SIE Questions

4.8 (10 reviews)
The SEC is a federal government agency responsible for all of the following, EXCEPT:
Click the card to flip 👆
1 / 141
Terms in this set (141)
The SEC is a federal government agency responsible for all of the following, EXCEPT:
Prosecute violators of criminal activity
- this is under the Department of Justice

The SEC is responsible for:
- creating/enforcing penalties for violation of federal securities law
- Protect US investors
- Require issuers to provide full and fair disclosure regarding their securities to investors
Which of the following is the exchange for options trading and the SRO for broker-dealers engaging in the options market?
CBOE
- Chicago Board Options Exchange
BFDIC is associated with which of the following?
Protecting bank account deposits in the US banks from bankruptcy
Following the execution of a trade, custody of client assets and securities are maintained by a(n):
Clearing broker-dealer
The main objectives of the Securities Act of 1933 are to:
Provide full and fair disclosures regarding new issues and to prevent misrepresentation and fraud in the sale of securities
When an issuer sells securities in a primary offering, the net proceeds are paid to the:
Issuer
Which the following underwriting agreements guarantees the issuer of an initial public offering (IPO) that all of the shares will be purchased?
Firm Commitment
Which of the following underwriting agreements allows an underwriter to step in, buy remaining shares, and then sell those shares to the public?
Standby
The cooling-off period is a minimum of _____ days
20
An investor owned a stock for 18 months before selling it to another investor. This trade placed in the:
Secondary market
Which of the following is considered an electronic trading exchange in the First Market?NASDAQWho receives the net proceeds from securities that are sold in the secondary market?InvestorsABC is quoted at 15 - 16 what is the ask?16Which of the following terms is NOT associated with the secondary market?Public offering price - Only in the primary marketAll of the following are contained in a confirmation statement, except:Profit or loss on the security position tradedThe primary reason investors buy stock in a corporation is to:Financially benefit if the share price increasesWhich of the following has the lowest priority claim on assets if a corporation goes bankrupt?Common stockholdersWhat is the maximum loss for a corporation's stockholder?The value of the investment in the companyHow many shares of stock are in a round lot?100Which type of security must all corporations issue?Common stockAll of the following are true regarding treasury stock, EXCEPT:It has voting rights - Treasury stocks are authorized but not outstanding, does not receive dividends, and have been issued and repurchased by the companyIf XYZ Corporation issued 10 million shares of common stock and has 1 million in its treasury, how many shares are considered outstanding?9 million = 10 million - 1 million Outstanding Shares = Issued Shares - Treasury SharesWhich of the following is an arbitrary number used for accounting purposes?Par valueWhich stock valuation method is determined by supply and demand?Market valueInvestors do NOT vote on which of the following?Amounts of dividend paymentsWhat determines the number of votes a stockholder has?Number of shares ownedWhich of the following voting methods gives smaller shareholders a better chance of gaining representation on the Board of Directors?Cumulative votingIf an investor is unable to attend a shareholder meeting and vote in person, what other option does the investor have to cast a voteSubmit a vote via proxy in a complete and timely mannerIf an investor owns 100 shares of XYZ stock XYZ pays a 10% stock dividend, the investor will:Now own 110 sharesIf the Quasinyx Corporation declares a dividend on August 8 to stockholders of record on Wednesday, August 23, on what date will the stock trade ex-dividend?Tuesday, August 22Morris owns 400 shares of RVL, an exchange traded stock. RVL paid a 20% stock dividend on August 5th. On the day before the ex dividend date, the stock closed at $20/share. What are the tax consequences of this event?No immediate tax liability, but the cost basis per share will need to be adjustedA stock split is used for all of the following reasons, EXCEPT:To give the current shareholders more money right away - Usually stock splits are a form of payment to make stock more attractive in secondary market trading and more marketableWhat is a major advantage of preferred stock over common stock?Preferred stock dividend have priority over common stock dividendsA preferred share of stock was issued with a $100 par value and a fixed dividend rate of 5%. If interest rates increased to 7%, the market value of