Series 7 Exam Question 224: Answer and Explanation

Question: 224

Priority, precedence, and parity rules of bids and offers dictate trading activity on the

• A. OTC pink market
• B. fourth market
• C. New York Stock Exchange
• D. OTC market

Correct Answer: C

Explanation:

C. When several bids or offers are made at the same price at a given time on the NYSE floor, the auction rules of priority (highest bid and lowest ask first), precedence (if orders are at the same price, the one that came in first is executed first), and parity (if all else is equal, the larger order is done first) allow for the efficient execution of orders.