SIE Exam Questions
#51. The shareholders of a mutual fund have certain rights associated with the ownership interests they hold in the company. These rights include all of the following EXCEPT a)Voting rights/proxy rights regarding company issues. b)Election of board. c)Approval authority for the company's annual report. d)Approval of investment advisory agreement.
C. This is an EXCEPT question. Mutual fund shareholders have the right to receive annual/semiannual reports; however, the company itself has approval authority for its publication. The shareholders approve the investment advisory agreement, have voting rights regarding company issues and elect board members. Additionally, they approve changes in investment objectives, policies, and fees, and ratify the selection of independent auditors
A customer wants to give her daughter all of the shares in her growth mutual fund. Since the initial purchase of the shares, the value of the shares has increased steadily over the life of the investment. When the shares are gifted, the daughter's cost basis will be? a) The initial NAV price Rhonda paid for the shares originally. b) The NAV of the shares on the day they are "gifted" to her. c) The same cost basis that Rhonda had for the shares. d) The difference between the initial purchase price for the shares and the current NAV of the shares.
The same cost basis that Rhonda had for the shares. When a security is received as a gift, the cost basis depends on the relationship of the market value of the securities to the donor's cost basis. If the market value is higher than the donor's basis, the recipient's cost basis is equal to the donor's. If the market value is lower than the donor's cost basis, the recipient's basis is equal to the market value of the securities at the time of the gift.
An investor owns 300 shares of LYPA stock, which is currently trading at $60 per share. The company announces a 1:3 reverse split. What will the investor own after the split? a) 100 shares at $180 per share b) 100 shares at $20 per share c) 900 shares at $20 per share d) 900 shares at $60 per share
a) 100 shares at $180 per share In a reverse split, the number of shares is reduced and the price per share increases proportionately. 1/3 × 300 shares before the split = 100 shares after; 3/1 × $60 price before the split = $180 price after. The investor will own 100 shares at $180 per share.
If an associated person was originally registered in 2020, when is the next time the associated person will be required to complete the Firm Element training? a) 2020 b) 2021 c) 2022 d) 2025
a) 2020 Associated persons must complete their Firm Element training annually. An associated person who is registered in 2020 must do their Firm Element training in 2020, and every year thereafter. At a minimum, each member must evaluate and prioritize its training needs and develop a written training plan at least annually.
After the last issue date, how long must institutional communications be kept on file for inspection? a) 3 years b) 5 years c) 8 years d) 10 years
a) 3 years The following documentation must be maintained on file for 3 years: all correspondence, retail and institutional communication, information about the sources of any statistical tables, charts, graphs or illustrations used in retail communications, as well as evidence of a principal's approval of these materials.
#26. According to FINRA rules on private securities transactions, an associated person entering into a series of private transactions without compensation must provide the member firm with all of the following EXCEPT a) A written notice on each transaction in a series. b) A statement of possible compensation. c) A description of each proposed transaction. d) The person's proposed role in the transactions.
a) A written notice on each transaction in a series. In the case where a series of related transactions without compensation are involved, an associated person needs to provide only a single written notice
Which of the following financial instruments would most likely be used by U.S. firms to finance imports? a) Bankers' acceptances b) Certificates of deposit c) Eurodollars d) Commercial paper
a) Bankers' acceptances Bankers' acceptances are letters of credit used in the import/export business.
#26. Uniform Termination Notice for Securities Industry Registration is also known as a) Form U5. b) Form 10K. c) Form S-1. d) Form U4.
a) Form U5. Just as an applicant completes a Form U4 for registration with a FINRA member, registered representatives are terminated by the member firm through the completion of a Form U5, or Uniform Termination Notice for Securities Industry Registration.
#64. An investment advisor that maintains physical custody of a client's securities must do which of the following? a) Maintain the securities in a separate account under the client's or advisor's name b) File a custodial consent form with the broker/dealer that the advisor uses for personal transactions c) Maintain such assets in a commingled account for security purposes d) Meet an additional bonding requirement for the value of the securities
a) Maintain the securities in a separate account under the client's or advisor's name Clients' monies and securities must be maintained in a separate account under either the client's name or in a separate account with only the funds of the advisor's clients under the advisor's name. They cannot be commingled (combined) with the firm's funds and securities.
