Series 7 - General Securities Representative Exam
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Which of the following is TRUE about Receive Versus Payment (RVP)?
It is a sale of securities where the buyer pays the seller upon the delivery of the securities to the broker/dealer
A
It creates settlement risk for institutional buyers and sellers when settling a securities trade
B
It creates market risk for institutional buyers and sellers when settling a securities trade
C
It is a sale of securities where the seller pays the buyer upon the delivery of the securities to the broker/dealer
D
Explanations
It avoids settlement risk between parties, as the seller is paid upon delivery of securities to the broker dealer.