SIE Market Structure and Trading 2

Question 1

Dark pools are best described as:

Accepted Answer

Private trading venues that do not display quotes publicly

Answer

Dark pools are private trading venues where large orders can be executed without showing quotes to the public market.

Question 2

A stop order (stop-loss order) becomes a market order when:

Accepted Answer

The security's price reaches or passes the stop price

Answer

A stop order is triggered and becomes a market order when the security's price reaches the designated stop price.

Question 3

Short selling requires investors to borrow securities because:

Accepted Answer

They are selling securities they do not currently own

Answer

Short sellers borrow securities to sell them first, expecting to buy them back cheaper later and return the borrowed shares.

Question 4

What is the 'spread' in a securities quote?

Accepted Answer

The difference between the bid and ask prices

Answer

The spread is the difference between the ask price (what dealers sell at) and the bid price (what dealers buy at), representing the dealer's compensation.

Question 5

An all-or-none (AON) order instructs the broker to:

Accepted Answer

Execute the entire order at once or not at all

Answer

An AON order must be filled in its entirety at the specified price; partial fills are not accepted.

SIE - Securities Industry Essentials Practice Test

SIE - Securities Industry Essentials Practice Test

SIE Market Structure and Trading 2