SIE Trouble Questions

when is a copy of the account record required to be delivered to client after account opening?

30 days of account opening.

A customer buys a 4% Treasury bond, maturing in 10 years, at a price of 96.08. What is the yield to maturity?

A bond whose price is below par (priced at a discount) has a higher yield to maturity than current yield, which in turn is higher than the nominal yield.

Under what circumstances could a member firm holding stock in street name vote the shares as it sees fit?

A member firm holding stock in street name may vote the shares as it sees fit if the customer does not return the signed proxy statement by the 10th day before the shareholders' meeting, and if the matters to be voted on are of minor importance. If the matters are of major importance (such as a change in the direction of the business or a merger or acquisition), the shares are simply not voted.

A partnership account wants to trade on margin. When will this be permitted?

A partnership account will be allowed to trade on margin as long as there are no restrictions against doing so in the partnership resolution. This is the same standard used for corporate accounts.

When is a the CE required for new licensee after their 2nd anniversary?

New registered representatives are required to sit for the regulatory element as of their second anniversary. Thereafter, they are scheduled each three years. Having just completed her second anniversary regulatory element CE, she will be next scheduled in three years.

A GTC order is left unexecuted at the end of the trading day on the last business day of April. When will it cancel?

All GTC orders if unexecuted will be automatically canceled on the last business day of April and the last business day of October. If the customer wishes to have the order continue working beyond that date, it must be reentered after the automatic cancellation.

What can an opening transaction be?

An opening transaction can be either a buy or a sell. Which one will determine the investor's market attitude—bullish when buying to open a position and bearish when selling to open a position (selling short).

What does not require the stockholders receive delivery of notice?

Stockholders must receive notice from the issuer in the event of actions to shareholders, chiefly those that are unscheduled or unpredictable. Some examples are stock splits, dividend payments, and rights or warrant offerings. A scheduled interest payment on a corporate bond thus does not require delivery of notice.

Which of the following publishes and maintains a list of known terrorists and drug traffickers and those controlled by them or acting on their behalf?

Such a list is maintained by OFAC and is available to broker-dealers and other companies in the financial industry. It must be consulted when a firm takes on a new customer and on other occasions. The FOMC carries out open-market operations for the Federal Reserve. FinCEN is concerned with detecting and preventing the various steps of money laundering, and FINRA, of course, is responsible for regulating trades at the New York Stock Exchange and in the over-the-counter market in the United States.

Which of the following entities establishes the rules, regulations, and membership eligibility standards to be registered with the SEC?

The National Adjudicatory Council (NAC) establishes the rules, regulations, and membership eligibility standards for registration with the SEC.

The regulatory element of training requires that all registered persons complete a computer-based training session how frequently?

The regulatory element of training requires that all registered persons complete a computer-based training session within 120 days of the person's second registration anniversary and every 3 years thereafter (i.e., within 120 days of the person's 2nd, 5th, 8th, 11th registration anniversary, and so on).

On October 8, an investor discovers that a security purchase that took place on August 5 of the same year was prompted by fraudulent information provided by the broker-dealer on the day of the purchase. How long does the investor have to bring action?

The statute of limitations on fraudulent practices, under the Securities Exchange Act of 1934, is 3 years from the event itself, or one year from its discovery, whichever comes sooner.

A customer receives a Regulation T margin call for $3,200. To meet the deposit requirement, how much needs to be deposited?

When meeting a Regulation T margin call with cash, 100% of the call must be deposited—in this case, $3,200. If using fully paid for marginable securities to meet the call, a deposit totaling twice the amount of the call must be made—in this case, $6,400. This is because securities are only marginable to 50% of their value.

An investor has been putting aside funds for retirement in a nonqualified variable annuity for over five years. She is now age 66 and takes a lump-sum distribution. How are the earnings taxed?

With a nonqualified annuity, all distributions more than the cost basis will be taxed as ordinary income.

Members and non-members alike can look into a broker's service and qualifications record by accessing which of the following services?

Broker's Check

For each transaction, a customer must be sent or given a written confirmation of the trade at or before the completion of the transaction, the settlement date. What information would be included in the trade confirmation?

Commissions for agency transactions are shown on confirms but not markups or markdowns charged in principal transactions. In a bond trade, the par value of the bond purchase (or sale) is confirmed, not the number of bonds. If the security has one, the applicable Committee on Uniform Securities Identification Procedures (CUSIP) number is included.

Which of the following may receive a commission from a FINRA member firm?

Domestically, nonmember firms, suspended firms, and retired representatives are not licensed or registered and may not receive commissions. The exception is a foreign nonmember firm that agrees to abide by FINRA rules, regulations, and standards.

Who are fingerprint card filed with?

The attorney General

Who prepares the first element of a broker's continuing education?

The member firm prepares it not FINRA