An investment advisor that maintains physical custody of a client's securities must do which of the following? a) Maintain the securities in a separate account under the client's or advisor's name b) File a custodial consent form with the broker/dealer that the advisor uses for personal transactions c) Maintain such assets in a commingled account for security purposes d) Meet an additional bonding requirement for the value of the securities
a) Maintain the securities in a separate account under the client's or advisor's name Clients' monies and securities must be maintained in a separate account under either the client's name or in a separate account with only the funds of the advisor's clients under the advisor's name. They cannot be commingled (combined) with the firm's funds and securities.
Which type of retirement account does not require distributions to start at age 72? a) Roth IRA b) Flexible IRA c) Standard IRA d) Traditional IRA
a) Roth IRA A Roth IRA has no required minimum distributions (RMDs) at age 72.
The Bank Secrecy Act requires financial institutions to file Currency Transaction Reports (CTRs) with the Financial Crimes Enforcement Network (FinCEN), which is a division of what federal Department? a) Treasury b) Commerce c) Banking d) Justice
a) Treasury The Financial Crimes Enforcement Network is a division of the federal Treasury Department.
If a customer mails a written complaint to a registered representative's home address, what should the registered representative do? a) Turn the complaint over to the registered principal at the Office of Supervisory Jurisdiction b) Advise the customer that under FINRA rules, the customer must submit his complaint to binding arbitration for resolution c) Nothing, since complaints are only valid if mailed to FINRA d) Personally respond to the complaint
a) Turn the complaint over to the registered principal at the Office of Supervisory Jurisdiction A complaint is defined as any written grievance. Written complaints, no matter where they are received, must be turned over to the registered principal at the OSJ (Office of Supervisory Jurisdiction). Each member is responsible for keeping a record of all customer complaints, along with the actions taken, in each OSJ.
#37. When would a member firm use a Form NRF (Non-Registered Fingerprint)? a) When a nonregistered person has access to or handles books and records b) When a nonregistered person is taking orders from customers c) When a nonregistered person is sharing commissions with registered persons d) For directors and officers of the corporation
a) When a nonregistered person has access to or handles books and records Any person who has access to or handles books and records must be fingerprinted, even nonregistered persons. Firms can submit fingerprints without registering an individual by completing Form NRF (Non-Registered Fingerprint). Nonregistered persons may not take customer orders or share commissions with registered persons.
#8. In order to open a new corporate margin account, all of the following are needed EXCEPT a)An affidavit of domicile. b)A new account form. c)A copy of the corporate charter. d)A corporate resolution.
a. An affidavit of domicile. This is an EXCEPT question, so we are looking for the one document that is not necessary when opening a corporate account. That would be the affidavit of domicile, which is used for state identification of a person who died with a joint account. In order to open a corporate margin account, the corporate resolution and corporate charter are required, along with a new account form. The corporate charter identifies the state of account residence.
#47. A Treasury note is quoted at 100.8. If a customer buys $8,000 par value at that price, what will be the principal dollar amount involved? a) $8,000 b) $8,020 c) $8,064 d) $8,200
b) $8,020 Remember that U.S. government securities are quoted in 32nds. On a bond or note, the par value is usually $1,000 and 1 point equals $10; therefore, 8⁄32 of 1 point would be equal to 1⁄4 of 1 point, or $2.50. Since this note has an $8,000 par, however, one would have to multiply $2.50 by 8 to find that 8⁄32 of 1 point on an $8,000 par note is $20. This note has a price of $8,020.
An investor owns 300 shares of LYPA stock, which is currently trading at $60 per share. The company announces a 1:3 reverse split. What will the investor own after the split? a) 900 shares at $60 per share b) 100 shares at $180 per share c) 100 shares at $20 per share d) 900 shares at $20 per share
b) 100 shares at $180 per share In a reverse split, the number of shares is reduced and the price per share increases proportionately. 1/3 × 300 shares before the split = 100 shares after; 3/1 × $60 price before the split = $180 price after. The investor will own 100 shares at $180 per share.