the 5% preferred stock will:DecreaseWhich of the following types of preferred stock pays dividends in arrears?CumulativeWhich type of preferred stock allows the investor the opportunity to increase overall value in their holdings as the company grows?ConvertibleA common stock is trading at $100 and recently paid a $1 quarterly dividend. What is the current dividend yield?4% $1 x 4 = $4 annually Dividend Yield = $4 / $100 = .04 or 4%All of the following are true statements regarding ADRs EXCEPT:ADRs have voting rights - No voting rights, just foreign trading, dividends, and no preemptive rightsAmanda owns 300 shares of ABC Inc. Recently, ABC issued 10 million shares of common stock and gave Amanda the ability to purchase some of the new shares prior to the public offering. This offering is known as:Preemptive rightsWhich of the following securities is subject to currency risk?American Depository Receipts (ADRs)Which of the following option contracts would a bearish investor seek?Long Put (put buyers)An investor would sell an options contract to:Generate income from the sale of the contractAll the following are characteristics of a bond, EXCEPT:They represent an ownership position in the issuer - Bonds pay a fixed interest rate, matures in 10-30 years, and are actively traded in the secondary marketWhat is the par value of a bond?$1,000What is a bond issuer responsible for paying to investors?Interest on a timely basisHow often does a zero coupon bond pay interest to its holder?Only at maturityAn investor buys a bond from an issuer for $1000. At maturity, interest rates have gone down dramatically. How much will the investor receive from the issuer?Par value plus the last interest payment dueABC Corporation issued a $1,000 10% coupon bond. At maturity, what is it required to pay out to its bondholders?$1,050 = $1,000 (par value) + $50 interest payment - Assume interest paid semi-annuallyThe value of a municipal bond will rise if credit rating agencies:Change their ratings from BBB to A - S&P jump to higher ratingA bond has a yield of 6.00% initially but now it is only 5.75%. How many basis points did it drop?25 = 600 - 575Which corporate bond has a current yield less than its coupon rate?PremiumWhich of the following statement about bonds trading in the secondary market is correct?Bond prices tend to move in the opposite direction of interest ratesWhat type of relationship exists between bond prices and yields?InverseAll of the following statements about corporate bonds are true, EXCEPT:The higher the credit rating of the corporation, the higher the interest rate it will offer (FALSE) TRUE - Corporate bonds are debt instruments issued by corporations - The higher the credit rating of the corporation, the LOWER the interest rate it will offer - Bond interests paid to the investor is subject to ordinary income tax - Failure to pay the semiannual interest means the corporation is in default and can be forced into liquidation by the investorsWhich of the following is a secured bond?Equipment trust certificatesDebentures are backed by the:Issuer's full faith and credit and promise to payWhich of the following bonds would pay out the highest interest rate to investors?Subordinated debentures - Higher default risk so they must have higher interest ratesAn owner of a convertible bond can:Exchange the bond for common stockWhen do issuers typically call bonds?When interest rates are falling - So they can reissue new bonds with a lower couponWhich of the following has the longest maturity?T-bondsAll of the following debt instruments are backed by the US government, EXCEPt:T-receipts - Since they're issued by broker-dealers that own treasury securitiesThe federal government has the moral obligation, but not the legal liability to back the issue of:FNMA securities - FHLMC and SLMA not backed as wellWhich of the following issues securities that are guaranteed by the full faith and credit of the US government?GNMA pass-through certificatesWhich of the following is not a source of income used to back a revenue bond?Ad valorem taxes - Designed to be self-sufficient so are not funded through taxes, but instead funded through tolls, enterprise activity income, and lease rental paymentsWhich type of municipal bond is backed by two or more sources of repayment?Double-barreled bondThe XYZ Corporation is experiencing a problem with cash flow and it is short of funds to increase its product inventory for a special order. XYZ could alleviate this problem by issuing:Commercial paperA bankers' acceptance is used for which of the following purposes?To finance a transaction between companies in two separate countriesWhich of the following is NOT a money market instrument?T-bonds - Usually matures in 10-30 yearsWhich of the following debt instrument is