MASTER SIE #1

If an investor purchases $1,000 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?

$1,080

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 for the previous year?

$2,400, which is not deductible from his ordinary income

All of the following accounts would be fully covered by the Securities Investor Protection Corporation (SIPC) in the event of a broker-dealer's failure except

$200,000 of Windmill Advisors Growth Fund and $300,000 in steel futures.

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. It has grown to $25,000 by the time he withdraws $10,000 to pay for his oldest son's college tuition. How will the withdrawal be taxed?

$5,000 tax free and ordinary income, plus a 10% penalty on the other $5,000

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?

$5,500

Upon termination a member firm must file a Form U-5 within how many days?

30 days

A quote for Seabird Airlines (SBRD) is 17 B 17 ½ A 5 x 5. A customer would be able to sell how many shares and at what price?

500 shares at $17 a share

Your customer, Cecelia, is 40 years old. She is married and has four sons. Her third child, age 13, has committed to going to college at the prestigious Bookworm Institute of Los Angeles in Southern California. 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 is the most suitable recommendation for the customer.

A 529 prepaid tuition plan

Paula has applied for a representative position with Great Sky Securities, a broker-dealer firm and FINRA member. While in college, she was a bit of a trouble maker. Since completing her education four years ago, she's been a model citizen. Which of the following issues from her past may result in her disqualification from becoming a registered representative?

A conviction eight years ago for misdemeanor larceny for selling her classmates an interest in the Bay Bridge

If the nation's GDP over the past four quarters came in at 2%, 1%, -2%, and -1%, respectively, we are likely experiencing what?

A recession

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

A shareholder's liability is limited to the amount invested when shares were purchased.

Gross domestic product (GDP) is a measure of which of these?

All economic activity within the borders of a nation

For common shareholders, which of the following true?

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

Achieving a Better Life Experience (ABLE) accounts may be opened for beneficiaries at what age?

Any age

The Sierra Verde Coffee Company recently developed a new flavor, jasmine chili salted mocha. Unfortunately, the coffee has a horrible taste, and the company discontinues the flavor. The costs involved in bringing the new product to market combined with the drop in sales and a reputational hit have translated into a significant drop in the price of the stock. This is an example of what type of risk?

Business risk

Your customer owns 500 common shares of Seabird Airlines (ticker: SBRD). He purchased the shares three years ago at $45 a share. Seabird is currently trading at $92 a share. The customer is concerned that a recent drop in airline travel will negatively impact the price of the stock. However, he does not want to sell the shares as he believes the company's long-term prospects are good. What would you recommend to the customer?

Buy 5 SBRD 90 puts

Which of the following is not true regarding convertible bonds?

Coupon rates are usually higher than nonconvertible bond rates of the same issuer.

The largest employer in Los Nachos, California, has closed. The subsequent drop in revenue is threatening the city's ability to make its next interest payment on a bond. This is an example of what type of risk?

Default risk

If consumer prices are steadily dropping from month to month, this is known as what?

Deflation

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 that Rob really likes

Your client asks about exchange-traded notes (ETNs) for her portfolio, and during the course of the conversation, she makes several statements. Which of the following is true?

ETNs are debt securities backed by the issuer.

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 regulation.

How long must a FINRA member firm maintain a file copy of a complaint?

Four years

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

Gains from securities transactions

Capital appreciation is another term for which of the following?

Growth

A client and her spouse own shares in the ACE Fund as tenants 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 of the shares would belong to her spouse, and the remaining half would be distributed to her estate.

A client buys stock on Monday, May 2, in a cash account. Under Regulation T, when is the client's payment due?

In four business days

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.

Your customer receives a 10% stock dividend on 1,000 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

Which of the following is an example of systematic risk?

Interest rate risk

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

Inverse

If a registered representative terminates their employment to enter regular military service, what happens to their license?

It is placed in a special inactive status.

Diversifying a portfolio may help mitigate which of these types of risk?

Legislative risk

Which of the following investments typically carries significant liquidity risk?

Limited partnership

If Edna moves $50,000 from a maturing certificate of deposit to her checking account, which of the following measures of money supply would change?

M1

Which of the following is not reported on Form U4?

