Unit 2 - SIE Study Practice

Examples of systematic risk would include - business risk - inflation risk - market risk - regulatory risk

Inflation Risk & Market Risk

The Options Clearing Corporation (OCC) assigns exercise notices to broker/dealers with short positions

On a randomized basis

Which of the following statements regarding a 529 plans is correct?

One person can be both beneficiary and owner

All of the following are debt security maturity schedules EXCEPT

Series

Which of the following statements regarding Treasury bills is correct?

T-bills are the only treasury security issued without a stated interest rate

In 2011, RST Corp. had both common stock and $100 par value 4% and noncumulative preferred stock outstanding. The preferred, like the common stock, paid dividends on a quarterly basis. Because of financial difficulties, the company stopped paying dividends after 2011. After resolving its problems in 2015, the company resumed dividend payments in 2016. Before paying the first quarterly common stock dividend that year, the company would have to pay a quarterly dividend to the preferred stockholders of

$1.00 bc $4.00 annually divided by four quarters.

Investing in securities entails a large number of potential risks. Diversifying one's portfolio could have the effect of reducing which of the following risks?

Business Risk

Under Rule 144, which of the following sales are subject to volume limitations on the number of shares sold? 1) Control person selling registered stock held for 1 year 2) Control person selling restricted stock held for 2 years 3) Non-affiliate selling registered stock held for 1 month 4) Non-affiliate selling restricted stock held for more than 6 months

C) 1 & 2

An investor shorts 2 DEF January 55 puts at a premium of 2 each when the market price of DEF is 56.25. What is the investor's maximum potential loss?

When short a put the risk is that the stock falls. The maximum risk occurs 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, but with 2 contracts, the potential loss is $10,600. Note that the market price of the stock at the time of the sale of the put is of no consequence.