10 free, exam-style FINRA Securities Trader Exam (Series 57) practice questions with answers and explanations. No signup required. Work through them below, then take the full free Series 57 practice test to study every exam domain.
A customer instructs a broker-dealer to sell 500 shares of a stock the customer owns outright. The shares, however, are held at a different institution and cannot be delivered to the executing broker-dealer by the settlement date. Under Regulation SHO, how must the firm mark this sell order?
Correct answer: C - Short, because the shares cannot be delivered by settlement
A covered security falls 10% or more from its prior day's closing price, triggering the short sale circuit breaker. For the remainder of that day and the entirety of the next trading day, a short sale order in that security may be executed only at a price:
Correct answer: A - Above the current national best bid
An investor sells a security short three business days before the pricing of a follow-on offering of that same security. The investor then purchases shares in that offering. Under Regulation M, this purchase is:
Correct answer: D - Prohibited, because the short sale occurred during the Rule 105 restricted period
Regulation NMS requires a trading center to maintain policies and procedures reasonably designed to prevent the execution of an order at a price inferior to a protected quotation displayed by another trading center. An execution that occurs at such an inferior price is called a:
Correct answer: B - Trade-through
A broker-dealer wants to display a customer limit order to buy shares of a national market system stock that is currently quoted at $0.95. Under the Sub-Penny Rule, the minimum increment in which this order may be ranked or displayed is:
Correct answer: D - $0.0001 per share
A member firm is holding an executable customer limit order to buy 1,000 shares of XYZ at $25.00. Before executing that order, the firm buys 1,000 shares of XYZ for its own proprietary account at $24.95. Absent an applicable exception, this conduct most directly violates:
Correct answer: A - The Manning Rule, by trading ahead of a customer order
Under the Market Access Rule, a broker-dealer that provides a customer with access to trading on an exchange or alternative trading system must establish a system of pre-trade financial and regulatory risk management controls. A defining requirement of the rule is that these controls must be:
Correct answer: B - Under the direct and exclusive control of the broker-dealer
An investor simultaneously buys one call and one put on the same underlying stock, with both options having the identical strike price and expiration date. This position is known as a:
Correct answer: D - Long straddle
A FINRA member firm executes a trade in an NYSE-listed common stock over the counter (i.e., away from any national securities exchange). To which facility is the firm required to report this transaction for public dissemination?
Correct answer: C - A FINRA Trade Reporting Facility (TRF)
A customer buys common stock in a standard regular-way transaction that executes on a Tuesday, with no intervening holidays. Under the current standard settlement cycle, on which day does the transaction settle?
Correct answer: B - Wednesday (T+1)
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