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All securities trading on the national exchanges, such as the NYSE, are called:
LISTED SECURITIES, because the companies that issue them are "listed" on the exchange
On the floor of the Exchange, a Specialist may act as ________ or ________
For Floor Brokers Two-Dollar Brokers are considered ___________
For Floor Brokers Commission Brokers are employed by ________
On equity (stock) exchanges, the trading is always centered around a:
On the options exchanges, the trading is centered around an:
ORDER BOOK OFFICIAL, or OBO
The four OTC markets are:
The primary market; The secondary market for unlisted securities, The third market, The fourth market
The PRIMARY MARKET is for the issuance of:
All securities sold for the first time are called:
All initial public offerings (IPOs) are brought out in the:
The SECONDARY MARKET is referred to as the:
- OTC Market (This term is used to indicate that the securities are being traded for at least the second time)
- Exchange Markets
- An electronic Quoting system
- 3 Levels of Service
Define the OTC Markets (NASDAQ)
- is decentralized
- Market Makers negotiate sales not auctions
THIRD MARKET transactions are trades in:
Listed securities (exchange-traded stock) that are executed in the OTC market rather than on the exchange.
The FOURTH MARKET of the OTC consists of direct trading between:
Large institutions without the use of a B/D (e.g., insurance companies trading with mutual funds).
Market makers are the broker/dealers who:
offer to buy or sell securities in the OTC market.
When a B/D acts as a Market Maker, it:
buys stock from one investor at the bid price and sells to another at the ask price.
The difference between the bid price and the ask price is called the:
Name 3 Details of Market Orders
- Guaranteed Execution
- Best Available Price
- No Guaranteed Price
A SELL LIMIT ORDER is _______ Current Price
A Buy LIMIT ORDER is _______ Current Price
Define LIMIT ORDER
- A Real Order waiting to execute at THAT price or better
- -Guaranteed Price, IF Executed
- -Execution is NOT Guaranteed
Define the Process of a STOP ORDER
- 2 steps
- - Activation Price or Trigger Price
- - Once "Activated", Order becomes a Market Order
Define a STOP ORDER
- a TRIGGER Waiting to activate an Order at that Price or Worse -To Protect Profit
- -To Limit Loss (Stop Loss)
A SELL STOP ORDER is _______ Current Price
Name Both ORDERS Above the Market
Name both ORDERS placed Below the Market
A BUY STOP ORDER is _______ Current Price
⇐ Market Price
Quotes by a market maker are always:
for lots of 100 shares (even lot)
FIRM QUOTES are quotes from a market maker or another B/D who is willing to:
do a trade at a certain price, and promises to trade the stock at that price
In Executing, Market orders are:
- To be executed as soon as possible at whatever the going market price is, no matter what the price
- To be executed at the next round lot trade that occurs on the floor regardless of the price of the next round lot trade
- The most commonly used order
BUY LIMIT ORDERS are always entered for prices:
- below the present market price.
- The order will be executed only when the security falls to the specific limit price set or lower.
SELL LIMIT ORDERS are always entered for prices above the:
- present market price.
- This enables an investor to sell the securities when they reach a certain high point.
- The order will be executed when the market price of the securities rises to the specified price or higher.
A BUY STOP ORDER is always entered at a price that is:
- Above the present market.
- Once the stop order is activated, it becomes a market order, meaning the security can be bought at any price at which the next trade occurs at the stop price, below the stop price, or above the stop price.
A SELL STOP ORDER is always entered at a price that is:
- below the present market.
- Once the stop order is activated, it becomes a market order, meaning the securities can be sold at any price at which the next trade occurs at the stop price, below the stop price, or above the stop price.
A BUY STOP-LIMIT ORDER is an order to:
buy stock at a specified price or better (called the STOP-LIMIT PRICE), but only after this given stop price has been reached or passed.
A SELL STOP-LIMIT ORDER is an order to:
sell securities at a specified price or lower (called the STOP-LIMIT PRICE), but only after a given stop price has been reached or passed.
B/D firms are responsible for reviewing all GTC orders every:
All LISTED STOCK is:
Traded on an EXCHANGE and meet Exchange Listing Requirements
When B/D Buys into or Sell out of it's own Account (as Principal)they are considered:
When B/D match Buyers and Sellers (as Agency) they are considered:
ALL UNLISTED STOCKS are traded in the:
- If Qualifications are met, NASDAQ
Name the 2 types of Accounts used for Trading:
- Cash Accounts
- Margin Accounts
A SPECIAL CASH ACCOUNT is also referred to a:
- A SPECIAL ACCOUNT
- but is most commonly referred to as a CASH ACCOUNT.
How are MARKET MAKERS compensated?
Mark-Ups or Bid/Ask Spread
Margin accounts are composed of three parts:
- The long position
- The short position
- The options position
- **most often, only 50% of the total value has to be deposited by the purchaser.
Long positions are taken when an investor believes the market in a particular security, or in securities in general, will:
rise because of demand
In a short sale, the securities sold are______from the broker/dealer (B/D).
- Therefore, the customer is obligated to repurchase these securities in the future to replace borrowed securities.
Short positions are taken when an investor believes:
the market in a particular security, or in securities in general, will fall.
Options (can/cannot) be bought on margin
- An investor who purchases options must make full payment for the options