Question of the Week

When a floor broker asks a specialist, “How’s PDQ?” The specialist replies “59.20 to 35; 6 by 11.”  If the specialist trades to narrow the spread, what is the lowest bid that the specialist may enter?

a) 59.19
b) 59.34
c) 59.36
d) 59.21

Answer: The correct answer is d)

When the specialist gave the floor broker the quote of “59.20 to 35; 6 by 11,”  the quote meant that the highest bid on the specialist’s book was 59.20 and the lowest ask on the book was 59.35 (the 6 by 11 means that there were 6 round lots at 59.20 and 11 round lots at 59.35).  When a specialist trades for its own account to narrow the spread, it must bid at least .01 higher than the highest bid and ask at least .01 lower than the public orders on the book—the specialist may compete with public orders.  The lowest that the specialist may ask in this case is 59.34.  The effect of a specialist’s narrowing the spread is said to be “trading between the bid and the ask.”

Professionals FAQs
  1. Where can I look for a financial planner?

    References from trusted friends or family members can help you find a financial planner; however, keep in mind that your friends' financial situations and goals may differ from yours and, therefore, their planners won't necessarily be the best fit for you.The Certified Financial Planner (CFP) Board of Standards certifies financial planners and maintains an online list of certified financial planners on its CFP Board of Standards website.
  2. If I am looking to get an Investment Banking job. What education do employers prefer? MBA or CFA?

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The caveat here is that the MBA would most probably need to be from a Top-20 B-School.The Chartered Financial Analyst (CFA) is well worth considering if you (a) are aiming for an entry-level position in investment banking, and/or (b) cannot afford to shell out six figures for an MBA or have to settle for a lesser-known B-school.That's because in the investment banking field, most entry-level positions are at the analyst level.
  3. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't count on it. The CFA Institute has long emphasized that ethics is a particular area of focus for it. The seriousness with which the CFA Institute views ethics is evident from the fact that for exam candidates with borderline total scores, performance on the ethics section can mean the difference between passing and failing the exam.
  4. Under the USA, registration as an IAR includes all of the following EXCEPT:

    Under the USA, registration as an IAR includes all of the following EXCEPT: A. Minimum net capitalB. Passing a qualification examC. Filing a consent to service of processD. Posting a surety bond The correct answer is "A", since only an IA would need to prove minimum net capital requirements.