Chapter 1 - Market Participants & Market Structure

Large blocks of stock can be traded anonymously through

Dark Pools

If an investment adviser has $400 million of assets under management, it must register with

The SEC

A broker-dealer that clears its trades through another broker-dealer is referred to as

An Introducing Firm

When used in reference to activities performed by a brokerage firm, the term "dealer" means

Any person that buys a security from or sells a security to a customer from/for its own account

When executing an agency trade for a customer, a broker-dealer will earn

A Commission

When equity securities fail to qualify for listing on either a physical or electronic exchange, the securities are referred to as

Over-The-Counter (OTC) Equities

According to FINRA, a person with assets of $80 million is considered

An Institutional Investor

When used in reference to activities performed by a brokerage firm, the term "broker" means

Any person that buys or sells securities for the accounts of others

Since a broker-dealer does not clear its own transactions, it sets up an account at a clearing broker-dealer and provides the clearing broker-dealer with information on each of its individual customers. This account is referred to as a(n)

Fully Disclosed Account

A market maker's quote for a stock is as follows: Bid $23.20 - Offer $23.70

A market participant is able to sell stock to the market maker at:

$23.20

Which of the following is NOT defined as an accredited investor?

A person who has a current Series 79 registration

A person who invests in equity securities will typically receive:

A Cash Dividend

Which of the following is NOT considered an issuer of securities?

The SEC

What type of account will hedge funds use when clearing their trades?

A Prime Brokerage Account

In order to be defined as an accredited investor, a person must have:

A net worth of at least $1 million (excluding his primary residence) or at least $200,000 in gross annual income in each of the last two years

Which of the following responsibilities is NOT provided by a transfer agent?

Maintaining the issuer's ownership register for each issue of its securities

Which of the following earns a fee based on the amount of assets it has under management?

An Investment Adviser

If an exchange has one entity that controls the trading in a specific stock, this entity is referred to as a:

Designated Market Maker (DMM)

Which of the following statements is NOT TRUE regarding corporate debt securities?

If the corporation has sufficient funds, it will pay the owners a cash dividend.

When executing a principal trade for a customer, a broker-dealer will earn:

A Markup or Markdown

The investment banking department of a broker-dealer will NOT perform which of the following functions?

Make recommendations as to which companies investors should purchase or sell