General Securities Sales Supervisor (Series10) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Study for the General Securities Sales Supervisor (Series 10) Exam. Enhance your skills with multiple choice questions and explanations. Master your exam with detailed insights and tips!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

If a market maker is quoting a stock at $10.00 - $10.25, what must they do when a customer places an order to buy at $10.00?

Execute the order without changes
Change their bid to match the order
Update the market quote
Place the order on hold

The correct answer is: Update the market quote

When a market maker is quoting a stock at a bid of $10.00 and an ask of $10.25, the bid price of $10.00 represents the highest amount they are willing to pay to purchase shares from sellers. When a customer places an order to buy at the bid price of $10.00, the market maker is obliged to honor this order, as it falls within their current quoted market. Updating the market quote reflects the activity in the market — specifically, it could mean revising their bid or ask prices based on supply and demand, or executing customer orders. The market maker can still execute the order at the quoted price, but they must also ensure that their quotes accurately represent the current market conditions. Executing the order without changes cannot occur without considering market conditions that might influence the bid and ask prices. Changing the bid to match the order does not align with standard market practices, as the market maker retains the right to maintain their bid. Placing the order on hold is not an acceptable action, as the market maker should process the order immediately at the quoted price. Thus, the need to maintain an accurate reflection of the market makes updating the quote the appropriate action.