SIE QUESTIONS MISSED ON PRACTICE TESTs 1 And 2
All of the following are true concerning convertible bonds except
coupon rates are usually higher than nonconvertible bond rates of the same issuer.
All of the following are true concerning convertible bonds except
coupon rates are usually higher than nonconvertible bond rates of the same issuer. Higher is not true because when you have a coupon you get stuff at a lower rate.
The Municipal Securities Rulemaking Board (MSRB) creates rules for all of the following except
municipalities issuing municipal securities.
Registered representative Curt recently purchased a list of potential investors and plans to begin to cold call them soon. In addition to checking the national do-not-call list, Curt needs to consult
the firm's do-not-call list, and not call any number that appears on either list.
A customer who is bearish on the stock market might take any of the following actions except
purchase an equity index ETF on margin.
The forward pricing rule applies to
purchases and redemptions of the shares of closed-end funds.
Purchasers of common stock may generally look to all of the following risks associated with an investment except
purchasing power risk.
An investor purchases an 8% corporate bond at 93. The bond is scheduled to mature in 2028. What will the investor receive at maturity?
$1,040 The investor will receive $1,040 at maturity. This amount comprises the principal repayment of $1,000 plus the final semiannual interest payment of $40.
A customer of a broker-dealer has a cash balance of $175,000 in an account and securities holdings of $225,000. The customer asks about SIPC coverage, and you explain that the current coverage is
$175,000 cash and $225,000 securities for total coverage of $400,000.
Your client has an extensive portfolio of stocks and bonds. Last year, she had an income of $56,000, of which $250 a month was from a part-time job and the rest from her portfolio. How much can she contribute to a ROTH IRA for last year?
$3,000, which is not deductible from her ordinary income
Your customer, Gio, is 47 years old. He is married and has three sons. His third child, age 13, has committed to going to college at the prestigious Bookworm Institute of Los Angeles in Southern California. Gio and his 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 is the most suitable recommendation for the customer? A) A 529 college savings plan B) A custodial account in the name of the minor C) A 529 prepaid tuition plan D) A Coverdell ESA account Explanation A 529 prepaid tuition plan is designed to protect against inflation in tuition costs. Both the college savings and ESA are likely exposed to market risk, as is the custodial account. Additionally, the custodial account is not earmarked for education, and the minor may take control of the account when they reach the age of majority.
A 529 prepaid tuition plan
Regarding preferred stock, which of the following is false?
A corporation issuing common shares must issue at least one class of preferred shares.
Sierra Verde coffee company purchases beans from both South America and Africa. A change in the value of the dollar may have what impact and the cost of coffee beans for the company?
A decrease in the value of the U.S. dollar may increase the cost of beans for the company.
Which of the following terms best describes a corporate debt instrument secured by a pledge from the issuer of property that consists of federal Treasury debt?
Collateral trust certificate Collateral trust bonds or certificates are issued by corporations that own securities of other companies as investments. The certificates are secured by a pledge of those securities as collateral.
Which of the following is not an example of a fixed-income security?
Common stock that has historically paid dividends
Which of the following is not an example of a fixed-income security?
Common stock that has historically paid dividends Common stock may or may not pay a dividend, depending on the board of directors. Common stock is not deemed a fixed-income security.
A newly licensed representative would like to send a mailer to 500 high-net-worth prospects touting the broker-dealer's long history of service. A copy of the communication would need to be filed with
FINRA within 10 days of use.
All registered persons must complete a computer-based training session within 120 days of the person's second registration anniversary and every three years thereafter to comply with
FINRA's regulatory element continuing education regulation.
Regarding stock rights and stock warrants, which of the following is true?
I. Warrants are sometimes bundled with other securities. III. Rights are exercised to purchase shares at a discount.
Your customer receives a 20% stock dividend on 1,000 shares owned. Regarding this dividend, you correctly explain that the position will do what?
Increase by 200 shares, but the price per share will be adjusted downward
Which of the following is not true of a traditional or rollover IRA?
No penalty is charged for failing to withdraw funds after age 72.