All of the following are true concerning mutual fund shareholder rights EXCEPT they a) Must be advised of all proposals requiring shareholder approval. b) Approve portfolio changes when recommended by the investment adviser. c) May ratify selection of independent auditing firms. d) Elect directors and approve investment advisory agreements.
b) Approve portfolio changes when recommended by the investment adviser. Remember that this is an EXCEPT question. Portfolio changes are at the sole discretion of the investment adviser, consistent with established policy and objective. However, changes in investment objective or policy must be approved by shareholders.
REITs are traded a) At net asset value. b) Both in the over-the-counter market and on exchanges. c) In the over-the-counter market only. d) On exchanges only.
b) Both in the over-the-counter market and on exchanges. REITs are closed-end or publicly traded. Many are listed, and some are on NASDAQ. Some REITs are non-traded and are redeemable after a certain time or event.
All of the following regarding preferred stock dividends are correct EXCEPT a) The dividend is fixed or stated. b) Like common stock dividends, the dividend may change. c) The dividend is based on par value. d) The dividend is interest rate sensitive.
b) Like common stock dividends, the dividend may change. Preferred stock dividends are fixed or stated. For example, an investor who owns a preferred stock paying a 5% dividend would receive 5% of the par value ($100) or $5. In order to complete for investor dollars, a company that issues preferred stock will consider the prevailing interest rates when determining the dividend. That is why dividend-paying preferred stock is considered to be interest rate sensitive.
Which of the following is NOT true concerning physical safety of mutual fund holdings? a) The shareholder needs to maintain share certificates since funds use "book entry" accounting. b) Securities cannot exist as electronic records on computers. c) If certificates are held, they must be surrendered in good order before shares can be redeemed. d) Physical safety of a fund's assets is the responsibility of the custodian.
b) Securities cannot exist as electronic records on computers. Book entry (electronic records) is the conventional method of accounting for share ownership. In cases where certificates do exist, in order to redeem shares, they must be surrendered in good order.
Which of the following is NOT true regarding a cash account? a) Cash accounts are required for minors. b) The customer must sign a statement that he or she understands the risks. c) The customer must pay for purchases in accordance with Reg T within 4 business days. d) If a customer buys a security and then sells it without first paying for it, the account will be frozen for 90 days.
b) The customer must sign a statement that he or she understands the risks. The broker usually requires a customer to sign a statement that he or she understands and acknowledges the risks associated with derivative instruments when trying to open an options account or with a penny stock account, not a cash account. All of the other statements are true.
All of the following are necessary requirements for a broker/dealer to hold a customer's mail EXCEPT a) A written request from the customer. b) The name of an alternative person to receive important correspondence on behalf of the customer. c) A way to communicate with the customer in a timely manner to provide important notifications. d) Written disclosure to the customer of alternative ways to access account information.
b) The name of an alternative person to receive important correspondence on behalf of the customer. There is no requirement for an alternative person.
A registered representative with verbal authority from the customer can decide which of the following? a) Security and price b) Time and price c) Quantity and time d) Price and quantity
b) Time and price Time and price are nondiscretionary elements of an order. Quantity (amount), security (asset), and action (buy or sell) require discretionary authority.
FINRA administers the continuing education (CE) program for the securities industry, which consists of two mandatory programs: the Regulatory Element and the Firm Element. All registered individuals must satisfy the Regulatory Element a) Within 60 days of their first anniversary and every 2 years thereafter. b) Within 120 days of their second anniversary and every 3 years thereafter. c) Annually. d) Every other year by December 31.
b) Within 120 days of their second anniversary and every 3 years thereafter The regulatory element of CE involving industry regulations and ethics must be completed within 120 days of a person's second registration anniversary and every 3 years thereafter. It is the firm element that must be completed annually.
