NYSE Trading

All of the following are requirements for a company to move its listing from another market to the NYSE EXCEPT:
A. 2,200 shareholders
B. Average monthly trading volume of 100,000 shares
C. $100,000,000 aggregate market value of outstanding shares
D. Minim

The best answer is D. The NYSE does not set a minimum dividend payout for a company to move its listing. It does require that the company have 2,200 or more shareholders; an average monthly trading volume of 100,000 shares for the past 6 months; $100,000,

Which of the following individuals trades on the New York Stock Exchange Floor?
I Specialist (DMM)
II Floor Broker
III Two Dollar Broker
IV Registered Representative
A. I and II only
B. III and IV only
C. I, II, III
D. I, II, III, IV

The best answer is C. The Specialist (now renamed the DMM - Designated Market Maker) is the assigned market maker in a security on the NYSE floor. The Floor Broker handles orders as agent for retail member firms. The Two Dollar Broker executes orders for

All of the following trade securities on the New York Stock Exchange EXCEPT:
A. Two dollar broker
B. Floor broker
C. Specialist (DMM)
D. Order Book Official (OBO)

The best answer is D. Two dollar brokers, Specialists, and Floor brokers execute transactions on the NYSE. The Specialist (now renamed the DMM - Designated Market Maker) is the assigned market maker in a security on the NYSE floor. The Floor Broker handle

Under NYSE rules, every broker or dealer who communicates bids and offers on the exchange floor must comply with which of the following rules?
I The highest bid and the lowest offer have precedence in all cases
II Bids and offers must be publicly announce

The best answer is C. Under NYSE trading rules, bids and offers must be for the minimum 100 share size trading unit; the highest bid and lowest offer have priority (the same as NASDAQ's "inside market" - now renamed the NBBO - National Best Bid and Offer)

The Specialist (DMM) on the exchange performs which of the following functions?
I Acts as a dealer trading for his own account
II Executes orders for other brokers
III Executes round lot orders
IV Executes odd lot orders
A. I, II, IV
B. I, III, IV
C. II,

The best answer is D. The Specialist (now called the DMM- Designated Market Maker) is a dealer on the exchange floor trading for his own account. He trades both round lots and odd lots. The DMM also acts as agent for other brokers, running a book of open

Specialists (DMMs) on the New York Stock Exchange can perform which of the following functions?
I Act as a market maker
II Act as a broker's broker
III Handle odd lot transactions
IV Act as an underwriter
A. I and II only
B. III and IV only
C. I, II, III

The best answer is C. Specialists (now renamed DMMs - Designated Market Makers) cannot deal with the public, so they cannot act as underwriters. They are wholesale members of the NYSE who deal only with other member firms. DMMs act as market makers and br

A customer owns 100 shares of an NYSE listed preferred stock and notices that the typical daily trading volume in the issue is less than 1,000 shares. The customer wants to sell the stock and asks his broker what will happen if there is no ready buyer for

The best answer is A. Specialist/DMMs (Designated Market Makers) are obligated, under NYSE rules, to make a continuous market in the assigned stock. Thus, on the NYSE floor, a customer is always assured that the trade will be executed - however the price

The Specialist (DMM) accepts which of the following orders on his book?
A. Day
B. Good Through Week
C. Good Through Month
D. Good Til Canceled

The best answer is A. The Specialist (now called the DMM - Designated Market Maker) only accepts "Day" orders on his book. If a customer wants an order with a longer "Time in Force," the member firm accepts it into its own internal system and feeds it to

A customer places an order with a member firm that is "Good through the month." The person responsible for canceling the order if it remains unexecuted after the month is up is the:
A. customer
B. Specialist (DMM)
C. member firm
D. NYSE

The best answer is C. Since the Specialist (now renamed the DMM or Designated Market Maker) only accepts "Day" orders on his book, if a customer wants an order canceled at the end of a month, this is the responsibility of the member firm that entered the

An order is placed on the NYSE to buy 100 ABC shares at $50 Day. If the order is not executed on that day, who cancels the order?
A. the customer
B. the Specialist (DMM) C. the registered representative
D. ABC corporation

The best answer is B. It is the responsibility of the Specialist (now renamed the DMM - Designated Market Maker) to cancel any "Day" orders at the end of the day that have not been filled.