considered a money market security?A 10-year US treasury note 9 months prior to maturityWhat is one advantage an investment company offers?Instant diversificationTo be defined as an Investment Company, a company is required to have all of the following, EXCEPT:Approval of the SEC - Must have $100,000 in net assets, 100 shareholders, and a clearly defined investment objectiveWhich type of investment company is established or organized under a trust indenture, is operated by a Board of Trustees who supervise the operations, and traditionally invests in a fixed portfolio that may consist of equity securities (stocks) or debt securities (bonds)?Unit Investment TrustWhich of the following only issues common stock to raise capital?Open-end Management CompanyAll of the following are true regarding the trading of closed-end management company shares, EXCEPT:Shares are redeemed through the fundA mutual fund must have a minimum of how many investors?100Who makes the investment decisions for an investment company?A professional investment manager or investment adviserWhich of the following typically acts as the custodian for a mutual fund?Trust companies or commercial banksWhat ratio is used as a method for measuring a mutual fund's annual expenses against the average net assets to show how efficient the fund is operating in comparison others?Expense RatioWho is responsible for the preparation of mutual fund retail communication?UnderwriterWhat is the name of the fee that can be paid by the fund out of its assets to cover distribution expenses and sometimes shareholder service expenses?12b-1A mutual fund may offer a reduced sales charges as an incentive to investors who purchase Class ___ Shares.AA letter of intent can be backdated for up to how many days?90Exchanges within the same fund family are also called:Net transactionsWhen must all customers be provided with the most current mutual fund prospectus?Prior to or at the time of confirmationMutual funds are required to furnish all of the following reports, EXCEPT:Unaudited annual reports to shareholders - Mutual funds must furnish: audited annual reports to SEC and shareholders, and unaudited semi-annual reports to shareholdersAll of the following are advantages of mutual fund investing, EXCEPT:Distributions reinvested are always income tax-freeA _____ is used with the sale of municipal fund securities.Program disclosure documentWho is the sponsor 529 plans?StatesAll of the following are characteristics of ETFs, EXCEPT:They are actively managed and have high management fees - ETFs are listed and trade on an exchange, charge investors commissions on sales, and provide diversification that mirrors a specific indexHedge funds are:Unregulated, typically unregistered, and not publicly tradedAll of the following are characteristics of REITs, EXCEPT:A REIT is set up as a corporation - REITs are trusts, that may be listed or unlisted, invest in property, mortgages, and shares of other REITs, and sell shares of beneficial interestDPPs provide:Pass-through incomeIn a variable annuity, the investment management fee is deducted from the:SubaccountA variable contract must be sold by:A prospectusHow is the Real Gross Domestic Product (GDP) different from GDP?It is calculated by subtracting the rate of inflation from GDPThe cost of goods and services purchased by a typical consumer in the United States is measured by the:CPIWhich of the following is the proper order of the economic business cycle?Expansion, peak, contraction, and troughAll of the following are leading economic indicators, EXCEPT:Employment duration - Some leading economic indicators are money supply, housing market, and stock marketIf a fixed dollar amount will not buy the same amount of goods in the future as it does today, an investor is facing what type of risk?Inflation or purchasing power riskWhen the money supply decreases, interest rates:RiseWhat action would the Fed take to make interest rates fall?Increase the money supplyIf the Fed decreased the reserve requirement, interest rates would:FallWhich of the following is the most often used tool by the Fed?Open market operationsAll of the following are tools used by the Federal Reserve to control the money supply, EXCEPT:Prime rates - Tools used by the Federal Reserve to control the money supply includes: (D)iscount rate, (O)pen market operations, (R)eserve requirement, (M)argin requirement, and (M)oral suasionWhat is the only rate set by the Fed?Discount rateThe President and Congress can slow the economy by:Increasing taxes and decreasing spendingIf the US dollar is weak compared to foreign currencies, which statement is true?US exports are likely to rise - Because US goods becomes cheaper to foreign countriesA country would have a favorable trade balance when its:Its exports are greater than its importsWhat happens if a customer refuses to provide all requested information at the time of account opening?The account may still be opened at the firm's discretionWhich of the following statements about a joint tenants with rights of survivorship account is false?The joint tenants have to be related to one another - No they don'tWhich of the following regarding custodial accounts is true?Any gifts made to the account are irrevocableWhat is the maximum annual contribution allowed to a Coverdell education savings account?