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Trading & Settlement: 198 free SIE practice questions

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Which organization serves as the primary clearinghouse for securities transactions in the United States?medium
When a broker-dealer executes a trade on behalf of a customer and charges a commission, it is acting in what capacity?easy
The standard settlement cycle for most U.S. equity trades is:hard
Which order type instructs a broker to buy or sell a security immediately at the best available current price?easy
What triggers the activation of a stop order?medium
When does a stop-limit order become a live limit order?medium
A customer wants an order to remain active until either it is filled or they decide to cancel it. Which order instruction should they use?medium
What is a potential risk of using a stop-limit order to sell?hard
A customer wants to sell a stock only if it drops to $50 or lower. Which order type should be used?easy
A customer opens a margin account and buys $20,000 of stock. According to Federal Reserve Regulation T, what is the minimum initial margin…medium
Which order guarantees execution but not price?medium
If the value of securities in a margin account falls below maintenance margin requirements, what can the broker-dealer do?medium
Which order type combines a stop order with a limit order, so the order enters the book as a limit order once triggered?medium
A customer places an order to buy 100 shares of XYZ at the current market price. What type of order is this?easy
Under Regulation T, what is the initial margin requirement for most stocks?easy
A client wants to sell shares only if the price falls to $40 or lower. What order should they place?easy
If the equity in a margin account falls below the maintenance requirement, what will the broker-dealer issue?medium
A client wants to buy stock, but only if the price does not exceed $25. What order should they use?medium
Under FINRA rules, what must a broker-dealer do to meet the best execution obligation?medium
What happens when a stop-limit order is triggered?medium
A fill-or-kill (FOK) order instructs a broker to:medium
When determining best execution, a broker-dealer considers:hard
Which order type guarantees execution but not price?easy
Regulation T requires customers to deposit what percentage of the purchase price when buying securities on margin?easy
Which order becomes a market order once a specified price is reached?medium
If the equity in a customer’s margin account falls below FINRA’s maintenance requirement, what action must the firm take?medium
A limit order to buy at $30 is placed when a stock is trading at $32. What happens to the order if the stock trades down to $30?medium
A broker-dealer must execute customer trades so as to obtain the most favorable terms possible. This is known as:medium
A customer wants to sell a stock only if it drops to a certain price. Which order type should be used?easy
Under Regulation T, what is the initial margin requirement for purchasing securities?easy
A stop-limit order to sell is triggered at $30 but specifies a limit of $28. What happens if the stock falls rapidly from $33 to $27?medium
A margin account falls below the maintenance margin requirement. What action must the customer take?medium
A client places a limit order to buy stock at $20. The stock’s current price is $23. What must happen for the order to execute?medium
A client wants to set a maximum purchase price and ensure execution only at or below that price. Which order should be placed?hard
An investor wants to buy 100 shares of a stock immediately at the current best available price. Which order type should they submit?easy
According to Regulation T, what is the minimum initial margin requirement for purchasing stock on margin?easy
Federal Home Loan Bank (FHLB) securities are:medium
A customer places a market order to buy 100 shares of XYZ stock. Which of the following best describes what will happen?easy
An investor places a limit order to buy 200 shares of ABC at $50. The current market price is $52. When will this order be executed?easy
An investor owns 500 shares of DEF stock currently trading at $80. She places a sell stop order at $70. Which statement is TRUE?medium
A customer places a sell stop-limit order at 45 stop, 44 limit on a stock currently trading at $50. The stock drops rapidly from $46 to $42…hard
A Good-Til-Canceled (GTC) order differs from a day order in that a GTC order:easy
When a broker-dealer executes a trade from its own inventory for a customer, the firm is acting in what capacity?medium
An investor sells short 100 shares of XYZ at $60 per share. If the stock drops to $40, what is the investor's profit before commissions?medium
Which of the following is the maximum potential loss for an investor who sells short 200 shares of a stock at $75 per share?hard
A short seller who sold stock at $50 places a buy stop order at $55. What is the purpose of this order?hard
Which type of order guarantees execution but does NOT guarantee price?medium
An investor places a sell limit order at $65 for a stock currently trading at $60. Under what condition will this order execute?medium
When a broker-dealer acts as an agent in a transaction, the firm charges the customer a:easy
