SIE practice questioneasyBook-Entry Securities
Book-entry securities are held in:
- APhysical certificate form delivered to the investor
- BElectronic form, with ownership recorded in the records of a depository✓ Correct answer
- CPaper form held by the transfer agent
- DBearer form that transfers ownership upon delivery
Explanation
Why B — Electronic form, with ownership recorded in the records of a depository
Book-entry securities exist only as electronic records — no physical certificates are issued. Ownership is tracked through the records of a central depository, typically the Depository Trust Company (DTC). This system reduces costs, speeds up settlement, and eliminates risks associated with physical certificates (theft, loss, forgery). Most securities today, including U.S. Treasury securities, are issued in book-entry form only.
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