Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What is meant by Non-NASDAQ OTC?

1. Securities that do not meet NASDAQ's listing requirements

2. Securities traded exclusively on NASDAQ

3. Securities listed on the New York Stock Exchange

4. Securities only available to institutional investors

The correct answer is: Securities that do not meet NASDAQ's listing requirements

Non-NASDAQ OTC refers to over-the-counter securities that do not meet the listing requirements set by the NASDAQ stock exchange. These securities are typically traded directly between parties rather than through a centralized exchange. The term "non-NASDAQ" indicates that these securities are not listed or traded on the NASDAQ exchange, which has specific criteria that companies must fulfill, such as minimum share price, market capitalization, and financial condition. While the other choices mention aspects related to stock exchanges or investor categories, they do not accurately describe the nature of Non-NASDAQ OTC securities. For example, securities traded exclusively on NASDAQ would not fall under the "non-NASDAQ" label, as they are precisely the opposite of what is being referred to. Likewise, securities listed on the New York Stock Exchange are not classified as OTC securities and are subject to their own listing requirements. Finally, the mention of securities only available to institutional investors does not accurately capture the broader category of OTC securities, which can include various types of investors, not just institutions. Thus, choice A correctly identifies the essence of Non-NASDAQ OTC securities.