Question

"A customer directs his broker to "Sell 100 shares of ABCD stock and use the proceeds to buy 100 shares of XPDQ stock." This is a:"

Answer 1

Answer: Proceeds transaction

Explanation:

In a proceeds transaction, the broker is involved in two related transactions which are the selling of one stock and the buying of another.

Proceed transactions involve a customer asking their broker to sell their stock and then use the proceeds gained from that sale to buy another stock which is what the customer did when he directed his broker to sell ABCD stock and use the proceeds to buy XPDQ stock.