SIE (Securities Industry Essentials) Practice Exam

The least liquidity in the securities shown below would be found:

1. In securities traded on the New York Stock Exchange

2. In securities traded on the NASDAQ

3. In securities traded on the Pink Quote system

4. In securities traded on the OTCBB

The correct answer is: In securities traded on the Pink Quote system

Context Liquidity refers to how easily and quickly an asset can be bought or sold in the market without significantly affecting its market price. Generally, the more actively traded a security is, the more liquid it is. Therefore, the least liquid option among the given choices would mean that it is the least actively traded and difficult to sell or buy. The Pink Quote system (C) is a quotation system that displays bid and ask prices for over-the-counter (OTC) securities, which are stocks not listed on major exchanges such as NYSE or NASDAQ. These securities are often less actively traded, making them less liquid compared to securities traded on major exchanges. Therefore, option C is the correct answer. Option A (New York Stock Exchange) and B (NASDAQ) are major exchanges that have high trading volumes and actively traded securities, making them more liquid than OTC securities. Thus, they are less likely to have the least liquidity among the given choices. Option D (OTCBB) is a quotation and trading system for OTC securities, but it is still more regulated than the Pink Quote system (C). Therefore, securities traded on OTCBB may have a higher trading volume, making them more liquid than those