n NISM Certifications
X NISM Series X
Medium

The process by which obligations of the buyer and seller in a securities trade are settled is known as ________.

Practice question from NISM Series XB- Investment Adviser (Level 1) Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Clearing

  2. Settlement

    Correct answer

  3. C

    Trading

  4. D

    Hedging

Why this is the answer

After a trade is executed on the secondary market, the buyer has a payment obligation and the seller has a delivery obligation. Clearing determines what is owed to each party, while settlement is the actual process of fulfilling these obligations, making it the correct answer.

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