SIE Missed Questions
What do unsponsored ADRs trade on
OTC
Regulation FD
addressed the distribution of material, nonpublic information to select individuals, such as research analysts.
When must a firm give a privacy notice?
when the account is opened
current yield
annual interest payment / current price
How much must a gift be worth for the firm to have to maintain records of it?
any amount
Most volatile preferred stock if interest rates are stable
convertible
how are t bills quoted
discount yield
A town has started the construction of public sewers. This project is likely paid by
fees paid to use the sewers
blue sky laws require a RR to...
file an application, pass an exam, and pay a fee
A grant anticipation note is normally paid from
funds received from the federal government
If a broker-dealer decides to change the method that it uses to maintain its records to electronic storage media, what is the firm's obligation?
notify primary regulator 90 days prior to implementation
How long do rights typically last
less than 60 days
What falls more if interest rates are rising: long term bond prices or short term bond prices?
long term, exposed to interest rate risk for longer
How often do Ginnie Mae pass-through certificates pay interest and principal?
monthly
Are Federal National Mortgage Association (FNMA) bonds backed by the US government?
no
Can a person subject to statutory disqualification be associated with a member firm?
no
Can the proceeds of a short sale be used for the purchase of stock?
no
Does the MSRB have the power to regulate municipal bond issuers?
no
are employees of a commercial bank associated persons?
no
can BD employees purchase Equity IPOs?
no
can investment/pension income be used to contribute to an IRA?
no
does a qualified plan have tax-free distributions?
no
must a firm officer who only provides capital to the firm be fingerprinted?
no
Does a customer confirmation have to include whether or not the member firm is the investment banker for the issuer of the security?
no, that's in a research report
If an RR or immediate family member wants to open an account at an external firm they need
prior approval from their firm and to notify the external firm that they work for a BD
how long do warrants typically last
several years to perpetuity
Whose approval is required before a municipality can begin making payments on a moral obligation bond
state legislature
Yankee bonds
issued in the U.S. by foreign corporations and governments, are dollar-denominated securities, and trade in U.S. markets
If firm trades the same as an open customer order
it must fill the customer order at the same price or better
A broker-dealer receives an order from a client to purchase 1,000 shares of ABC stock. Before executing the order, the broker-dealer purchases the same security for its own account at a price that would have satisfied the client's order. The broker-dealer's transaction is considered:
trading ahead
What type of fixed income security always trades at a discount
treasury bills
TRUE or FALSE: A temporary hold can apply to either the entire account or specific disbursements
true
How many owners do Spousal IRAs and Uniform Transfers to Minors (UTMA) accounts have?
1
For how long can a broker-dealer is permitted to hold a customer's mail without instructions concerning a valid reason:
3 months
How are US treasury notes and bonds quoted?
32nd of a point
How often are broker dealers required to send balance sheets?
6 months
A broker-dealer must maintain customer account records for how long after an account is closed
6 years
According to current regulations, if a client redeems his mutual fund shares, the fund company must send the payment within:
7 days
how long do options typically last
9 months up to 3 years
Sales charge formula
(POP - NAV) / POP
When are reinvested dividends and capital gains in an IRA taxed?
All growth, distributions, and accumulations in an IRA are tax-deferred. Any tax consequences will occur when distributions to the holder of the account begin.
If a customer purchases shares of one stock and sells short shares of another stock, how can she settle these transactions?
By executing both transactions in a margin account and depositing the required cash for both transactions.
What do sponsored ADRs trade on
NYSE or Nasdaq
A type of order that becomes a market order when a round-lot trades at or through a particular price is called a:
Stop order
Compromise of Creditors
When the proceeds of a short sale of property is used to settle the payment of a mortgage at less than its full amount, must be reported to FINRA
In judging the fairness of a firm's markup, industry rules would NOT consider:
Whether the client was a retail or institutional customer
What is a prime broker?