#46. Which of the following is NOT correct regarding 529 plans?a)They allow for an accelerated gift per donor. b)Qualified withdrawals are taxed as ordinary income. c)Rules and provisions may vary by state. d)Contributions grow tax deferred.
b. Qualified withdrawals are not taxed as ordinary income. Rather, withdrawals are tax-free when used for qualified education expenses. 529 plans are state-specific, and some rules may vary. Most plans allow for a 5-year "accelerated gift" equal to five times the allowable annual amount per donor with no gift tax liability if no other contributions are made for 5 years. This amount increases periodically for inflation. Contributions grow tax-deferred.
#45. A background check must be performed within how many days after the Form U4 is filed with FINRA? a)10 days b)30 days c)60 days d)90 days
b. The background check must be completed within 30 days of the Form U4 filing with FINRA
An associated person was originally registered in 2014 and it is now 2020. When is the next time the individual would be required to take Regulatory Element training? a) 2020 b) 2021 c) 2022 d) 2024
c) 2022 Regulatory Element training is due on the second anniversary of original registration and then every 3 years thereafter. The next time this associated person would be required to complete the training is 2022 (2014 + 2 + 3 + 3).
#56. Any changes to information on Form U4 must be updated within how many days? a) 10 days b) 20 days c) 30 days d) 90 days
c) 30 days Form U4 information is stored in FINRA's Central Registration Depository (CRD) database. Any changes to Form U4 information must be updated within 30 days.
How many days does a broker/dealer firm have to send a copy of the Form U5 to FINRA if they want to terminate a registered representative? a) 2 business days b) 7 days c) 30 days d) 45 days
c) 30 days If any registered person's employment is terminated, the member firm must notify FINRA by filing a Form U5 within 30 calendar days. If a registered person leaves one firm to join another, the new employer must file a Form U4 for the new employee and obtain a copy of the Form U5 filed by the employee's former firm. Although the former firm is not required to provide a copy of the Form U5 to the employee's new firm, the new employee, if asked, must provide a copy within 2 business days of request.
#68. A predispute arbitration agreement includes all of the following EXCEPT a) The parties waive their right to go to court. b) Arbitration procedures are more limiting than court proceedings. c) Arbitrators never have to explain the reasons for their awards. d) Arbitration is final and binding upon the parties.
c) Arbitrators never have to explain the reasons for their awards. Predispute arbitration agreements that are included in Form U4 must disclose that associated persons applying for registration are waiving their right to go to court, that arbitration may be more limiting than a court procedure and that there is no appeal from arbitration. Arbitrators do not have the obligation to explain the reasons for their decision. However, the award may contain a rationale underlying the award if both parties jointly request an explained decision at least 20 days prior to the first scheduled hearing date.
An unmarried couple applies for a joint brokerage account and says they wish to open a JTWROS account together. What should the registered representative do before starting the application? a) Open the account and file a SAR report following the application. b) Begin the application immediately according to their wishes. c) Ask them why they wish to open that type of account. d) Explain the risks involved with that type of account.
c) Ask them why they wish to open that type of account. The best answer is to ask them why they want a Joint Tenants with Rights of Survivorship (JTWROS) account. If their response indicates that they do not fully understand the characteristics of this type of account, especially as it pertains to an unmarried couple, the registered representative needs to explain the advantages and disadvantages. In a JTWROS account, 100% of the assets in the account pass to the surviving account owner should one die. A Tenants in Common account might be more suitable because in the event of the death of one of the owners, the deceased owner's portion of the account will pass to their designated beneficiaries or to their estate.
If a company were liquidated, what is the residual value left for the common stockholders? a) Current assets b) Net working capital c) Book value d) Cash flow
c) Book value Book value is equal to shareholders' equity minus preferred equity. Remember that common shareholders have the lowest priority when a company's assets are liquidated.
Which of the following statements is true? a) Only out of the money options premiums have time value. b) Only at the money options have intrinsic value. c) Both at the money and out of the money options have no intrinsic value. d) Neither at the money nor out of the money options premiums have time value.
c) Both at the money and out of the money options have no intrinsic value. Both at the money and out of the money options have no intrinsic value. The premiums of both at the money and out of the money options are made up entirely of time value.
