SIE Practice test

A company's net worth belongs to its owners. The net worth for a company is computed as

assets - liabilities

A municipal bond has a coupon of 6.25%, and at the present time, its yield to maturity is 6.75%. From this information, it can be determined that the municipal bond is trading

at a discount

An investor is looking to increase her purchase of put options. From this, you would surmise that the customers market outlook is

bearish

A customer enters a market order. This type of order can be

buy or sell to be executed at the next available price

Rob takes a job with Seacoast securities, a FINRA member broker-dealer firm, as a receptionist in a branch. Which of the following activities may violate the rules concerning activities of registered persons?

directing a customer to a flyer for a specific mutual fund rob really likes

Member Bank A wants to borrow from the federal reserve banks window. What would be the interest rate of the loan?

discount rate

A person who is vested with legal rights and powers to be exercised for the benefit of another is know as

fiduciary

When shares are held in street name this refers to the shares being

held in the name of the broker dealer for the beneficiary owner.

A customer enters an order that must be executed in its entirety when entered or canceled immediately. This is known as

immediate or cancel

Your customer receives a 10% stock dividend on 1000 shares owned. Regarding this dividend, you correctly explain that the position will do what?

increase by 100 shares but the price per share will be adjusted downward

For common shareholders which of the following is true

increase in the value of shares owned represents growth or capital appreciation

Which of the following terms best describes a corporate debt instrument secured by a pledge by the issues of property that consists of stocks or bonds of other corporations?

collateral trust certificate*

An investor is selling shares of rule 144 restricted stock after holding it for the required length of time. The buyers of these shares are purchasing shares of stock that

considered registered with no holding period

An investor owns 4% preferred stock participating to 6%. This means the investor

could recieve an additional 2% over the stated 4% if the board declares it

Which of the following is NOT true regarding convertible bonds?

coupon rates are usually higher than nonconvertible bond rates of the same issuer

If a representative possesses material insider information about a publicly traded company, under which of the following circumstances may he communicate this information to the public?

under no circumstance

Purchasers of common stock may generally look to all of the following risks associated with that investment except

interest rate risk

ABC corporations stock is trading at $35. A client has purchased a 50 call. The options current value is made up of

intrinsic value

The securities exchange act of 1934 covers all of the following except

issuance of corporate securities

A common shareholders preemptive right is the right to

maintain a proportionate share of ownership in the corporation

Which of the following is not reported on Form U4

marital status

Which of the following is among the items of information that must be entered on a new account form?

name of all persons with access to the account

The windmill alternative energy fund offers its shares to the public at the funds NAV based on the next calculation of that figure cost. Based on this, you can say that the fund is

no-load fund

Bonds selling at a slight premium mean that

nominal yield is higher than the ytm

A customer enters an order to buy 1000 shares of XYZ at 21. Which of the following is true regarding these order instructions?

order can be executed at 21 or lower

Which explanation regarding owners and writers of listed equity option call contracts would be true?

owner of a call has the right to exercise, the writer would be obligated to sell the shares at the strike price

You are recommending the purchase of the XYZ Growth fund to one of your clients, and you explain that the fund operates pursuant to a 12b-1 plan. Under the terms described in the prospectus, the fee is

part of the expense ratio of the fund

A company that has issued cumulative preferred stock

pays in arrears and current preferred dividends before paying dividends on common stock

A customer with no mutual fund investment wishes to invest 47,000 in the XYZ technology fund. If the Class A shares are eligible for a breakpoint sale charge discount at the 50,000 investment level, the action lease appropriate for an agent is to

place the order as instructed

Sandal manufacturer Achilles had registered to sell shares of its stock to the public for the first time. This company has several different uses for the money to be raised - first among them is the building of a new manufacturing plant outside of Troy, Michigan. This sale would be part of

primary market

A new registered representative working for a broker dealer is taking a part time job at a restaurant on evening and weekends to supplement current income. Regard this activity,

prior written notice must be made to the member firm, who could reject or restrict the affiliation

In a prime brokerage account, the prime broker?

provides custody and clearing services, while other brokers provide execution services.

When a company liquidates assets, in which order are claims satisfied

secured bond holders, debentures, preferred stock, common stock

The major difference between and open-end company and a closed-end company is that the open end investment company

sell shares through a continuous primary offering

The conduct rules

set out fair and ethical trade practices that member firms and their representatives must folllow

In the event of a corporate bankruptcy, which of the following is true?

shareholders liability is limited to the amount invested when shares were purchased

In a split offering

shares are issued to the existing shareholders

BakeCo., an NYSE-listed food company, has decided to split off its cookie-making operation into a separate corporation. Current shareholders will receive one share of the new company, BigCookieCo, for each share of BakeCo. they own as of the record date. This action is an example of

spin off

If an investor purchased 1000 face amount of an 8% corporate bond at 93, and the bond is scheduled to mature in 2028, what will the investor receive at maturity?

1080

All of the following accounts would be fully covered under SIPC in the event of a broker dealer failure except?

200k in windmill advisors growth fund and 300k in steel futures

A quote for Seabird airlines is 17 B 17.5 A 5x5. A customer would be able to sell how many shares at what price

500 Shares at $17 a share

Your customer, Cecilia, is 40 years old. she is married and has four sons. Her third child, age 13, has committed to going to college. Cecelia and her spouse have noted the rapid increase in the school's tuition over the past few years and are worried about their savings keeping pace with tuition costs. They also express discomfort with the uncertainties in market returns. Which of the following are the most suitable recommendations for the customer?