A customer places an all-or-none (AON) order to buy 5,000 shares of a thinly traded stock at $12 limit. Only 3,000 shares are available at…hard
An investor purchases 100 shares of stock at $40 per share and pays a $50 commission. What is the investor's cost basis per share?medium
An investor buys a stock at $50, receives $3 in dividends over the year, and sells it at $58. What is the total return?medium
To qualify for the lower long-term capital gains tax rate, an investor must hold an asset for more than:easy
Qualified dividends receive preferential tax treatment compared to ordinary dividends. To be classified as qualified, dividends must meet…medium
Under current SEC rules, the standard settlement cycle for most securities transactions is:easy
Book-entry securities are held in:easy
If an investor buys stock on Monday, under T+1 settlement, by when must the investor deliver payment?medium
The Depository Trust Company (DTC) performs which of the following functions?medium
A seller fails to deliver securities by the settlement date. This is known as a:hard
For tax purposes, when is a securities transaction generally considered to have occurred?easy
U.S. Treasury bills typically settle on what basis?medium
A trade executed with 'cash settlement' terms requires delivery and payment by:hard
Under Regulation T, the initial margin requirement for purchasing equity securities is:medium
FINRA's minimum maintenance margin requirement for long equity positions is:medium
An investor purchases $20,000 worth of stock in a margin account, depositing the required Reg T margin of $10,000. If the stock declines to…hard
Under FINRA rules, a pattern day trader is defined as a customer who executes how many day trades within five business days?hard
A customer in a cash account buys shares and sells them at a profit before paying for the original purchase. This practice is known as:hard
The Employee Retirement Income Security Act (ERISA) applies to which of the following?hard
Which of the following would be considered material, non-public information (MNPI)?medium
Under SEC Regulation SHO, before selling a stock short, a broker-dealer must:hard
After executing a trade for a customer, a broker-dealer must send a trade confirmation by:easy
Under FINRA's best execution rule, a broker-dealer is required to:medium
An investor borrows $50,000 on margin to purchase securities. Which of the following is TRUE about the interest charged?medium
A client instructs her registered representative to buy 100 shares of XYZ at the best available price as soon as possible. Which order type…easy
A customer wants to sell shares of ABC only if the price falls to $45 or lower. Which type of order should they place?easy
Which entity is responsible for ensuring best execution of customer orders?easy
Under Regulation T, what is the initial margin requirement for purchasing stock on margin?easy
A buy limit order is placed at $30. Where must the stock trade for the order to execute?easy
A customer places a stop-limit order to sell 100 shares of DEF at $40 with a stop price of $42. If DEF falls from $44 to $41 and then…medium
A broker-dealer receives a customer market order to buy 50 shares of a thinly traded stock. What must the broker-dealer consider to ensure…medium
Which of the following is true about sell stop orders?medium
Which order type should an investor use to protect a short stock position from a rising market?medium
If a customer's margin account falls below the maintenance margin level, what action is the broker-dealer required to take?medium
A broker accepts a buy order and then trades the same security for their own account before executing the customer’s order. What prohibited…medium
An investor wants to buy a stock if its price falls to $50. Which order should they place?medium
Which of the following would be considered a wash sale?medium
A customer places a sell limit order at $60. The stock is currently trading at $55. When will the order be executed?medium
A customer places a market order to buy 500 shares of a very thinly traded stock after hours. What is the greatest risk to the customer?hard
A registered representative places unauthorized trades in a customer’s account that result in losses. What rule has been violated?hard
If a stop order to sell is triggered in a rapidly falling market, what execution risk does the investor face?hard
A customer purchases $30,000 of stock in a margin account. What is the minimum deposit required under Regulation T?hard
A broker-dealer attempts to inflate a security’s end-of-day price by placing trades minutes before the market closes. What is this called?hard
A firm receives a customer limit order to buy at $25 when the market is at $24.98. If the firm executes the trade for its own account at…hard
A customer wants to buy 100 shares of XYZ stock as soon as possible at the current market price. Which type of order should be entered?easy
A customer places a sell limit order for 100 shares of ABC at $25. Which of the following accurately describes how this order will be…easy
What happens if a stop order is triggered?easy
Which order type would you use to protect an unrealized gain on a stock you own if the price drops below a certain point?easy
According to Regulation T, what is the initial margin requirement for most stocks?easy
