SIE EXAMINATION
The maximum value of a gift allowed by FINRA Rules is
$100 per person per year
What is an underwriter's maximum sales charge on a limited partnership (LP)?
10.5%
Which of the following describes a market maker?
A broker/dealer that assumes the risk of holding an inventory of shares of a stock in order to facilitate the trading of that security
Due to drought conditions, an experienced high net worth investor believes that the prices of a broad range of agricultural commodities will increase. Which of the following might be an appropriate investment for this investor?
Agriculture sector total return ETN
When a market maker does not honor a published quote, that could be considered a market manipulation practice of
Backing away
When a customer sells a security in the secondary market, he or she will receive the
Bid Price
A variable life policy's nonforfeiture provision
Entitles the policyowner to the cash value less any outstanding loan amount if the policy is terminated.
The purpose of breakpoints is to
Give the investor a reduced sales charge
An annuity owner chooses the straight life annuitization option because
It provides the maximum cash flow of all his options.
What economic theory advocates stimulating economic growth through government intervention?
Keynesian Theory
Preemptive rights allow a stockholder to
Maintain proportionate interest in the company
What type of risk deals with the possibility of earning a lower yield on a new bond after an existing bond matures?
Reinvestment risk (Reinvestment risk occurs when interest rates have fallen and the proceeds from a bond that has just matured must be reinvested at a lower rate. This would reduce the investor's stream of interest income.)
A customer wishes to pay her son's college tuition using funds from her brokerage account. Her account has a checking account feature. The member firm may withdraw the funds if the customer does which of the following?
Requests in writing a wire transfer of the funds to the college
According to MSRB rules, if a control relationship exists between an issuer and a municipal securities dealer, the nature of that relationship must be disclosed when
The broker/dealer is acting as a principal or an agent.
The underwriting agreement is between whom?
The issuer and the managing underwriter
Which of the following correctly describes a bond's interest accrual period?
The last payment date up to but not including settlement date
Which of the following is true of the registered persons on inactive status serving in active duty in the U.S. military?
They can continue to earn commissions.
Which of the following securities is considered to be a long-term instrument?
Warrants
Which of the following is FALSE regarding warrants?
Warrants are issued at a discount to the underlying equity in order to make security offerings more attractive to the investor
Local government investment pools (LGIPs) offer all of the following benefits EXCEPT
Wide array of investment options.
What is the timeframe for filing relevant Suspicious Activity Reports?
Within 30 Days of initial discovery
Which of the following is the highest yield when a bond is trading at a discount?
Yield to Maturity
All of the following are characteristics of Unit Investment Trusts EXCEPT
actively managed portfolio
A corporation pays a stock dividend to
conserve cash
Which of the following practices is a registered representative permitted in accordance with FINRA conduct rules?
share in the profits in a customer's account
An investor owned stock in the corporation where he was an officer. Two days before it was made public that the company would file for a financial restructure, he sold his stock for $50,000. After the news became public, the stock would have been worth $10,000. What is the maximum civil penalty that can be imposed on this investor according to the Insider Trading Act of 1988?
$120,000
Find the breakeven price for the stock at expiration in this scenario: A customer buys 1 XYZ Jan 25 put for a premium of $2 and, at the same time, buys 100 shares of XYZ stock for $25 per share.
$27 The investor is purchasing both the stock and a put on the stock. In order to find the breakeven point on the stock at expiration, add the price paid for the stock ($25) to the premium paid ($2) for the put 25+2=27
An individual who has been previously registered with another firm is applying for registration with a new member firm. The new member firm has requested the Form U5 from the applicant. Within how many days must the applicant provide the Form U5 from his previous registration?
2 business days
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?
2022
If an investor owns 150 shares of XYZ Corporation and the stock splits 3-for-2, how many additional shares will he own after the split?
75
A Rule 144 filing for the sale of restricted securities by control persons is subject to which of the following time limitations?
90 days
An investor is interested in a REIT that will provide immediate income. The investor would best be served by
A mortgage REIT
The Insider Trading Act of 1988 has set guidelines for imposing penalties including civil actions in a federal court. The maximum penalty a court can impose for insider trading violations is
An amount up to 3 times the profit gained or loss avoided
Corporations generally issue warrants in connection with which of the following?
Bonds, in order to secure a lower interest rate
If an investor is very bullish on a stock, which of the following actions would provide the greatest potential short-term gain?
Buy one call on the stock
The sum of all issued securities of a corporation is referred to as the corporation's
Capital structure.
In order to comply with FinCEN's anti-money laundering initiative, broker/dealers are required to
Designate an AML compliance officer
If an investor cannot specifically identify redeemed shares, the Internal Revenue Service (IRS) assumes that reporting will be on the basis of
First-In, First-Out.
Which of the following best describes GNP?
GDP, plus income earned by residents from overseas, minus income earned within the domestic economy by overseas residents
Which of the following is not included in the current assets section of a balance sheet
Goodwill
What are the benefits of writing covered calls?