529 prepaid tuition

John, a customer, purchases 500 shares of the Sierra Verde Coffee Company at $22 a share in a margin account. What is John's initial margin requirement for this purchase?

5500

Any sale of securities outside an associated persons or the employing members firm's regular business is recognized as

A private securities transaction (selling away)

All of the statements regarding the different securities offering types are true except?

APO proceeds go to existing shareholders. ***Proceeds go to corporation(correct answer)

Which of the following about ETN's are true

ETN's are debt securities backed by the issuer

All registered persons must complete a computer based training session within 120 days of the persons second registration anniversary and every three years thereafter to comply with

FINRA regulatory element regulation

For tax purposed, which of the following is not associated with being reportable as ordinary income?

Gains from security transactions

Capital Appreciation is another term for which of the following?

Growth

A client and her spouse own shares in the ACE fund as tenets in common. If each has a 50% ownership interest in the account, and the client dies, what happens to the shares in the account

Half the shares would belong to her spouse, and the remaining half would be distributed to her estate.

An investor owns a municipal bond fund. What is the tax status of distributions from the fund?

Income is tax-free but capital gains distributions are taxable

If interest rates are changing, which of the following terms would best describe the relationship between prices and yields for corporate bonds?

Inverse

One of the ways in which closed-end investment companies differ from open-end investment companies is in their ability to

Issue preferred stock

Your customer, Rodrigo, is 40 years old. He is married and has four sons. Five years ago, he purchased a nonqualified variable annuity for 20,000 which has grown to 25,000 by the time he withdrawals 10,000 to pay for his oldest son's college tuition. How will the withdrawal be taxed?

Ordinary income on 10,000***

Under the Uniform Transfers to Minors Act (UTMA), Oscar wants to give some stock to his brother's son, whose father is the legal guardian over. However, if Oscar wants to name himself as custodian, which of the following needs to be done?

Oscar must open the account and name himself as the custodian.

The first stage of money laundering is

Placement

Money Laundering is defined as

Process used to make funds obtained from illegal activity appear to have come from a legitimate source

Under the Uniform Practice code, regular way transactions for common stock settle on

T+2

A registered representative wants to give employees of another broker-dealer located in the same office building $20 boxes of chocolates for the holiday season. Which of the following is TRUE?

The gifts are permitted if no condition of sales or reciprocal business is expected and the RR's employing firm's prior approval has been given.

Your Client, Sven, has an extensive portfolio of stocks and bonds. Last year, he had an income of 36,000, of which 200 a month was from a part time job and the rest from his portfolio. How much can he contribute to a ROTH IRA from the previous year?

The indexed maximum, which is not deductible from his ordinary income

Which of the following transactions may be made on margin

The purchase of NYSE-listed closed-end fund shares

Which of the following issues from her past may result in her disqualification from becoming a RR

a charge 6 years ago for grand theft

Regarding preferred stock, all of the following are true except

a corporation issuing common stock must issue at least one preferred

A penny stock is defined as

an unlisted security trading at less than $5 per share

A municipal financial professional wants to make a political contribution to a candidate for major in the town that she resides in. Under the MSRB pay-to-play rule, a contribution to this candidate

cannot exceed $250

BMOR is a NYSE-listed retailer. The company has a long history of steady growth and has paid dividends every quarter for five decades. They recently announced that they expect steady growth in same store sales and will continue paying dividends into the foreseeable future. They have also announced plans to expand into central and south America. BMOR stock is an example of?

emerging market stock

When an investor wants to sell shares short, first the shares must be

located in order to be borrowed

An investor with no position in LMN stock purchases 600 shares at the market. The investor is

long and is bullish

If a bond is purchased at a premium, the yield to maturity is

lower than the nominal yield

A preferred stock dividend is stated as a percentage of

par value

For an owner to be paid a dividend, his name should be recorded on the stock record book of the issuers transfer agent by

record date

A corporation lists to services of a transfer agent, who would be expected to handle all of the following functions except?

register the corporations securities with the state

A client buys stock on Monday, May, 2, in a cash account. Under regulation T, when is the clients payment due?

same day

A breakpoint sale is

the sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions to incur the highest sales charge

Capital Markets can be characterized by all of the following except

they are utilized by the public sector only

As participants in a firm commitment underwriting agreement, the underwriters know that

they, the underwriters, will be acting as principals buying the securities from the issuer.

An investor purchased a call. She has

unlimited upside and limited downside

Supply-Side economics believe that the government should

use taxation to increase or decrease the money supply

An IRA can be funded using all of the following except:? -investment company -work of art - stocks and bonds -securities

works of art

An investor purchased a corporate bond at 98-5/8 and sold the bond at 101-3/4. How much money did he make or lose on this transaction?

Profit of $31.25

The forward pricing rule applies to

Purchases and redemptions of the shares of open-end investment companies

You quote ABC stock to a customer 72 bid for 1000 shares, 700 offered at 72.10. Which of the following is true?

Spread is .10

All of the following are money market instruments except? - negotiable certificates of deposits - warrants expiring within 3 months - bankers acceptance - treasury bonds maturing within the next year

Warrants expiring within 3 months

An investor interested in quarterly income should invest in

Utility company stock****

How often must a representative complete the firm element continuing education (CE) requirement?

annually