SIE (Securities Industry Essentials) Practice Exam

At what price will a customer's transaction occur if they wish to liquidate 100 shares of ABC common at the market and the inside market is 904.78 - 905.57?

1. 904.78

2. 905

3. 905.57

4. 906

The correct answer is: 904.78

When a customer wishes to liquidate a stock, they sell a certain number of shares at the prevailing market price. In this scenario, the inside market for ABC common is 904.78 - 905.57. This means that the highest bid price is 904.78 and the lowest ask price is 905.57. Since the customer wishes to sell at the market, the transaction will occur at the best available price, which in this case is the highest bid price of 904.78. This price ensures that the customer's transaction will be executed immediately. Choice B, 905, is incorrect because it is neither the highest bid price nor the lowest ask price. Choice C, 905.57, is incorrect because it is the lowest ask price and not the highest bid price. Choice D, 906, is incorrect because it is a higher price than the highest bid price. Therefore, the correct answer is A, 904.78, as it is the highest bid price and the price at which the customer's transaction will occur.