Which of the following statements about trading shares of stock or market efficiency is FALSE? A) Maintenance margin is the required percentage of an investor’s equity compared to the total value of the stock after the investor trades on margin. B) Block houses, where institutional traders buy and sell large blocks of shares, are also called upstairs traders. C) The uptick rule requires that the last trade in the security be at a price higher than the previous trade. D) External efficiency means prices adjust rapidly to new information.
tough…they all look correct. I know C & D are definately true, B sounds about right…I am going with A
B is utter crap. Block House is the brokerage firm that search for potential block traders (one who buys lumpsum volumes of stocks) while a Upstairs traders are traders that bid-ask out of the exchanges and their trading activity is not tracked via any exchange. So ‘B’ should be the answer. - Dinesh S
C used to be true with short sales only, not anymore
C is false for sure. i actually just had this on a qbank exam. there are 2 parts to the uptick rule. The uptick rule requires that either: (1) the last trade is at a price higher than the previous trade, or (2) the last trade is at the same price (a zero trade) and that the previous non-zero trade is at a price higher than the trade before it.