Which of the following order types guarantees execution but not price?easy
A buy stop order is typically used to:easy
When would a sell stop-limit order be activated?easy
Which type of order would an investor use to buy a security ONLY if it falls to a specific price or lower?easy
A client wants to ensure a stock is sold if it drops to $30, but only if it can be sold at $29 or higher. Which order should they place?medium
A broker-dealer is required to seek 'best execution' for its clients. Which of the following best describes this obligation?medium
A buy limit order is placed at $20 for XYZ stock, currently trading at $22. What will happen?medium
A client's margin account falls below the maintenance requirement. What will the broker-dealer require?medium
Which of the following orders does NOT guarantee execution?medium
Which of the following orders is most likely to result in a stock being sold during a severe price gap downward?medium
A customer wishes to buy shares only if a stock breaks above resistance at $50, but does not want to pay more than $52. Which order should…hard
A broker excessively buys and sells in a client’s account solely to generate commissions. This is known as:hard
An investor enters a buy stop order at $40 on a stock currently trading at $35. What happens if the stock rises sharply to $45 in one trade?hard
An investor wants to buy shares at the current market price as quickly as possible. Which type of order should the investor place?easy
Which type of order instructs a broker to buy a security only if it can be purchased at a specified price or lower?easy
A client places a stop order to sell shares at $50. What happens if the stock trades at $50?easy
Who is responsible for ensuring best execution of a customer’s order?easy
A client enters a GTC (good-till-canceled) order. What does this mean?easy
Which order would guarantee execution but not price?easy
Which of the following describes a sell stop order?easy
What is the main purpose of a stop-limit order?easy
A customer wants to ensure a stock is not sold below a certain price. Which order type is most appropriate?easy
If an investor wants to set a minimum price that they will accept for selling shares, which order should they use?easy
A firm that acts as a dealer in a transaction is acting as:easy
An investor wants to purchase a stock if it rises to $45 or higher. Which order type should be used?easy
Which of the following best describes a broker’s role when acting as an agent in a securities transaction?easy
A customer places a buy limit order for 100 shares at $20. The stock trades at $20.05 and $19.95. What happens to the order?medium
A customer enters a stop-limit order to sell 200 shares with a stop price of $42 and a limit of $41. The stock falls to $42, then…medium
Which of the following is required by Regulation NMS (National Market System) when executing orders for listed equities?medium
A customer places an all-or-none buy order for 500 shares at $30. The market has 200 shares available at $30 and 300 at $30.05. What occurs?medium
A broker-dealer receives a client’s limit order. What must the broker-dealer do to ensure compliance with SEC and FINRA regulations?medium
An investor wants to buy shares but only if the price falls to $25 or below. Which order type should be used?medium
Which order executes only if the stock can be bought at or below a certain price?medium
A client places a market order to buy 1,000 shares. During execution, prices rise rapidly. What is the risk?medium
A client wants to sell if the price drops to $30, but does not want to sell for less than $29. Which order type should be used?medium
A broker receives a buy order from a client and buys the same security for their own account just before executing the client's order. What…medium
Which statement about stop orders is correct?medium
A stop order to sell is usually placed at a price:medium
What happens when a buy stop order is triggered?medium
Which term describes a broker-dealer executing an order internally rather than routing to an exchange for execution?medium
A client wants to buy only if a stock price rises above current levels, indicating a breakout. Which order is best?medium
A firm receives a client’s limit order at $52 and immediately buys 500 shares for its own account at $52 without executing the client’s…medium
Under Regulation T, what is the initial margin requirement for purchasing stock in a margin account?medium
Which of the following best defines 'best execution' under FINRA rules?medium
A flat yield curve often indicates:medium
An investor places a not-held order. What discretion does the broker have?medium
A customer enters a buy stop-limit order with a stop price of $30 and a limit of $30.10. The market moves from $29.90 to $30.15 in one…hard
A client places a fill-or-kill order to buy 1,000 shares at $10. Only 900 shares are available at that price. What occurs?hard
A broker-dealer internalizes a customer market order but fails to match the best price available on another market. What rule is violated?hard
A client wants an order to sell 2,000 shares if the stock falls to $40, but only if the shares can be sold at $39.90 or better. The order…hard
A margin account falls below the maintenance margin. Which of the following is the broker-dealer’s obligation?hard
