Securities Trader Representative (Series 57) Practice Exam

Which of the following quotes is considered NOT firm?

1. An OTCBB issue quoted at 10 bid

2. An unpriced indication of interest in the Pink Sheets

3. An OTC equity security quoted over the phone at "3 to 3.25"

4. A two-sided convertible bond quote on Nasdaq

The correct answer is: An unpriced indication of interest in the Pink Sheets

The selection of an unpriced indication of interest in the Pink Sheets as not being a firm quote is based on the nature of what constitutes a firm quote in the securities market. A firm quote represents a binding offer to buy or sell a security at a specified price. However, an unpriced indication of interest does not imply a commitment to transact at a defined price; rather, it often reflects a potential interest in buying or selling a security without establishing a firm price level at which a transaction would occur. This differentiates it from the other options, where clearer pricing is indicated, thus establishing a more concrete commitment. In contrast, an OTCBB issue quoted at 10 bid reflects a specific bid price and demonstrates readiness to buy at that level. A quote given over the phone of "3 to 3.25" implies a firm range of prices where trades can occur, thereby providing actionable pricing information. Similarly, a two-sided quote on Nasdaq indicates a firm bid and ask, displaying clear commitment by market participants at defined prices. All these options embody characteristics of firm quotations, which allows for transactions to happen within specified parameters.