A Specialist (DMM) on the NYSE is quoting ABC stock as follows:
$50.05 - $50.06
30 x 60
The Specialist/DMM receives an order via Super Display Book to buy 6,000 shares of ABC at the market. The Specialist/DMM will:
A. place the order on his book for execu

The best answer is D. The Specialist (now called the DMM - Designated Market Maker) is quoting the stock at $50.05 Bid with a size of 30 (good for 30 x 100 = 3,000 shares); and $50.06 Ask with a size of 60 (good for 60 x 100 = 6,000 shares). These are the

A Specialist (DMM) on the NYSE is quoting ABC stock as follows:
$50.05 - $50.06
60 x 30
The Specialist/DMM receives an order via Super Display Book to sell 6,000 shares of ABC at the market. The Specialist/DMM will:
A. place the order on his book for exec

The best answer is C. The Specialist (now called the DMM - Designated Market Maker) is quoting the stock at $50.05 Bid with a size of 60 (good for 60 x 100 = 6,000 shares); and $50.06 Ask with a size of 30 (good for 30 x 100 = 3,000 shares). These are the

All of the following statements are true about "odd lot" transactions EXCEPT:
A. orders for odd lot amounts have no standing on the NYSE trading floor
B. an odd lot is an order for less than the normal trading unit of 100 shares
C. odd lot transactions ar

The best answer is D. The NYSE does not set commission rates - these are set by brokers and dealers themselves. Odd lots are transactions for less than the normal trading unit of 100 shares. Odd lot orders are handled by the Specialist (now renamed the DM

On the New York Stock Exchange, which of the following persons will handle odd lot transactions?
A. Specialist (DMM)
B. Floor Broker
C. $2 Broker
D. Competitive Trader

The best answer is A. Odd lot transactions on the NYSE are handled by designated "Odd Lot" dealers - who happen to be the Specialists (Designated Market Makers) in the assigned stocks.

The Specialist (DMM) can stop stock for:
I proprietary orders
II public orders
III brief time periods
IV that trading day
A. I and III
B. I and IV
C. II and III
D. II and IV

The best answer is C. The Specialist (now renamed the DMM - Designated Market Maker) can only stop stock - guaranteeing a price for a brief time period to a floor broker - for public orders. This is a Specialist/DMM courtesy function that allows floor bro

Super Display Book is the automated trading system for the:
A. NASDAQ Stock Market
B. American Stock Exchange (NYSE-MKT)
C. New York Stock Exchange
D. Instinet Stock Market

The best answer is C. The NYSE automated trading system is called the Super Display Book. This replaced the previous DOT (Designated Order Turnaround) system in late 2009.

Which of the following statements are TRUE about computerized trading of securities on exchanges as compared to manual trading?
I Trades are effected more rapidly
II Trades are effected less rapidly
III Trades are effected at lower cost
IV Trades are effe

The best answer is A. Electronic trading systems, such as the NYSE Super Display Book system, are faster, cheaper, and more efficient than manual trading by floor brokers. These systems have size limitations, and cannot handle orders that require human ju

All of the following statements are true about computerized trading of securities on exchanges EXCEPT:
A. trades can be effected more efficiently and at lower cost
B. trades bypass the floor broker
C. orders are prioritized with member firm orders having

The best answer is C. Electronic trading systems, such as the NYSE Super Display Book system, are faster, cheaper, and more efficient than manual trading by floor brokers. These systems have size limitations, and cannot handle orders that require human ju

Which of the following statements are TRUE regarding the Super Display Book system?
I Orders are routed directly to the NYSE DMM for execution
II Only round lots are permitted; odd lot orders cannot be entered into the system
III Member firms prefer to us

The best answer is D. All of the statements are true regarding the Super Display Book System. It is an electronic order entry, order matching, and trade reporting system. The system can only handle round lots (100 shares or more), with limits on the maxim

