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Series 57 Practice Exam
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Series 57 Practice Exam 1

Series 57 Practice Exams

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Series 57 Practice Exam 1

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Question 1 of 10

1. Question

All NASDAQ Market Makers will identify their B/D on the Level 2 or Level 3 system with a unique:

MPID
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BDID
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PBID
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SYND
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Correct

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Question 2 of 10

2. Question

The minimum net capital requirement for a member firm which makes a market in 50 stocks below $5 per share and 100 stocks above $5 per share is:

$1,000,000 for engaging in market making activities
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$300,000 subject to the potential higher minimum comp. for aggregate indebtedness
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$500,000
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$1,500,000 if the firm engages in executions through a clearing B/D
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Question 3 of 10

3. Question

An order to purchase 1000 shares of XYZ stock at a price above the current market is most likely a:

Buy limit order
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Buy stop-limit order
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Buy stop order
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Market order to buy with restrictions
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Question 4 of 10

4. Question

FINRA rules state that a market maker may not enter a quote into the NASDAQ system which:

Locks with the quote of another market maker
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Crosses with the quote of another market maker
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Intimidates another market making firm
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Exceeds the inventory position of the entering B/D
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Question 5 of 10

5. Question

Regulation M Rule 103 specifies the conditions under which passive market making is required. These conditions would include:

The firm is a market maker while also in the syndicate of an IPO
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The firm is a market maker while also in the syndicate of a follow-on offering
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The firm is contemplating becoming a market maker once the underwriting syndicate is disbanded
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The firm wishes to limit its market making risk while underwriting a new issue
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Question 6 of 10

6. Question

SEC Rule 10b-10 pertains to which of the following?

Fraud is prohibited in the sale of new issues of stock
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A prospectus must be furnished to a customer purchasing shares of a new issue
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Advertising which implies a guarantee against loss in the sale of securities is not permitted
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A confirmation must be provided to a purchaser which discloses the capacity in which the B/D has acted
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Question 7 of 10

7. Question

On the ex-dividend date for a cash dividend, which orders are automatically reduced at the opening by the designated market maker (specialist)?

Buy stop and sell limit orders
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Buy limit and sell limit orders
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Buy limit and sell stop orders
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Sell stop and sell limit orders
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Correct

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Question 8 of 10

8. Question

When a short sale order is placed, the locate rule will likely come into play in order to assure an efficient and timely execution and settlement. The conditions of this rule are covered in:

Regulation NMS
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Regulation S
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FINRA rule 5130
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Regulation SHO
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Question 9 of 10

9. Question

FINRA mandates that member firms must periodically coordinate which of the following with FINRA?

The clocks used to time stamp orders
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The back office books and records regarding customer complaints
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The annual compliance meeting
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Continuing education training and examinations
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Question 10 of 10

10. Question

Though trading ahead and front running are normally prohibited, there are at least two exceptions, including:

When it is approved by an OSJ Principal
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When it is a VWAP or an ISO order
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When it is clearly an erroneous transaction
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When accommodating a large client order
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