Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

Which three items must be specified on a not held order?

1. Action, Amount, Asset

2. Buy/Sell, Date, Price

3. Action, Trade Type, Client ID

4. Asset, Quantity, Time

The correct answer is: Action, Amount, Asset

In the context of a not held order, it is essential to understand what the term refers to. A not held order is a type of order where the client gives the broker discretion over the timing and price of the trade execution, thus providing flexibility for the broker to choose when to execute the order. The correct answer highlights three crucial components: action (whether to buy or sell), amount (the quantity involved in the trade), and asset (the specific security involved in the transaction). Specifying the action is vital because it dictates whether the broker will be buying or selling the asset on behalf of the client. The amount is equally important, as it conveys how much of the asset is to be transacted, which is crucial for executing the order effectively. Finally, identifying the asset ensures that the broker knows precisely what security the client wishes to trade. Each of these elements plays a critical role in ensuring that the broker can execute the client's intentions correctly under the discretion allowed by a not held order. The absence of any of these specifics could lead to misunderstandings or errors in the execution process.