SIE Knowledge of Capital Markets Question 35: Answer and Explanation

Question: 35

Which of the following statements is true regarding a depository?

• A. It is a firm that confirms securities transactions.
• B. It is a natural person that settles securities transactions.
• C. It is a firm that keeps electronic records of who owns investments.
• D. It is a stock exchange.

Correct Answer: C

Explanation:

C: Choice C is correct because a depository holds information that demonstrates investment ownership. Choice A is incorrect because a clearing corporation confirms investment transactions. Choice B is incorrect because a clearing firm settles purchases and sales of investments. Choice D is incorrect because a stock exchange is a venue where buy orders are matched with sales orders. The results of those matches are communicated to a depository, who processes the change in ownership.