The current ratio a) Considers only cash and cash equivalents. b) Is a stricter measure of liquidity than the Acid Test Ratio. c) Equals Current Assets ÷ Current Liabilities. d) Equals (Current Assets - Inventory) ÷ Current Liabilities.
c) Equals Current Assets ÷ Current Liabilities. Equals Current Assets ÷ Current Liabilities is the correct answer. This is the definition of the current ratio which is derived from the balance sheet. It is a measure of liquidity that gauges a company's ability to pay current liabilities.
Which entity enforces MSRB rules that pertain to NYSE member firms? a) SIPC b) NYSE c) FINRA d) MSRB
c) FINRA MSRB rules are enforced for broker/dealers by FINRA, the SEC and bank regulators. For bank dealers, the MSRB rules are enforced by FDIC, FRB, and the Office of Comptroller of the Currency.
#72. An investor in general obligation bonds should be aware of all of the following EXCEPT a) Market risk. b) Call features. c) Flow of funds. d) Credit risk.
c) Flow of funds. General obligation bonds are backed by taxes. The municipal project's flow of funds would be analyzed if the investor were purchasing revenue bonds, which are backed by user fees.
#46. For an individual who is NOT covered by an employer-sponsored plan, IRA contributions are a) Never tax-deductible. b) Partially tax-deductible depending on the income level. c) Fully tax-deductible. d) Deductible based on the income level.
c) Fully tax-deductible. Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.
#63. All of the following are investment company classifications as defined under the 1940 Investment Act EXCEPT a) Unit investment trust. b) Management company. c) Holding investment company in mineral rights. d) Face amount certificate company.
c) Holding investment company in mineral rights. There are three classifications of investment companies under the Investment Company Act of 1940: face amount certificate companies, unit investment trusts, and management companies.
NASAA members do all of the following EXCEPT a) Educate the public. b) Investigate violations. c) Participate in enforcement actions only in their state. d) License firms and their agents.
c) Participate in enforcement actions only in their state. NASAA (North American Securities Administrators Association) members participate in multistate enforcement actions and information sharing. All of the other answers are correct.
Which of the following is NOT true concerning physical safety of mutual fund holdings? a) Physical safety of a fund's assets is the responsibility of the custodian. b) The shareholder needs to maintain share certificates since funds use "book entry" accounting. c) Securities cannot exist as electronic records on computers. d) If certificates are held, they must be surrendered in good order before shares can be redeemed.
c) Securities cannot exist as electronic records on computers. Book entry (electronic records) is the conventional method of accounting for share ownership. In cases where certificates do exist, in order to redeem shares, they must be surrendered in good order.
The interest income for U.S. government securities is a) Exempt from federal and state income taxes. b) Subject to state income tax but exempt from federal income tax. c) Subject to federal income tax but exempt from state income tax. d) Subject to federal and state income taxes.
c) Subject to federal income tax but exempt from state income tax. Interest paid by U.S. government securities is taxable at the federal level and is exempt at the state level.
With respect to the Securities Exchange Act of 1934, which of the following is false? a) All publicly held companies are required to file an annual report and distribute the report to shareholders. b) Stock exchanges are required to register with the SEC. c) The Act gave the SEC the right to set margin requirements. d) The Act gave the Security Exchange Commission (SEC) the right to enforce security laws.
c) The Act gave the SEC the right to set margin requirements. The Federal Reserve Board, not the Securities and Exchange Commission (SEC) has the authority to establish margin requirements for broker/dealers.
All of the following statements are correct with regard to a Uniform Gifts to Minors Act (UGMA) account EXCEPT a) The custodian is not required to be a guardian or relative of the minor. b) Purchases in the UGMA account are eligible for reduced sales charges from rights of accumulation. c) The custodian may open a margin account. d) There can be only one custodian and one minor per account.
c) The custodian may open a margin account. UGMA accounts are permitted to have only one custodian and one minor per account. There are no requirements of relationship or guardianship between the minor and custodian. Purchases in an UGMA account may take advantage of reduced sales charges through rights of accumulation from other accounts held by the custodian and immediate family members. UGMA accounts cannot be margin accounts.