All of the following are true about the NYSE automated trading system EXCEPT:
A. market orders are accepted
B. limit orders are accepted
C. any size order is accepted
D. day orders are accepted

The best answer is C. The Super Display Book system cannot handle any size order: there are maximum order sizes (e.g., 3,000,000 shares for limit orders). The system accepts market and limit orders. It no longer accepts stop orders, but member firms can t

Which of the following orders are accepted on the NYSE automated trading system?
I Day orders
II Market orders
III Limit orders
IV Large Block orders
A. I only
B. II and III only
C. I, II, III
D. I, II, III, IV

The best answer is C. The Super Display Book system cannot handle any size order. There are maximum order sizes (e.g., 3,000,000 shares for limit orders). The system accepts market and limit orders. It only accepts Day orders - any longer term order can o

All of the following statements are true about the NYSE Super Display Book system EXCEPT:
A. market orders are accepted
B. limit orders are accepted
C. not held orders are accepted
D. round lot orders are accepted

The best answer is C. The Super Display Book system accepts market and limit orders by routing them directly to the DMM's - Designated Market Maker's - Display Book for execution. Market orders are executed immediately while limit orders are placed on the

The Network A Consolidated Tape reports all trades of:
A. AMEX (NYSE-MKT) Securities
B. U.S. Government Securities
C. NASDAQ Securities
D. NYSE Securities

The best answer is D. The Network A Consolidated Tape reports all trades of NYSE listed issues, wherever they occurred. The Network B Consolidated Tape reports all trades of NYSE-MKT (AMEX) and regional exchanged listed issues, wherever they occurred. The

Regarding reporting of trades that take place in NYSE listed issues:
I each trade must be reported within 10 seconds
II each trade must be reported within 60 seconds
III the executing member reports
IV the initiating member reports
A. I and III
B. I and I

The best answer is A. Equity trade reporting rules are consistent for all markets - trades must be reported by the executing member within 10 seconds of execution during regular market hours.

Which of the following movements in the Standard and Poor's 500 Index before 3:25 PM would INITIATE the market-wide "circuit breaker"?
A. 1,200 to 1,176
B. 1,200 to 1,140
C. 1,200 to 1,116
D. 1,200 to 1,080

The best answer is C.
Under the circuit breaker rule, if the Standard and Poor's 500 Index moves down by 7% or more from the prior day's closing price, the listed equity markets will be shut down for 15 minutes. After reopening, if the index falls by a to

When the Standard and Poor's 500 Index is at 1,230 on a given day, the U.S. listed equities markets will close its market for the rest of the day if the index declines by a total of:
A. 62 points
B. 86 points
C. 160 points
D. 246 points

The best answer is D. Under the circuit breaker rule, if the Standard and Poor's 500 Index falls by a cumulative 20% in a given trading day, the market will be shut for the balance of the day. 20% of 1,230 = 246 points.

Trading halts in National Market System stocks will occur if the Standard and Poor's 500 Index drops by all of the following EXCEPT:
A. 5%
B. 7%
C. 13%
D. 20%

The best answer is A.
Under the circuit breaker rule, if the Standard and Poor's 500 Index moves down by 7% or more from the prior day's closing price, the listed equity markets will be shut down for 15 minutes. After reopening, if the index falls by a to

Which statements are TRUE regarding trading halts?
I If it is a regulatory halt, only that exchange stops trading the stock
II If it is a regulatory halt, all markets must stop trading the stock
III If it is a non-regulatory halt, only that exchange stops

The best answer is C.
A "regulatory halt" is one imposed by either a regulator (the SEC stops trading in a stock) or one that occurs because the "circuit breaker" (7% drop in the S&P 500 Index) was tripped. If there is a regulatory halt, all trading in th

A trade is considered to be a "block trade" if the amount is for a minimum of:
A. 100 shares
B. 1,000 shares
C. 10,000 shares
D. 100,000 shares

The best answer is C. Once a trade hits 10,000 shares, it is considered a "block" trade. The full amount of the "block" is printed on the tape. Please note that as the NYSE continually expands the capabilities of Super Display Book, this definition is bec

A corporation is making a tender offer for all of its common shares. Which of the following customers CANNOT tender the shares?
A. Customer A, who is long 100 shares of ABC in a custodian account
B. Customer B, who is long 100 shares of ABC in a cash acco

The best answer is D. Under the "short tender" rule, tendering shares for a customer who is in a "net" short position in a security is prohibited. Tenders are permitted only to the extent of the customer's net long position. Customer C is net long 100 sha

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announ

The best answer is B. If the customer wants to "cash out" the position, tender is not appropriate since the offer is contingent on 64% of the shares being tendered. The best procedure is simply to sell the long position at the new higher market price.

