SIE Exam Study Set #1

On February 29 of last year, when the stock was trading at $72, Seabird Airlines declared a 15% stock dividend, payable on April 15. On the close of trading, on the pay date, the stock was trading at $75. What would a customer who owned the stock all of last year report for tax purposes?

A) Nothing

The BBB Corporation is liquidating under a Chapter 7 bankruptcy. What is the order of payout?

A) Secured bondholders, senior bondholders, subordinated bondholders, and then common shareholders

Your client has a long-term investment time horizon and is willing to accept some risk to achieve a better rate of return. Of the following, which would be the least suitable recommendation?

A) T-bills and negotiable CDs

Which of the following is not correct regarding a rights offering?

A) The number of rights issued is based on the number of new shares to be issued.

A guaranteed bond is usually guaranteed by which of the following entities?

B) A parent company

Limited partnerships

B) must end on a predetermined date or can be dissolved earlier by vote.

A registered representative enters a discretionary order for her clients account. All of the following are required except

B) the order must be approved by a principal prior to entry.

Which of the following issuers are exempt from the registration requirements of the Securities Act of 1933?

D) First National Bank

If your client, Marvin Blackwell, places a sell stop order at 38 when ABC is trading at 40, at which of the following prices could the order be filled? I. 38 II. 39 III. 40 IV. 41

D) I, II, III, and IV

BigBox Stores, Inc., declared a $1 per share dividend on Tuesday, September 13. The dividend will be paid to holders of record of BigBox common stock as of Tuesday, September 27, and will be delivered to shareholders on Wednesday, October 12. What is the most likely ex-dividend date for this dividend?

D) Monday, September 26

For registered shares held by an affiliate (known as control stock), which of the following applies?

D) No holding period, but volume limits always apply

Which of the following is not part of a mutual fund's expense ratio?

D) Sales load

If a stockholder submits a proxy for the annual meeting but then choses to attend the meeting to vote, what becomes of the proxy?

D) The voting proxy would be revoked.

If a stock is at risk of failing to maintain the minimum price requirements to remain listed on the NYSE, the most likely corporate action taken to preserve the listing could be

D) a reverse split.

An option contract having no intrinsic value at expiration will likely be

D) allowed to expire.

A registered representative is discussing fee-based and commission-based accounts with a customer. All of the following are true except

D) fee-based accounts are most suitable for those who do very little trading during the course of the year.

Which of the following would require the filing of a suspicious activity report (SAR)?

A) Any transaction alone or in aggregate involving at least $5,000 and appears to serve no business or legal purpose.

Which of the following is a type of investment company security as defined by the Investment Company Act?

A) Variable annuity subaccount

A customer placed an order to purchase 300 shares of DEF Corp. preferred stock. The broker-dealer sourced the shares from another broker-dealer that makes a market in the stock. The customer's firm acted as

A) a broker

All of the following statements about securities purchases are true except

A) securities may not be purchased with borrowed money.

A trade of an equity option settles in ( ) days, while an exercise of an equity option must be completed in ( ) days.

B) 1,2

Which of the following terms is not associated with the exchanges?

B) Negotiated pricing

Which of the following contracts do not have intrinsic value if the strike price is 40 and the market price is 30?

C) Long call and short call

Keegan and Drew, spouses, have a checking account at Gloria City National Bank. The balance is $450,000. What is their protection from SIPC if Gloria City fails?

C) There is no coverage for Keegan and Drew

Which of the following is true when opening an out-of-state Section 529 plan?

C) Withdrawals may not be free of state taxation.

A stock power may be used in place of

D) the customer's signatures on the certificate.