Series 7 practice questionmediumTrade Settlement — Cash Settlement
A customer requests a cash settlement for a stock trade executed on Tuesday. When must settlement occur?
- ABy end of business on Tuesday (same day)✓ Correct answer
- BBy end of business on Wednesday
- CBy end of business on Thursday
- DWithin 5 business days
Explanation
Why A — By end of business on Tuesday (same day)
A cash settlement requires delivery and payment on the same day as the trade (T+0). Cash settlement trades must be completed by the end of business on the trade date. This type of settlement is uncommon and typically used in special circumstances, such as when an investor needs to meet a specific deadline. Cash settlement trades often carry a premium because the seller must deliver securities on the same day.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Order Processing & Trade Settlement questions
- XYZ Corporation declares a cash dividend with a record date of Wednesday, March 18. Under T+1 settlement, what is the…
- U.S. Treasury securities settle on what basis in regular-way secondary-market trading?
- A corporation announces a 2-for-1 stock split effective April 15. Between the announcement date and the effective date,…
- What is the regular way settlement period for corporate stocks and bonds?
- A customer buys 100 shares of RST stock on Monday, March 9. The stock has a record date of Tuesday, March 10 for a…
- A specialist's limit order book shows the following buy limit orders for PQR stock: 200 shares at $50.10, 500 shares at…
- In a seller's option settlement, the seller may deliver securities:
- A short seller has sold 400 shares of MNO stock at $72 and wants to limit potential losses. The stock is currently…