$2,000Retirement plans can be funded by all of the following, EXCEPT:Spousal contributionThe account holder of a qualified plan must take required minimum distributions no later than April 1 of the year after the account owner turns age:72What is the name of an employer-sponsored retirement plan in which the employee has the option of taking employer contributions in cash or directing them into the plan?401(k)Contributions to deductible IRA may be limited depending on all of the following factors, EXCEPT:The state in which the taxpayer lives - May be limited by taxpayer's income, tax-filing status, and if the taxpayer can participate in an employeR-sponsored qualified retirement planAll of the following are true about the Roth IRAs, EXCEPT:Contributions can be made even if the individual has no earned income - Contributions are made after tax, contributions are not age limited, there are no RMDsThe major risk a client faces when giving a registered representative discretionary authority is:Transactions that are excessive in size or frequencyIf a client opens a margin account, which of the following must be obtained in addition to the new account form?Margin agreementThe disclosure document provided to a customer at or before an option account is approved his known asCharacteristics and Risks of Standardized OptionsPrior to making any suitable customer recommendations, a registered representative should:Know their customerAll of the following are relevant personal and financial info necessary for a registered representative to make a suitable recommendation, EXCEPT:College degree earnedIf an older investor wants to invest for future generations, it is recommended that they:Take on the investing profile of the expected beneficiaryIn the long term, which of the following investments is most likely to protect an investor's portfolio against the effects of inflation?StocksAn investor purchases 1,000 shares of XYZ stock. What risk does this investor face?Business riskThe possibility that an issuer will be unable to pay back the interest and/or principal due to its creditors is known as what type of risk?CreditWhich of the following statements about diversification is true?It reduces nonsystematic riskUnder FINRA Suitability Standard Rule 2111, which of the following is not one of the three suitability obligations?QualitativeAll of the following are considered fraudulent account activities, EXCEPT:Unsolicited trading - Request based on the customer so this is not fraudulentWhich of the following activities constitutes market manipulation?Creating the impression that a security is actively trading & Providing Falls market quotationsIf a person does not pass their qualification exam the first time, how long must they wait before they can retest?30 daysWhen must a registered person take and complete the regulatory element of their CE?2 years from their initial registration and every 3 years thereafterWithin what time period can a terminated person reinstate their registration without retesting?2 yearsHow long can FINRA retain jurisdiction over one of its members or registered associated persons after they are no longer in the industry?2 yearsHow can consumers research current and former BDs and RRs registered with FINRA within the past 10 years?Use FINRA BrokerCheckWhat must an RR do if they care to engage in any outside business activity for compensation?Provide prior written notification to their BDBroker-dealers and RRs are not permitted to give gifts in excess of what dollar amount per person per year to another person if the gift is given in relation to the business of a person's employer?$100Broker-dealers, investment companies, and investment advisors must provide their customers with a notice of their privacy policies and practices at the time the relationship is established, and every:Year afterSuspicious Activity Reports (SARs) include detailed information about transactions that appear to be suspicious and need to be filed with FinCEN if a financial institution suspects such activity involving at least:$5,000The maximum protection SiPC provides per separate customer is:$500,000A method used by con artists to gain a person's trust by identifying with a large target group is:Affinity Fraud