Income and a partial hedge
The market price of ABC stock is $17.25. The ABC June 20 call
Is out of the money. (The ABC June 20 call is out of the money. The market price of the stock is lower than the strike price. Calls are in the money when the market price is above the strike price.)
An investor is having difficulty selling a security due to a lack of demand in the secondary market. What does that say about his investment?
It has liquidity risk
The owner of a variable annuity is guaranteed to receive payments for a minimum of 15 years. This annuity is a
Life annuity with period certain.
Which of the following is true regarding an individual account?
No one but the owner may give trade instructions unless the customer has provided advance written permission.
All of the following are types of new stock underwritings EXCEPT
Not held
The Paper Act regulates the
Primary market.
If a limited partnership interests are distributed in a public offering, what is the name of the disclosure document?
Prospectus
Which of the following is NOT correct regarding 529 plans?
Qualified withdrawals are taxed as ordinary income.
A Customer Relationship Summary (Form CRS) must be provided to customers when an associated person
Recommends that a customer open an IRA rollover account for assets currently held in a former employer's retirement plan.
All of the following are agency issues backed by government-guaranteed or insured mortgages EXCEPT
SLMA
Overlapping debt includes which of the following types of debt?
School district (Overlapping debt is GO)
Which of the following describes a variable rate demand note (VRDN)?
Security with a stated maturity date, floating interest rate, and an option to put the security back to the financial intermediary daily or weekly
Which of the following describes a tender offer?
Shareholders selling into the tender must deliver the shares net long
A client wants to open an UTMA account for her 12-year-old son. Whose tax ID is used?
Son
Which of the following candidate qualifications would FINRA take into consideration when waiving a Qualification Exam Requirement?
The candidate has related experience in the securities industry and/or investment banking
A customer purchased 100 shares of XYZ stock at $30 per share. Two years later, the customer donated the shares to charity. At the time of the donation, XYZ had a market value of $50 per share. What are the tax consequences for the customer?
The donor will have a $5,000 income tax deduction.
A 50-year-old individual needs $20,000 for his child's education, and wishes to withdraw the necessary funds from his traditional IRA. Which of the following statements is true concerning taxation on the withdrawal?
The entire amount will be taxed as ordinary income.
Which of the following statements is NOT correct with respect to closed-end investment companies?
They continuously offer new shares
All of the following investments are subject to currency exchange risk EXCEPT
U.S. Treasury Bonds. (U.S. Treasury bonds are not subject to currency risk because they have no foreign exposure.)
An investor owns securities that represent an undivided interest in a fixed portfolio. What type of investment company is this?
Unit Investment Trust
A husband and wife want to make a contribution to their IRAs. The husband earns $35,000 a year. The wife is currently not working. What is the maximum they can currently contribute into their IRAs?
Up to 6,000 for the husband and 6,000 for the wife the maximum amount an individual can contribute annually to an IRA is up to 100% of earned income not to exceed $6,000. The same amount can be contributed for a nonworking spouse in a separate account, called a spousal IRA
Which of the following signatures does FINRA require on a new account form?
a principal of the broker/dealer
Which of the following products might be offered by a cyclical company?
bulldozer
The type of risk that includes influences such as competitive pressures, market share and competence of management and is usually managed with a long-term focus is called
business risk
Hedge fund fees are
calculated based on both annual asset management and performance fees
Which of the following is the risk that an issuer may not be able to meet interest or principal payments on fixed income securities?
credit risk
Which of the following is NOT required of a representative when determining the suitability of an investment?
determine where the client worked 5 years prior
A customer's account would be frozen for 90 days if the customer
failed to deliver payment within 4 business days of purchase
In accordance with the Uniform Gifts to Minors Act, a donor may
give an unlimited amount of cash
Mrs. Johnson bought 200 shares of Intec at 18 in March. When she passed away in June, the market price of Intec was 21. What is the taxation to her daughter, who inherited the shares?
her cost basis is 21 and the holding period is long-term
Under Rule 144, when does an affiliate need to file a Notice of Proposed Sale with the SEC?
if the sale involves more than 5,000 shares
A legal entity that sells securities to investors to finance its operations is
issuer
A corporation is highly leveraged. Which of the following would this indicate?
it has a high debt-to-equity ratio
Which of the following is NOT true regarding a nonqualified retirement plan?
it needs IRS approval
A grandfather wants to buy an annuity that will provide the best benefit to both his son and granddaughter. What annuity type would best suit his needs?
joint and last survivor
Which member of a stock exchange provides liquidity in a security by being willing to buy and sell at any time?
market maker
The North American Securities Administrators Association (NASAA) is an
organization of securities regulators whose goal is to protect customers from fraud
The ex-dividend date is
the first date on which the stock trades without the dividend
UITs have fixed portfolios, which means that
the holdings in the portfolio are fixed for the life of the trust
Under what circumstance would the Federal Reserve sell treasury bonds in the open market?
to tighten the money supply
