Series 24. Chapt 11 (STC) Questions with 100%
Correct Answers
Information barriers are usually used to prevent which of
the following prohibited activities?
A Charging higher-than-normal commissions
B Trading ahead of a research report
C Detecting outside business activities of registered
persons
D Churning Correct Answer: B Trading ahead of a
research report
FINRA has issued an interpretation that prohibits a
member from establishing, increasing, decreasing, or
liquidating an inventory position in a particular security
or derivative of that security, based on material,
nonpublic, advance knowledge of the content and
timing of a research report in that security. The
,interpretation prohibits inventory adjustments in
advance of either positive or negative reports. However,
inventory changes related to unsolicited order flow from
retail customers or other broker-dealers are not covered.
Likewise, there is no restriction if the research involved is
for in-house use only and is in no way being prepared for
external publication. The interpretation requires
information barriers to isolate the research department
from the trading department. These information barriers
would prevent a trading department from learning
about a pending research report regarding a stock in
which it had a position, and would allow the trading
department to carry on its business as usual. (63427)
An S&P 500 stock's last sale is $40.00 at 11:36 a.m., with
the NBBO at $39.80 - $42.10. Market Maker 1 bids $42.00.
Since S&P 500 stocks have a 5% price band and the
reference price is $40.00, all the following statements are
TRUE, EXCEPT:
A The bid of $42.00 will trigger a limit state for 15
seconds.
, B The bid of $42.00 will trigger a limit state and trading
will be paused for five minutes.
C If the $42.00 bid is cancelled within 15 seconds,
trading may continue.
D If the $42.00 bid is not executed or cancelled after 15
seconds, a trading pause will be initiated. Correct
Answer: B The bid of $42.00 will trigger a limit state and
trading will be paused for five minutes.
The Limit Up, Limit Down (LULD) Rule states that if a
quote causes a stock to enter limit state and the quote
is not executed against or canceled after 15 seconds, a
five-minute pause in trading will go into effect. However,
if the quote is executed or cancelled before the 15
seconds has elapsed, the stock exits limit state and
trading continues uninterrupted. Entering limit state
doesn't cause a trading pause; instead, it must stay in
limit state for 15 seconds
If the S&P 500 Index is down 7% from the previous day's
close at 3:00 p.m. ET, the market will close for:
Correct Answers
Information barriers are usually used to prevent which of
the following prohibited activities?
A Charging higher-than-normal commissions
B Trading ahead of a research report
C Detecting outside business activities of registered
persons
D Churning Correct Answer: B Trading ahead of a
research report
FINRA has issued an interpretation that prohibits a
member from establishing, increasing, decreasing, or
liquidating an inventory position in a particular security
or derivative of that security, based on material,
nonpublic, advance knowledge of the content and
timing of a research report in that security. The
,interpretation prohibits inventory adjustments in
advance of either positive or negative reports. However,
inventory changes related to unsolicited order flow from
retail customers or other broker-dealers are not covered.
Likewise, there is no restriction if the research involved is
for in-house use only and is in no way being prepared for
external publication. The interpretation requires
information barriers to isolate the research department
from the trading department. These information barriers
would prevent a trading department from learning
about a pending research report regarding a stock in
which it had a position, and would allow the trading
department to carry on its business as usual. (63427)
An S&P 500 stock's last sale is $40.00 at 11:36 a.m., with
the NBBO at $39.80 - $42.10. Market Maker 1 bids $42.00.
Since S&P 500 stocks have a 5% price band and the
reference price is $40.00, all the following statements are
TRUE, EXCEPT:
A The bid of $42.00 will trigger a limit state for 15
seconds.
, B The bid of $42.00 will trigger a limit state and trading
will be paused for five minutes.
C If the $42.00 bid is cancelled within 15 seconds,
trading may continue.
D If the $42.00 bid is not executed or cancelled after 15
seconds, a trading pause will be initiated. Correct
Answer: B The bid of $42.00 will trigger a limit state and
trading will be paused for five minutes.
The Limit Up, Limit Down (LULD) Rule states that if a
quote causes a stock to enter limit state and the quote
is not executed against or canceled after 15 seconds, a
five-minute pause in trading will go into effect. However,
if the quote is executed or cancelled before the 15
seconds has elapsed, the stock exits limit state and
trading continues uninterrupted. Entering limit state
doesn't cause a trading pause; instead, it must stay in
limit state for 15 seconds
If the S&P 500 Index is down 7% from the previous day's
close at 3:00 p.m. ET, the market will close for:
