAT 5. STT (Securities transfer tax)

Question 28

in the share transaction process , vat must be charged on?

Answer 28

1. Brokers fee 2. STRATE settlement cost 3. Investor protection levy

Question 29

definition of investors protection levy

Answer 29

used by the JSE to monitor transaction and insure insider trading is not taking place

Question 30

what % is the investor protection levy

Answer 30

0. 0 0 0 2%

Question 31

true or false: STT is only charged when purchasing shares, meaning only the buyer will pay this tax?

Answer 31

True