Orders & Trading Strategies
This type of order guarantees execution but not price.
What is a market order?
Regular-way settlement for corporate securities occurs this many business days after trade date.
What is T+2?
This account requires customer payment in full before settlement.
What is a cash account?
This occurs when an RR trades ahead of a customer order.
What is front running?
This SRO oversees broker-dealers.
What is FINRA?
This order is used to limit losses by triggering a market order once a price is reached.
A. Limit order
B. Stop order
C. Stop-limit order
D. Market order
What is a stop order?
Which action requires shareholder approval?
A. Stock split
B. Cash dividend
C. Proxy vote
D. Interest payment
What is a proxy vote?
Which account allows borrowing to purchase securities?
A. Cash
B. Margin
C. Custodial
D. Discretionary
What is a margin account?
Guaranteeing a client against loss is:
A. Allowed
B. Encouraged
C. Prohibited
D. Disclosed
What is prohibited?
Which organization writes and enforces trading rules?
A. SEC
B. FINRA
C. SIPC
D. FDIC
What is FINRA?
This order sets the maximum price a buyer will pay or the minimum price a seller will accept.
What is a limit order?
This corporate action increases the number of shares outstanding while lowering the price per share.
What is a stock split?
This document is required to open a margin account.
What is a margin agreement?
This is the illegal sharing of material nonpublic information.
What is insider trading?
This organization protects customers if a brokerage fails.
What is SIPC?
A customer places an order to buy at $40 only if the stock falls to that price.
A. Market
B. Limit
C. Stop
D. Stop-limit
What is a buy limit order?
Which action is mandatory?
A. Cash dividend
B. Stock dividend
C. Stock split
D. Rights offering
What is a stock split?
Which customer can legally trade options?
A. Any customer
B. Only institutions
C. Approved customers
D. Custodial minors
Who are approved customers?
Excessive trading to generate commissions is called:
A. Arbitrage
B. Churning
C. Scalping
D. Matching orders
What is churning?
Who must register with FINRA?
A. Issuers
B. Associated persons
C. Investors
D. Banks
Who are associated persons?
This trading strategy involves buying and selling the same security to profit from small price movements.
What is day trading?
This date determines which shareholders receive a dividend.
What is the record date?
This type of account is managed for a minor by an adult.
What is a custodial account?
This manipulative practice creates artificial market activity.
What is wash trading?
This is required before an RR can solicit trades.
What is registration?
Which order becomes a market order once the stop price is hit?
A. Stop
B. Limit
C. Stop-limit
D. Market
What is a stop order?
A stock begins trading without its dividend on this date.
A. Payable date
B. Declaration date
C. Record date
D. Ex-dividend date
What is the ex-dividend date?
Which account requires written authorization for trading decisions?
A. Margin
B. Cash
C. Discretionary
D. Joint
What is a discretionary account?
Spreading false rumors to move a stock price is:
A. Legitimate research
B. Pump and dump
C. Hedging
D. Arbitrage
What is pump and dump?
Continuing education is required:
A. Once
B. Annually
C. Periodically
D. Never
What is periodically?
This order is canceled automatically if not executed during the trading day.
What is a day order?
This document allows shareholders to vote without attending a meeting.
What is a proxy?
This account allows two or more owners equal access.
What is a joint account?
This rule prohibits misleading statements in securities sales.
What is the anti-fraud provision?
This exam allows individuals to solicit securities transactions.
What is the SIE?
Which order combines features of both stop and limit orders?
A. Market
B. Limit
C. Stop-limit
D. Day
What is a stop-limit order?
If a trade fails to settle on time, this document ensures dividend payment to the buyer.
A. Prospectus
B. Due bill
C. Confirmation
D. Tombstone
What is a due bill?
Which document outlines risks of margin trading?
A. Prospectus
B. Loan consent
C. Margin disclosure statement
D. SAI
What is a margin disclosure statement?
Borrowing money from a client is:
A. Allowed with consent
B. Always allowed
C. Prohibited
D. Encouraged
What is prohibited?
Which body enforces federal securities laws?
A. FINRA
B. SEC
C. MSRB
D. SIPC
What is the SEC?
This trading strategy attempts to profit from short-term price trends.
What is momentum trading?
This corporate action allows shareholders to buy additional shares at a discount.
What is a rights offering?
This account type is used for retirement savings with tax advantages.
What is an IRA?
This practice involves trading in a client account without authorization.
What is unauthorized trading?
This organization regulates municipal securities.
What is the MSRB?
This order remains open until executed or canceled.
What is a good-til-canceled (GTC) order?
This occurs when two companies combine and shareholders receive new shares or cash.
What is a merger?
This customer suitability concept requires recommendations to match objectives and risk tolerance.
What is suitability?
This requires RRs to place customer interests ahead of their own.
What is fiduciary responsibility / best interest?
This occurs when an RR fails to supervise activities properly.
What is failure to supervise?