More SIE Review

face-amount certificate company

An investor has entered into a contract to pay an investment company a specific sum of money in exchange for the company's agreement to pay the investor a specific (larger) sum of money on a specific date in the future. The investment company must be

strike price, the price the investor can purchase stock at

An investor is long 1 May 35 call at 5. The 35 in this contract represents

long 900 shares at 15

An investor is long 300 shares of MAS at 45. The stock has just undergone a 3:1 split. The investor's new position is

the price of the bond move higher

An investor owns a bond carrying a 4% coupon. Interest rates in the marketplace have been moving downward and are currently at 2.5%. Given the current interest rates in the marketplace, this investor should see

$5,300

An investor sells short 1 MJS June 55 put at 2. The current market value of LMN is 56. The investor's maximum loss potential is (Put sellers are bullish. Therefore, the maximum risk is if the stock falls to 0. The maximum potential loss, therefore, is the strike price less the premium received for the put (55 − 2 = 53). The maximum loss per contract is $5,300. The current market value of the stock at the time the put was sold short is of no consequence.)

Negotiable jumbo CDs

are issued in denominations of $100,000-$1 million and trade in the secondary market. Most jumbo CDs are issued with maturities of one year or less. These CDs are unsecured promissory notes backed only by the credit standing of the issuing institution.

before or during the sales presentation

If a prospectus is being used to close a mutual fund sale, it must be given to the investor

Being highly liquid

Money market securities can be associated with which of the following characteristics?

contract is at parity

On a long call, when the premium is equal to the intrinsic value, which of the following is true?

36 months

Once a customer account has been opened at a broker-dealer, rules require that updating information on the account record occur no less frequently than once every

Business risk

Portfolio diversifying might be used to reduce which of the following risks?

exchanges or over the counter (OTC)

REIT shares can trade on

push bond prices lower in the open market

The Federal Reserve Bank is raising interest rates, this will

may affect contributions into a Coverdell ES

The income level of a donor

unlimited

The maximum gain on a long call is

premium

The maximum gain on a short call is

unlimited

The maximum loss on a short call is

prospectus

The operating characteristics of LGIPs are similar to those of money market funds, and they keep a $1 net asset value (NAV). They are not required to register with the SEC and therefore there is no

money market mutual fund investing in short-term corporate debt

Your client, Dana McRae, has no investment experience. She just retired and won't be in a high tax bracket. She also is concerned about volatility of her investments. She is more concerned about preserving her principal than getting a high rate of return. Which of the follow would you recommend?

short stock position

gives an investor unlimited risk potential if the stock should rise because the investor must eventually buy back the stock at the higher price...unlimited risk. The sale of a naked call requires that, if exercised, the writer must buy the stock in the market and deliver it at the strike price. Again, because the stock can rise to some unlimited price, the position carries unlimited risk.

financial risk

risk that an issuer will be unable to meet interest and principal payments on debt obligations

face-amount certificate company

offers the investor a certificate with a face amount on it. The investor buys it for a discount from the face amount, with the agreement being that the company will pay the investor the face amount on a specific date in the future.

FINRA

oversees trading in the over-the-counter (OTC) market

Real estate investment trusts (REITs)

pay dividends and pass gains through to investors but not losses.

Sell stop orders

placed below the current market price and become market orders once the price touches or passes through the stop price

bid price

price the broker-dealer is willing to pay when buying a security, price a customer will receive when selling a security

Interest

specific rate of return the borrower pays the investor for use of the funds

current yield

stated coupon rate / current market price (so if stated rate is 4% -- coupon rate is $40)

accounts grow tax deferred

Which of the following are true of both qualified plans and nonqualified plans?

Holding a stock and selling above its cost basis if over 12 months later would be a long-term gain

Which of the following are true of long-term or short-term gains or losses?

next available price after the market price falls to 39

Which of the following best describes how a sell stop at 39 order would be filled?

time of execution of the trade & At what price to execute the trade

Which of the following choices would a registered representative be able to make for a customer in a nondiscretionary account?

Withdrawals may not be free of state taxation

Which of the following is true when opening an out-of-state Section 529 plan?

open-end management investment company

Which of the following issues only common stock?

Credit and hypothecation agreements

Which of the following must be signed by a customer wanting to open a margin account?

Long calls

Which of the following positions will mitigate the risk of a short call position?

Selling short

Which of the following transactions has the most risk?

Sell 100 ABC to open

Which of the following transactions, if any, cannot be done in a cash account?

fund pays a small dividend; market value of the portfolio declines.