Marital status

Risk that is specific to an issuer, or even an individual issue, is called which of these?

Nonsystematic risk

A broker-dealer must make a reasonable effort to obtain the name and contact information for a trusted contact person for a senior customer when doing which of these?

Opening an account or when updating account information

Under the Uniform Transfers to Minors Act (UTMA), Oscar wants to give some stock to his brother's son, a minor. The brother is the legal guardian of the child. 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.

An investor purchased a corporate bond at 98⅝ and sold the bond at 101¾. How much money did he make or lose on this transaction?

Profit of $31.25

If representative Jamison sends a flyer introducing an exciting new investment opportunity to 30 existing middle market customers, this communication would be considered which of these?

Retail communication

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

Secured bondholders, debentures, preferred stockholders, common stockholders

Risk that is difficult to reduce by diversification within an asset class is called which of these?

Systematic risk

Member Bank A wants to borrow from the Federal Reserve Bank's window. What would be the interest rate on this loan?

The discount rate

A registered representative (RR) 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 gives prior approval.

A customer enters an order to buy 1,000 shares of XYZ at 21. Which of the following is true regarding these order instructions?

The order can be executed at 21 or lower.

A registered representative is introducing options terminology to a client. Of the following, which explanation regarding owners and writers of listed equity option call contracts would be true?

The owner of a call has the right to exercise the contract, and the writer would then be assigned and obligated to sell shares to the owner at the strike price.

Which of the following transactions may be made on margin?

The purchase of NYSE-listed closed-end fund shares

You quote ABC stock to a customer 72 bid for 1,000 shares, 700 offered at 72.10. Which of the following is true?

The quote's inside spread is $0.10.

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

Under no circumstances

Joshua, a registered representative, calls a prospect at 7:00 pm only to be told that the prospect is in a different time zone, where it is 10:00 pm. Joshua has done which of these?

Violated the TCPA because it is after 9:00 pm the prospect's time

BuyMore, Inc., (ticker: 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

a blue-chip stock.

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

a fill-or-kill (FOK) order.

The Windmill Alternative Energy 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

a no-load fund.

Money laundering is defined as

a process used to make funds obtained from illegal activity appear to have come from an original source.

Supply-side economists believe that the government should

allow market forces to determine prices of all goods.

A penny stock is defined as

an unlisted (not listed on a U.S. stock exchange) security trading at less than $5 per share.

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

are now considered registered and no longer held to a holding period.

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

assets less liabilities.

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

bearish.

Details surrounding a termination must be included with a Form U-5 filing for all of the reasons below except

death.

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

in an additional primary offering (APO), underwriting proceeds go to existing stockholders.

The Securities Exchange Act of 1934 covers all of the following except

issuance of corporate securities.

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

issue preferred stock.

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

located in order to be borrowed.

An investor with no other positions in LMN stock purchases 600 shares at the market. This investor is

long LMN stock and bullish.

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

lower than the nominal yield.

A common shareholder's preemptive right is the right to

maintain a proportionate share of ownership in the corporation.

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 other mutual fund investments wishes to invest $47,000 in the XYZ Technology Fund. If the Class A shares are eligible for a breakpoint sales charge discount at the $50,000 investment level, the action least appropriate for an agent is to

place the order as instructed.

The first stage of money laundering is

placement.

A new registered representative working for a broker-dealer is taking a part-time job at a restaurant on evenings and weekends to supplement current income. Regarding 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 and may share execution services with other broker-dealers.

The forward pricing rule applies to

purchases and redemptions of the shares of open-end investment companies.

A major difference between an open-end management investment company and a closed-end company is that the open-end investment company

sells shares through a continuous primary offering.

The Conduct Rules

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

Sandal manufacturer Achilles, Inc., had registered to sell shares of its stock to the public for the first time. The 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

the primary market.

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

the record date.

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

the second business day following the trade date.

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.

ABC Corporation's stock is trading at $35. A client has purchased a 50 call. The option's current value is made up of

time value only.

An investor purchased a call. She has

unlimited upside and limited downside.

All of the following are money market instruments except

warrants expiring within three months.

An IRA can be funded using all of the following except

works of art.