When U.S. interest rates are higher than foreign rates, a) Foreign imports fall. b) The dollar is weak. c) U.S. goods are more expensive than foreign goods. d) Foreign goods are more expensive than U.S. goods.
c) U.S. goods are more expensive than foreign goods. Higher interest rates in the U.S. attract foreign investors to the U.S dollar. When the U.S. dollar is strong, U.S goods are more expensive than foreign goods.
If a stock is purchased just before the ex-dividend date, the investor a) Will not receive the dividend. b) Will have an unrealized gain on the stock. c) Will have an unrealized loss on the stock. d) Will not have any tax liability. If the investor purchases the stock just before the ex-date, the investor will have an unrealized loss on the stock when the price drops. The investor will receive the dividend, but will generate a tax liability since the dividend is taxable income.
c) Will have an unrealized loss on the stock. If the investor purchases the stock just before the ex-date, the investor will have an unrealized loss on the stock when the price drops. The investor will receive the dividend, but will generate a tax liability since the dividend is taxable income.
After receiving an initial privacy notice, subsequent privacy notices should be provided to customers a)Quarterly. b)Semiannually. c)Annually. d)Every 3 years.
c. Consumers must be provided with an initial privacy notice at account opening; those who become customers should receive annual privacy notices.
On behalf of a client, you enter an order to write 5 ABC Jan 30 puts. This order is a(n) a)Closing buy order. b)Opening buy order. c)Opening sell order. d)Closing sell order.
c. Opening sell Opening sell, the investor is establishing a short position.
According to FINRA rules, members are required to report any violations of laws, rules, and regulations within how many days? a) 3 days b) 10 days c) 15 days d) 30 days
d) 30 days Members must report violations within 30 days. In addition, members are required to report certain events on the part of the member or an associated person related to the securities, insurance, commodities, financial and investment industries. This reporting rule also pertains to instances in which the member knew or should have known of the event.
Which of the following statements about broker/dealers is CORRECT? a) An introducing broker/dealer must maintain higher levels of cash than a clearing broker/dealer. b) A clearing broker/dealer does not maintain custody of securities. c) Prime brokers do not provide back office functions. d) A prime broker works with hedge funds and other professional investors whose business requires the ability to borrow cash and securities.
d) A prime broker works with hedge funds and other professional investors whose business requires the ability to borrow cash and securities. A prime broker works with hedge funds and other professional investors whose business requires the ability to borrow cash and securities. A prime broker is a full-service broker/dealer offering investment banking and securities services to clients with more complex financial needs, such as hedge funds and other professional investors, who require services, such as, securities lending and financing for leveraged transactions.
#18. Payment of debt service for moral obligation bonds is typically dependent on a) Administrative appropriation. b) Court validation. c) State attorney general validation. d) Legislative appropriation.
d) Legislative appropriation. Moral obligation bonds require legislative appropriation in order for the government to assume responsibility for a municipal issue that is in default.
#47. If a member firm suspects that a senior customer (age 65 or older) is being financially exploited, it may a) Liquidate the person's account and hold the proceeds in trust. b) Contact a caretaker or relative. c) Contact FINRA and report the suspected abuse. d) Place a temporary hold on disbursements from the customer's account.
d) Place a temporary hold on disbursements from the customer's account. A member firm that suspects that a senior customer is being financially exploited may place a temporary hold on the disbursement of funds or securities from the customer's account.
Which of the following transactions requires distribution of an offering circular to prospective investors? a) Rule 144A b) Reg D c) Rule 147 d) Reg A+
d) Reg A+ Regulation A+ or small issue exemptions, use an offering circular for disclosure instead of a prospectus. It must be sent to the prospective buyer either 48 hours prior to the purchase, or at the time of purchase, with a 5-day right of rescission.
