SIE practice questionhardCash Settlement
A trade executed with 'cash settlement' terms requires delivery and payment by:
- ATwo business days after the trade
- BThe same day as the trade (T+0)✓ Correct answer
- CThe next business day
- DFive business days after the trade
Explanation
Why B — The same day as the trade (T+0)
Cash settlement, also called same-day settlement, requires the exchange of securities and funds on the same day the trade is executed (T+0). This is faster than the standard T+1 settlement. Cash settlement is used in specific situations, such as when an investor needs shares to meet a delivery obligation. It typically involves an additional charge due to the expedited processing.
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