A broker executes a client’s order at a disadvantaged price while a better price was available on another market. This is a violation of…hard
A customer’s limit order improves the market but is not displayed by the broker-dealer. What regulation is most likely violated?hard
Which order type can be both triggered and then not executed if the market moves past the limit price without trading within the limit…hard
A not-held order gives the broker discretion regarding:hard
A broker 'interpositions' another firm between itself and the market to handle a client order. What is the regulatory issue?hard
An investor wants a purchase order to cancel if not executed immediately at the desired price. Which type should they use?hard
A customer places a market order to buy 200 shares of XYZ stock. Which of the following best describes what will happen to this order?easy
A client owns shares of ABC Corp currently trading at $50. To help limit potential losses, the client gives their registered representative…medium
A 401(k) is best described as:easy
Which account can be used to enter both market and limit orders?medium
What must a registered representative do before recommending an options strategy?medium
FINRA requires broker-dealers to determine beneficial ownership of accounts for which reason?medium
Who is considered the beneficial owner in a trust account?medium
Settlement in a cash account requires:hard
A registered representative shares profits with a customer in a joint account without firm approval. What rule is violated?hard
Under Regulation T, what is the initial margin requirement for most stock purchases?easy
In a margin account, what is the minimum maintenance margin requirement for equity securities according to FINRA?medium
Which federal regulation sets the initial margin requirement for purchasing securities on margin?easy
A customer in a cash account places a market order to buy shares. What does a market order guarantee?easy
In a margin account, what happens if equity falls below the maintenance requirement?medium
A customer wants to sell shares short. Which account type is REQUIRED?medium
A customer in a cash account is worried about a price drop. Which order type will GUARANTEE a sell order if the stock falls to a specific…medium
Regulation T primarily regulates:easy
If the equity in a margin account falls below the maintenance requirement, the broker-dealer must:medium
A customer places a 'stop-limit' order. If the stop price is triggered, the order becomes:medium
Which economic indicator is considered a lagging indicator?medium
Which is an example of manipulation known as 'pump and dump'?medium
Which of the following client instructions must never be followed by a registered representative?medium
A stop order is typically used to:medium
Which is TRUE regarding Treasury bills (T-bills)?medium
Under the Securities Exchange Act of 1934, which event must be promptly reported to the SEC?hard
Which practice is specifically prohibited to prevent market manipulation in options trading?hard
A registered representative places customer orders after executing their own trades at better prices. This is prohibited under:hard
A broker-dealer intentionally delays executing a customer’s order to benefit its own trading. This practice is known as:easy
A registered rep guarantees a client that the yield curve will predict a stock’s price every time. This statement is:easy
A customer fails to pay for a stock purchase in a cash account within the required period. Under Regulation T, the broker-dealer must:medium
A registered rep places a client’s stop order in a way that intentionally triggers the stop and benefits the rep’s principal trading. This…medium
A margin account drops below maintenance requirement and the client does not meet the margin call. The broker-dealer:medium
An agent enters a client’s stop order at a price specifically chosen to be easily triggered for personal benefit. This constitutes:hard
A registered rep recommends mutual fund switches just to increase commissions, rather than for the customer’s benefit. This practice is:easy
A trader places a series of buy limit orders just below a stock's current price to create the illusion of market support, then cancels them…medium
A customer’s margin equity falls below the required maintenance level. If the firm allows continued trading without a margin call, it is…medium
A client wishes to avoid the risk of rapid price swings. Which order type helps prevent unintended purchases due to sudden price moves, but…medium
A trading firm routinely allows customers to exceed margin limits established in Regulation T for initial purchases and does not issue…hard
A firm intentionally releases misleading economic research to attract investment into specific securities. What could be the result?hard
A trader places successive small orders to gradually move a stock price up, then sells a large position at the new price. This pattern is…hard
A trader repeatedly places large orders to buy a stock, then cancels them before execution to create the illusion of demand. This practice…hard
What is the general rule regarding principal approval of correspondence?medium
Which system requires reporting of short sale transactions in equity securities?medium