All of the following are differences between qualified and nonqualified retirement plans EXCEPT a) Taxation of withdrawals. b) Taxation of contributions. c) IRS approval requirements. d) Taxation on accumulation.
d) Taxation on accumulation. Taxation on accumulation is deferred in both types of plans. The rest of the characteristics differ.
Which of the following joint accounts is designed specifically for married couples? a) Transfer on Death b) Tenants in common c) Joint Tenants with Rights of Survivorship d) Tenancy by the Entirety
d) Tenancy by the Entirety Tenancy by the Entirety is a type of joint account specifically designed for legally married couples and contains the right of survivorship.
If a municipal firm makes a contribution to the county assessor in the community where their office is located, which of the following occurs? a) Depending on the amount of money that was contributed, the firm may or may not be able to engage in investment banking business. b) The municipal broker/dealer would be terminated and no longer be able to conduct municipal activities. c) The firm would be unable to enter into a competitive bid with that municipality for 2 years. d) The firm would be unable to enter into a negotiated underwriting with that municipality for 2 years.
d) The firm would be unable to enter into a negotiated underwriting with that municipality for 2 years. The municipal firm is not allowed to contribute money to any candidate who would have influence over the municipality, whether located in their district or not. One way to remember this is that the MFP, who is an individual, can only give money to a candidate he can vote for. Since the firm itself has no ability to vote for a candidate, it is prohibited from giving any money.
Which of the following correctly describes a bond's interest accrual period? a) The last settlement date up to but not including interest payment date. b) The dated date up to but not including trade date. c) The last settlement date up to but not including trade date. d) The last payment date up to but not including settlement date.
d) The last payment date up to but not including settlement date. The bond purchaser owes part of the next semiannual interest payment (accrued interest) to the bond seller. The seller is entitled to the first portion of the interest payment (from the last payment date up to but not including settlement date) and the buyer will earn the second portion (from settlement date until the next semiannual payment date).
Which of the following statements is true about tax-qualified annuities? a) Employee contributions are not tax deductible. b) They can discriminate. c) Withdrawals are not taxed. d) They must meet IRS requirements.
d) They must meet IRS requirements. In qualified annuities, IRS approval is required; contributions are tax deductible; accumulations are tax-deferred and withdrawals are taxed. Qualified annuities cannot discriminate among policyowners.
Your client is 78 years old and has recently shown signs of memory lapses when he meets with you. It has been about 3 months since you have spoken with this client when you notice a significant amount of activity in the account, including the sale of securities and requests for funds to be removed. You are concerned about fraud in the account. What action can you take to address your concerns? a) You are a registered representative and can have your company simply back out of the trades. b) Nothing, without a power of attorney you cannot reverse trade requests or money transfers out. c) You can alert your principal officer and inform the principal you wish to be supervised while making transactions in the account. d) While you cannot transact without the proper trading authority, you have an obligation to contact the client. Whether successful or not, you can place a hold on trading and funds transfers.
d) While you cannot transact without the proper trading authority, you have an obligation to contact the client. Whether successful or not, you can place a hold on trading and funds transfers. For seniors age 65 or older who have physical or mental disabilities, FINRA permits the registered representative to place a temporary hold on the disbursement of funds or securities from the customer's account. In addition, with written authorization from the client, the registered representative may contact a previously designated trusted contact person to discuss the account.
Which of the following activities may a nonregistered person perform? a) Charge commissions b) Qualify a potential customer c) Solicit business d) Provide quotes
d) Provide Quotes A nonregistered person is permitted to provide quotes and account opening forms. However, a nonregistered person may not accept orders for trades (solicited or unsolicited), charge commissions, prequalify a customer, or solicit business
#70. Which of the following may NOT be purchased on margin?a)Closed-end investment company shares b)Treasury bonds c)Corporate bonds d)Mutual funds
d.) Because mutual fund companies continually issue redeemable shares, they are considered new issues and cannot be purchased on margin. In addition, mutual funds cannot be used as collateral for margin purchases until they are held in a cash account for 30 days.
