SIE Exam 1
An investor shorts 2 DEF January 55 puts, at a premium of two each, when the market price of DEF is 56.25. What is the investor's maximum potential loss?
$10,600
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
2%.
XYZ Corp pays a quarterly dividend of $1. The common stock is currently valued at $160 per share. What is XYZ common stock's dividend yield?
2.5%
Betsy Bingham asks you what her current yield will be if she buys a 6% corporate bond at $1,200. The answer is
5%.
Your customer owns 300 shares of BigCo, Inc., common stock. In the upcoming election there are three open board seats. If BigCo operates under a statutory voting system, how many votes does the customer have in that election?
900 votes, no more than 300 votes for any one seat
Your investor invests in a mutual fund at an offering price slightly higher than the fund's net asset value (NAV). Your investor is likely purchasing what share class?
A shares
Regarding sales loads, management fees, and operating expenses for mutual funds, which of the following is true?
All reduce investor returns because they reduce the amount of money available for the fund to invest.
A bond having an 8% coupon is selling with an 8.25% yield to maturity. Which of the following statements are true? Nominal yield is higher than yield to maturity (YTM). Current yield is higher than nominal yield. Nominal yield is lower than yield to maturity (YTM). Current yield is lower than nominal yield.
II and III
Risk that is specific to an issuer, or even an individual issue, is called which of these?
Nonsystematic risk
An investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place?
Rights will be distributed to existing stockholders with an exercise price lower than the current market value.
When must a report listing all written complaints be filed with FINRA?
Within 15 days of the end of each calendar quarter
A customer placed an order to purchase 300 shares of DEF Corp. preferred stock. The broker-dealer sourced the shares from another broker-dealer that makes a market in the stock. The customer's firm acted as
a broker.
If a customer wishes to open a cash account in his name only and allow a third party to make trading decisions, but not withdraw cash and securities, he must instruct his broker-dealer to open
a cash account with limited power of attorney.
A registered representative is discussing fee-based and commission-based accounts with a customer. All of the following are true except
fee-based accounts are most suitable for those who do very little trading during the course of the year.
All of the following would be associated with hedge funds except
investing in government debt securities
Limited partnerships
must end on a predetermined date or can be dissolved earlier by vote.
When a broker-dealer pledges customer securities to a bank as collateral for a margin loan, the pledge is known as
rehypothecation.
The mission of the Financial Crimes Enforcement Network is to
safeguard the financial system from illicit use.
Municipal Securities Rule Board (MSRB) and Financial Industry Regulatory Authority (FINRA) rules specifically deter gaining political favor via contributions made to candidates, officials, or political parties. As such, if a political contribution is made to any of these entities then under the act, the firm may not provide advisory services to any government these individuals or parties represent for how long?
two years
Exempt from the penny stock rules are
unsolicited transactions
An investor interested in quarterly income should invest in
utility company stock.
