Series 57 Practice Test 1 questions and answers 2024\2025
GradeA+
Threshold Securities
- correct answer 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
- correct answer 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
- correct answer 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?
- correct answer 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?
- correct answer if the trade is client-initiated (unsolicited)
Locked quote
- correct answer 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?
- correct answer 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)
- correct answer 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
- correct answer 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
- correct answer 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?
- correct answer 8:00 pm
Price-to-Comply orders
- correct answer 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?
- correct answer It will remain in the system, but will not be subject to the automatic lock-in process.
What type of ATS may meet the conditions for a trade reporting exemption? (hint: think execution)
- correct answer One that does not permit automatic execution. To qualify for an exemption, the ATS
must demonstrate that it is fully disclosed at all times, does not exchange shares or funds on behalf of
the member subscriber, and does not take either side of the trade for clearing nor permit automatic
execution.
GradeA+
Threshold Securities
- correct answer 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
- correct answer 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
- correct answer 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?
- correct answer 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?
- correct answer if the trade is client-initiated (unsolicited)
Locked quote
- correct answer 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?
- correct answer 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)
- correct answer 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
- correct answer 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
- correct answer 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?
- correct answer 8:00 pm
Price-to-Comply orders
- correct answer 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?
- correct answer It will remain in the system, but will not be subject to the automatic lock-in process.
What type of ATS may meet the conditions for a trade reporting exemption? (hint: think execution)
- correct answer One that does not permit automatic execution. To qualify for an exemption, the ATS
must demonstrate that it is fully disclosed at all times, does not exchange shares or funds on behalf of
the member subscriber, and does not take either side of the trade for clearing nor permit automatic
execution.