Which of the following would cause a change in the net asset value (NAV) of a mutual fund share?

fee-based account

Which type of account fee structure is typically better for the moderate to active trader?

hedge fund

Your client, Chue Xiong, is a very wealthy, sophisticated investor and has many years of experience investing in aggressive strategies. He is looking for very high rates of return on a very large investment and is willing to have the money tied up for a few years. Which of the following would be suitable for him?

No stated time limit

A registered representative has left one firm to join another. Sometime later, the former employer discovers that some information on Form U-5 filed at the time of termination was inaccurate. The firm need not file an amended U-5 if at least how much time has gone by?

private securities transaction

A registered representative helps an old school friend issue securities for a small business under formation. A registered representative helps an acquaintance sell some inherited stock certificates without the acquaintance becoming a customer of the firm.

closed-end company

A company has just conducted a stock offering, by prospectus, through an investment banker. The proceeds of the offering are used to purchase a portfolio of securities. The stock, now in the hands of the public, is freely traded in the secondary market, and the portfolio is managed to generate maximum profit according to a specific investment objective. The company must be

secondary offering, additional public offering

A company is already public with several major stockholders. Sale proceeds for shares being sold to the investing public will go to some of the existing stockholders who want to divest of their shares. This is

tender offer

A company offers to repurchase outstanding debt securities it has issued directly from its bondholders for cash in what would commonly be known as

additional public offering

A company with previously issued shares outstanding wants to issue more shares to the public. These new shares are issued in what is known as

exchange market execution

A corporation sells shares to the investing public in order to raise capital. This is known as

Fully paid for marginable securities totaling $6,400 in market value

A customer receives a Regulation T margin call for $3,200. To meet the deposit requirement, which of the following can be deposited?

filing a CTR with FinCEN

A customer wishes to deposit $20,000 in cash into her account. This requires

legislative risk

A luxury tax that consumers must pay that is levied on nonessential items of a certain value or more is an example of

Immediately, at the lowest

A market order to buy must be executed when and at what available price?

common shareholders

A preferred shareholder's priority claim on assets is the preferred shareholder's priority standing over

par value

A preferred stock dividend is stated as a percentage of

30 days in each month and 360 days in each year

Accrued interest on corporate bonds is calculated using

ability to invest small amounts in many different securities, increased purchasing power in the marketplace

Advantages to the investor offered by investment companies include

short stock

All of the following are bullish positions except

NYSE-listed securities

All of the following are exempt from Regulation T except

Negotiable CDs

Being secured by no physical asset and backed only by a bank's good faith and credit, a bank's promise to pay principal and interest can be evidenced in which of the following securities that are traded in the secondary market?

trading costs for active traders

Exchange-traded funds (ETFs) offer several attractive advantages over mutual funds. All of the following would be advantages that ETFs typically have over mutual funds except

Two

Financial Industry Regulatory Authority (FINRA) normally requires that member firms provide at least how many names as emergency contacts as a part of their business continuity plan (BCP)?

Six-month holding period, with sales allowed freely thereafter

For restricted stock (unregistered) held by a nonaffiliated, which of the following applies?

taxed at either ordinary income tax or capital gains tax rates

For tax purposes, investment income is

She now has more shares at a lower cost basis

Grace Olson owns 100 shares of XYZ stock at $50 per share when the company declared a 2:1 split. Which of the following is true?

2%

MAS Corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of

T+2

Isaac James has some call options in his account that he would like to exercise. He wants to know when the resulting purchase of the stock would settle. You would tell him

nonsystematic risks

Risks that are unique to a specific industry, business type, or investment type are known as

subject to volume restrictions within any 90-day period

Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares

Covers up to $500,000 in cash and securities but no more than $250,000 in cash

SIPC coverage is best described by which of the following?

mortgage debt

Secured corporate debt includes

margin account

Selling to open (a short sell) can only be done in a

have the opportunity to approve or disapprove of the associated person's participation

Should a registered representative enter into a private securities transaction that would entail earning compensation, the employing member will

6%

What is the penalty, if any, for overcontribution to an IRA?

Random-selection basis

What method is used to assign exercise notices to broker-dealers with short positions by Options Clearing Corporation (OCC)?

should be less than that of the real estate it is backed by

When a corporation issues a mortgage bond, the issue's total value

be unaffected by the open-market interest rates

When interest rates in the open market move up or down, a bond's coupon rate will

Lower interest rates on loans to consumers

When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this will do which of the following?

hypothecation agreement

contract allowing securities to be pledged for the loan