Series 57 Practice Test 1 Questions
with Complete Solutions11
Threshold Securities - ANSWERS-equities with aggregate fail to deliver positions of 10,000
shares or more and equal to at least .5% of the issuer's total shares outstanding for 5
consecutive settlement days
Immediate Family Member - FINRA sharing account rules - ANSWERS-rules regarding sharing in
customer accounts define immediate family members as parents, mother/father-in-law,
husband or wife, children or any relative whose financial support the member contributes
directly or indirectly
Ex-date for dividends relating to ADRs - ANSWERS-the ex-date for dividends relating to ADRs are
designated by the UPC Committee
During LULD (limit up/limit down) trading halt, how long does trading halt at minimum? -
ANSWERS-5 minutes. It may be extended another 5 minutes at the option of the primary
trading exchange.
If a BD sells an OTC penny stock to a retail client, in which case might this trade qualify for a
specific transaction exemption? - ANSWERS-if the trade is client-initiated (unsolicited)
Locked quote - ANSWERS-where the bid ask prices are identical
If a company on the OTCBB is found in violation of the 3-strike rule and removed from the
OTCBB, how long must it wait to be reinstated and be quoted? - ANSWERS-One year. If it misses
any periodic filing deadline during the removal period, the one-year clock resets
, Under what circumstances can a sell order not be marked "short exempt?" (hint: think order
size) - ANSWERS-The trade is effected by a MM to offset a customer round lot order. A sell order
can be marked "short exempt" if it is executed to offset a odd lot order not a round lot order.
Trader X hears news from an underwriter that his firm will be buying a large block of ABC stock.
If X buys shares of the stock before the news is made public, he engaged in - ANSWERS-Front
Running. Front running is trading on non-public information ahead of an imminent block sale in
the same or related securities.
When a BD receives a limit order from a customer,
A. it must be displayed in the firm's quote absent special instructions
B. the order must be returned to the customer
C. the order must be displayed in the BD quote if the customer specifically requests that his
order be displayed
D. the order must be executed as promptly as possible - ANSWERS-A. it must be displayed in the
firm's quote absent special instructions. Limit orders must be displayed in BD's quotes if no
specific instructions are provided.
What is the latest a client's Market Hours Good Till Close order can be entered? - ANSWERS-
8:00 pm
Price-to-Comply orders - ANSWERS-designed to not lock or cross the market. They are put on
the Nasdaq book as non-displayed at the locking price. Nasdaq then displays the order at the
most aggressive price allowed under Reg. NMS which is one trading increment inside the
locking price
Under Trade Acceptance method of processing, what happens if the contra-party declines a
trade? - ANSWERS-It will remain in the system, but will not be subject to the automatic lock-in
process.
with Complete Solutions11
Threshold Securities - ANSWERS-equities with aggregate fail to deliver positions of 10,000
shares or more and equal to at least .5% of the issuer's total shares outstanding for 5
consecutive settlement days
Immediate Family Member - FINRA sharing account rules - ANSWERS-rules regarding sharing in
customer accounts define immediate family members as parents, mother/father-in-law,
husband or wife, children or any relative whose financial support the member contributes
directly or indirectly
Ex-date for dividends relating to ADRs - ANSWERS-the ex-date for dividends relating to ADRs are
designated by the UPC Committee
During LULD (limit up/limit down) trading halt, how long does trading halt at minimum? -
ANSWERS-5 minutes. It may be extended another 5 minutes at the option of the primary
trading exchange.
If a BD sells an OTC penny stock to a retail client, in which case might this trade qualify for a
specific transaction exemption? - ANSWERS-if the trade is client-initiated (unsolicited)
Locked quote - ANSWERS-where the bid ask prices are identical
If a company on the OTCBB is found in violation of the 3-strike rule and removed from the
OTCBB, how long must it wait to be reinstated and be quoted? - ANSWERS-One year. If it misses
any periodic filing deadline during the removal period, the one-year clock resets
, Under what circumstances can a sell order not be marked "short exempt?" (hint: think order
size) - ANSWERS-The trade is effected by a MM to offset a customer round lot order. A sell order
can be marked "short exempt" if it is executed to offset a odd lot order not a round lot order.
Trader X hears news from an underwriter that his firm will be buying a large block of ABC stock.
If X buys shares of the stock before the news is made public, he engaged in - ANSWERS-Front
Running. Front running is trading on non-public information ahead of an imminent block sale in
the same or related securities.
When a BD receives a limit order from a customer,
A. it must be displayed in the firm's quote absent special instructions
B. the order must be returned to the customer
C. the order must be displayed in the BD quote if the customer specifically requests that his
order be displayed
D. the order must be executed as promptly as possible - ANSWERS-A. it must be displayed in the
firm's quote absent special instructions. Limit orders must be displayed in BD's quotes if no
specific instructions are provided.
What is the latest a client's Market Hours Good Till Close order can be entered? - ANSWERS-
8:00 pm
Price-to-Comply orders - ANSWERS-designed to not lock or cross the market. They are put on
the Nasdaq book as non-displayed at the locking price. Nasdaq then displays the order at the
most aggressive price allowed under Reg. NMS which is one trading increment inside the
locking price
Under Trade Acceptance method of processing, what happens if the contra-party declines a
trade? - ANSWERS-It will remain in the system, but will not be subject to the automatic lock-in
process.