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announ

The best answer is A. Since the offer is contingent on 64% of the shares being tendered, the customer has no assurance of being paid for the shares if he decides to tender.

The Master Manufacturing Company has just announced a tender offer for its own common stock. Master is offering to buy up to 100% of the company's stock at $20 per share contingent on at least 64% of the outstanding shares being tendered. After the announ

The best answer is B. If the customer sold at the opening, he would receive $18.75 per share or $1,875.00 for 100 shares owned.

Regulation SHO:
I requires every sell order to be marked either "long sale" or "short sale"
II requires every buy order to be marked either "long purchase" or "short purchase"
III places limits on "naked" short sales of equity securities
IV places limits

The best answer is A. Regulation SHO is an update to the short sale rule. It applies a uniform rule for all equity security short sales, regardless of whether the stock is exchange listed or traded OTC. Every order to sell must be marked as a "long sale

Regulation SHO is a body of rules covering:
A. shorting against the box in an arbitrage account
B. short sales of equities traded on an exchange or over-the-counter
C. short term capital gains treatment on securities transactions
D. shorting of naked opti

The best answer is B. Regulation SHO is an SEC rule intended to apply a uniform short sale rule to both exchange listed and OTC equity issues; and to stop the illegal practice of "naked" short selling (selling short a security without the intention to bor

A customer wishes to place an order to short 50,000 shares of ABC stock. The average daily trading volume (ADTV) in ABC stock is 40,000 shares. The representative:
A. should place the order
B. cannot accept the order because the order size exceeds the ADT

The best answer is C. Because the customer wants to short 50,000 shares of the stock and the average daily trading volume is only 40,000 shares per day, this means that there is not much trading activity in the stock relative to the amount of stock this c

Under the provisions of Regulation SHO, before a security can be "sold short," it must be determined that the security:
A. can be borrowed and delivered by settlement
B. has been traded on an + tick or a 0+ tick
C. is not on the threshold list
D. is subje

The best answer is A. Regulation SHO (as in SHOrt sale rule) requires that, prior to effecting a short sale for a customer, it must be affirmatively determined that the security can be borrowed and delivered on settlement. This "locate" requirement must b

Regulation SHO requires that:
I if a stock falls by 5% in a trading day
II if a stock falls by 10% in a trading day
III it can only be sold short on an up bid
IV it can only be sold short on a down bid
A. I and III
B. I and IV
C. II and III
D. II and IV

The best answer is C. If an NMS (National Market System stock - NYSE, NYSE-MKT (AMEX), or NASDAQ listed) falls by 10% or more, it can only be sold short on an "up bid" for the remainder of that trading day and the entire next trading day. Thus, it can onl

Under Regulation SHO, a "threshold" security is one that:
I is easy to borrow
II is hard to borrow
III cannot be sold short under any circumstances, but can be sold long
IV if sold short and not delivered within 13 settlement days, it must be bought-in
A.

The best answer is D. Customer short sales not resulting in delivery must be bought-in after 10 business days from settlement, if the security was on the exchange's threshold list as of trade date under Regulation SHO and remains on that list for 10 busin

The mandatory buy-in provision of Regulation SHO:
I applies to a fail to deliver of any equity security that is sold short
II applies to a fail to deliver of a threshold list security that is sold short
III must be completed within 6 settlement days
IV mu

The best answer is D. If there is a short sale of a security on the threshold list of "hard to borrow" securities, and the seller fails to deliver on settlement, then Regulation SHO requires that the position be bought in no later than 10 business days fr