A prime-brokerage arrangement involves a variety of services offered by a broker-dealer to an active trading firm
When trading equity securities, the term dark pool is BEST defined as trading:
Between investors, allowing them to buy and sell securities anonymously without quotes being displayed
Interest on Treasury Inflation Protected Securities (TIPS) is subject to what tax?
federal, not state
Interest received from Ginnie Mae pass-through certificates is subject to which taxes?
federal, state, and local
Which orders are adjusted on the ex-dividend date
orders below market price
cost basis after a stock split is based on
original purchase price
The Securities Investor Protection Act of 1970
protects customers of failed broker-dealers
Regulation SP
protects the confidentiality of the information that broker-dealers collect from their clients
National Securities Clearing Corporation (NSCC)
provides clearing services for the majority of broker-to-broker equity trades in the United States
What must happen if a person who is associated with a FINRA member firm has been indicted or pleads guilty to any felony or any misdemeanor that involves the purchase or sale of a security, theft, robbery, burglary, extortion, forgery, or counterfeiting,
reported to FINRA
what is basis with bond pricing
same as yield to maturity
An individual who is considering the purchase of closed-end fund shares would pay:
secondary market price
Who determines the investments in a Coverdell Education Savings Account (CESA)?
the investor (self-directed)
Who is responsible for the payment of interest and principal on a general obligation (GO) bond
the issuer
How are TIPS inflation protected?
the rate of interest is fixed. However, the principal amount on which that interest is paid will vary based on the CPI
In what way are mutual funds and REITs similar?
they are actively managed
The minimum denomination for negotiable certificates of deposit is:
100,000
A client is short stock that's trading at $35.00 and wants to buy, but only if he can buy at $34.00 or lower. He should place which of the following orders?
A buy limit
The SIPC is funded by
Assessments on broker-dealers
he primary purpose of the North American Securities Administrators Association is to
Create rules, laws, and exam requirements for states
Which form reports final arbitration awards
Form U6
The tendering of equity securities is permitted if
Equity securities may be tendered only if the investor is either long the stock or long an equivalent security
Which form does the firm notify FINRA of a termination with?
Form U5
who can place orders for an account?
Only individual's with trading authority can place orders for an account. It does not indicate the husband has trading authority and as a result, the order cannot be accepted. Principals are not permitted to approve orders for accounts in which the individual does not having trading authority.
Which of the following accounts allow for its owners to have different percent interests?
Only joint tenants in common (JTIC) allow for owners to have different percent interests in the account
A customer opens a new margin account and her initial transaction is a short sale of 100 shares of XYZ at $16. What is her minimum deposit requirement?
Short sales must be executed in a margin account since they involve borrowing securities. For the first short sale in a new margin account, the minimum deposit requirement is $2,000. (17555)
Rank the following from longest to shortest life: Options, Warrants, Rights
Warrants, Options, Rights
Under FINRA, who must sign the new account form when a cash account is opened?
a principal of the firm
The Insider Trading and Securities Fraud Enforcement Act of 1988
established specific penalties for the misuse of material, nonpublic information
Who must the firm provide notice to if the account is placed on temporary hold?
account owner and trusted contact person
Does form U4 require arbitration for all disputes or just FINRA
all
What does the loan consent agreement do?
allows a broker-dealer to lend a customer's securities to other clients or broker-dealers
How often must notification of a customer's free credit balance be provided?
at least quarterly (if statements are sent more frequently, then they must be included with statements)
A municipality borrowing for a short-term period to finance a capital project would issue
bond anticipation notes
A method of voting that gives smaller, less substantial stockholders a greater degree of voting power over the larger, more substantial stockholders is:
cumulative voting
Institutional Suitability Requirements
customer can evaluate investment risks independently and the customer is using that ability
The responsibility for automated book-entry changes in the ownership of securities is a function of a
depository facility (ex. DTC)
double-barreled security
municipal security that can be paid from the revenues of a project and is also a general obligation of a municipal government.
A municipal advisor provides advice to
municipalities planning to issue securities
Do you need approval from employer for outside business activities
no
what is the maximum you can spend on a client dinner?
no max
are institutional investors exempt from SRO suitability requirements?
no, but less stringent
does being accused of a relevant crime make someone subject to statutory disqualification?
no, must be found guilty
Do preemptive rights receive the same dividends as shareholders?
no, they get no dividends
What is the limit on trustee-to-trustee IRA transfers?
none
A registered representative purchased two tickets to a concert for which he paid $175 per ticket. If the face value of the tickets is $95 per ticket, the RR may:
not give any tickets to the customer
Main difference between auction rate securities and variable-rate demand obligations?
only VRDOs have put feature
Can a firm prevent disbursements on an account on temporary hold if it has reasonable belief that financial exploitation is occuring?
yes
Do you need to disclose outside business activities to an employer
yes
Is a bankers acceptance a collateralized time draft?
yes
are time of trade disclosures for municipal securities required for unsolicited transactions?
yes
can an employee of a BD loan funds from an immediate family member without approavl?
yes
does a qualified plan have non-discrimination of participants?
yes
does a systematic withdrawal plan always result in a reduction of capital?
yes