An investor interested in quarterly income should invest in
STRIPS.
inal Exam 2× Test Id: 207413735 Question #42 of 85 Question ID: 1329108 Jenny, a registered representative and licensed insurance agent, meets with Darryl, a 60-year-old widower to discuss what to do with life insurance proceeds from his deceased spouse. Darryl is apprehensive about liquidity. Jenny hands him a prospectus for a variable annuity and recommends the funds be conservatively invested in separate accounts within the annuity. She takes time to carefully explain and illustrate a 6% gross return over a 20-year period, and further explains that earnings will grow tax deferred. What did the Jenny do wrong?
She recommended a variable annuity to an individual who is looking for liquidity.
Member Bank A wants to borrow from another member bank. What would be the interest rate on this loan?
The federal funds rate
The board of directors of the Windmill Growth Fund have declared a dividend. The ex-date for the dividend will likely be on which of the following days?
The first business day after the record date
Your customer places an order to purchase 500 common shares of BuyStuff, Inc., a big box retailer. Your customer has which of the following attitudes?
Your customer is bullish on the company.
Your customer purchased Buymore Stores stock in September and sold it the next year in October for a profit. This profit will be reported for tax purposes as
a long-term capital gain.
The CEO of SuperTech Corporation holds shares of restricted SuperTech common stock. These shares have
a six-month holding period and are subject to volume limits for as long as the investor is an affiliate.
If a customer wishes to open an account in his name and would like to allow his spouse to make trading decisions (but not be able withdraw cash or securities), you would suggest he open
an account with limited power of attorney.
A company's net worth belongs to its owners (shareholders). The basic balance sheet equation is
assets equals liabilities plus net worth.
A municipal bond has a coupon of 4.25%, and at the present time, its yield to maturity is 4.75%. From this information, it can be determined that the municipal bond is trading
at a discount.
A municipal finance professional (MFP) wants to make a contribution to the campaign for a friend running to represent the state legislative district that MFP resides in. Under the MSRB pay-to-play rule, a contribution to this candidate
cannot exceed $250.
A bond offered at par has a yield to maturity
equal to its coupon rate.
A customer owns 1,000 shares of stock subject to a 1:3 reverse stock split. The position will now consist of
fewer shares worth more per share with the same net position value.
For tax purposes, all of the following are ordinary income except
gains from securities transactions.
For tax purposes, all of the following are ordinary income except
gains from securities transactions. Ordinary income can be defined as the income earned from interest, wages, rents, royalties, and similar income streams. Capital gains are usually associated with the sale or exchange of property, including securities.
A broker-dealer registered with the Securities and Exchange Commission (SEC) conveys that the SEC
has accepted the member firm's registration to do business.
If a bond is purchased at a discount, the yield to maturity is
higher than the nominal yield.
One of the ways in which closed-end investment companies differ from open-end investment companies is in their ability to
issue bonds.
An investor bought a call. He has
limited downside and unlimited upside.
When an investor wants to sell short 700 shares of XYZ stock, before the order is entered, the shares must be
located to be borrowed.
An investor with no other positions in LMN stock purchases 400 shares at the market. This investor is
long LMN stock and bullish. With no other positions in LMN stock, the purchase was an opening transaction. Having purchased the stock in an opening transaction, the investor now has a long position in LMN stock and is bullish—wanting to see the stock rise in value
The Windmill Growth and Income Fund offers its shares to the public at the fund's net asset value (NAV) based on the next calculation of that figure. Based on this, you can say that the fund is
no-load fund.
The City of Chicago issued $200 million in GO debt five years ago. The bonds were issued with a 20-year maturity and carry a 5% coupon. Your client, who purchased one of these bonds on the initial offering, calls you to get a current quote. You respond that the bonds are selling at a slight premium. This means that
the nominal yield is higher than the yield to maturity. AN inverse relationship exists between bond prices and yields. If the bond is now selling at a premium, the yield to maturity has dropped
To receive a dividend, the owner's name must appear in the transfer agent's books by
the record date.
All of the following are rights of a common stockholder except
the right to a dividend.
A regular-way settlement of a stock trade settles on
the second business day following the trade date.
