Question

1) Which one of the following best describes a broker?

		intermediary who arranges trades between buyers and sellers
		trader who buys and sells from their own inventory
		person who buys securities for his or her own account on an exchange floor
		trader who transacts business on behalf of a securities issuer

2) Over-the-counter market activity is reflected in the Nasdaq index.

True

False

3) Marcus just placed a stop limit order to buy 100 shares at $20 stop, $25 limit. Which one of the following statements is correct concerning this order if the current market price is $19?

		The broker will attempt to buy the stock at the current market price.
		The broker will attempt to buy the stock once it reaches $25.
		The broker will wait to see if the price climbs to $20 before buying the shares.
		None of the above.

4) The divisor used in a price-weighted index will increase whenever a stock within the index undergoes a reverse stock split.

True

False

Answer 1

1. Option 1 - A broker is an intermediary who arranges the trade between buyers and seller

2. False

Explanation: In NASDAQ index, OTC stocks are not reflected as OTC stocks are very small in value and less liquidity

3. Option 3 - The broker will wait to see if the price climbs to $20 before buying the shares

Explanation: In Stop limit order - Order gets activiated above the stop price and will get filled its limit price

4. True -

Explanation: The divisor will increase to adjust the effect of reverse stock split. It will keep the index balanced due to reverse stock split

Please note that we are allowed to one question or 4 parts of the same question which are interlinked. However, i completed all four questions. If you like it, please give thumps up