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SIE practice questionmediumSettlement and Payment

If an investor buys stock on Monday, under T+1 settlement, by when must the investor deliver payment?

  1. ATuesday✓ Correct answer
  2. BFriday
  3. CMonday (same day)
  4. DWednesday
Explanation

Why A — Tuesday

Under T+1 settlement, payment is due one business day after the trade date. If the trade occurs on Monday, the settlement date is Tuesday. By Tuesday, the buyer must deliver funds and the seller must deliver the securities. If Monday were a Friday, settlement would be the following Monday (the next business day), since weekends and holidays are not counted as business days.

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