SIE FINAL #2
Your customers Sang and Maisha, a married couple, are considering investing in a private placement to add to their portfolio. They mention that they are accredited investors. If accurate, they have a net worth of at least
$1 million, or an annual income of greater than $300,000 in each of the two most recent years.
An investor holds a 5% corporate bond with a yield to maturity of 2.75%. How much will be received in interest on each of the scheduled interest payment dates?
$25
Rule 144 limits the amount of shares an affiliate of a company may sell to
1% of the shares outstanding or the average weekly volume of trading in the previous four weeks, whichever is greater.
If a real estate investment trust (REIT) distributes 89% of its net investment income to shareholders, on how much of its net investment income must the trust pay taxes?
100%
If a registered representative terminates employment with a member firm, how many years may elapse before she would be required to again pass the qualifying exams in order to affiliate with her prior firm?
2 years
Upon termination a Form U5 must normally be filed within how many days?
30 days
An investor has the following position in MES stock: 200 shares at $20. After a 2:1 stock split, this investor will have
400 shares at $10 per share.
At what minimum age could normal distributions be made from an individual retirement account (IRA) without a penalty
59½ years old
If an issuer chooses to sell exclusively to residents of the company's home state, which of the following exemptions to SEC registration would apply?
A Rule 147 offering
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.
Your customer, Elisa, is 45 years old and in the 20% federal income tax bracket. She is interested in opening a traditional IRA as a supplement to her retirement savings. Her intention is to place the entirety of her contribution into the Windmill Growth Fund, which offers a choice of share classes. Which share class would likely be best for Elisa?
B shares
The price an investor can sell a security is called the
Bid
Which of the following groupings might indicate the economy is in decline?
Bond defaults are rising, inventories are rising, and GDP is falling.
A broker-dealer as joint tenants with rights of survivorship. In explaining the details of the account to the couple, the registered representative would not indicate which of the following?
Certificates may be registered in the name of either party.
Which of the following mutual fund share classes have a contingent deferred sales charge (CDSC) that extends over a course of years?
Class b
Your customer holds a callable bond currently trading at $955. Which of the following is true?
Current yield (CY) is lower than yield to maturity (YTM).
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.
Which of the following is not true in regards to the SEC's fingerprinting requirements?
Fingerprint records must be submitted to the SEC for processing.
Your client has $250,000 to invest. His objective is a life-time monthly income that he can receive after he retires. Part of his customer profile stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is subject to market fluctuations. Based on the client's profile, which of the following would be the best recommendation?
Fixed annuity
If the U.S. economy were to enter an inflationary period, which of the following would likely not occur?
Fixed income payments would become more valuable.
To register to become associated with a member firm as a registered representative a person must complete which of the following?
Form U4
A corporate stock transaction occurs regular way on Wednesday, June 3. Ownership of the securities is recognized as changing hands between buyer and seller on
Friday, June 5.
Which of the following features is common to variable annuities?
Guaranteed life income
A married couple opens a new account as tenants in common (TIC). Which of the following statements regarding this account is correct?
In the event of death, the decedent's interest is distributed through the decedent's estate.
Which of the following laws covers open and closed-end management companies and unit investment trusts (UITs)?
Investment Company Act of 1940
How frequently should a customer of a broker-dealer holding a penny stock in her account (purchased in an unsolicited trade) expect to receive an account statement?
Monthly
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.
Restricts solicitation of buyers to complete the sell order of an insider
Rule 144
All of the following are U.S. government agency debt securities except
STRIPS.
Regarding the third and fourth markets, which of the following is true?
The fourth market is for institutional investors, and it is made up primarily of electronic communication network (ECNs).
Which of the following statements applies to 529 plans?
The maximum contribution varies from state to state.
Yield
The percentage return paid on a stock in the form of dividends, or the effective rate of interest paid on a bond or note.
Which of the following statements is correct concerning writing an uncovered call?
The premium is the maximum gain and the loss potential is unlimited.
Which of the following persons would be allowed to purchase shares of an initial public offering (IPO)?
The uncle of a member broker-dealer employee
Your client, Sophia, retired from her job five years ago and placed all of the proceeds of her 401(k) distribution into a rollover IRA at a local bank. If Sophia wishes to transfer the funds to an IRA at your broker-dealer, which of the following statements would be true?
There is no limit to the number of transfers per year between custodians.
If a 40-year-old customer earns $85,000 a year and his 38-year-old spouse earns $140,000 a year, how much may they contribute to individual retirement accounts (IRAs)?
They may each contribute 100% of earned income or the maximum annual allowable dollar limit, whichever is less.
Which of the following federal securities acts provides the legal framework for the registration of broker-dealers and agents at the state level?
Uniform Securities Act
Regarding stock rights and stock warrants, which of the following is true?
Warrants are sometimes bundled with other securities. Warrants have a short-term subscription length (expiry).
Your customer is bullish on the company.
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 retired two years ago at age 68. He recently took a job with a golf course cleaning carts. He would like to contribute to a retirement plan to accumulate additional money with the view to leave something to his grandchildren. You would most likely advise him to open
a Roth IRA.
One of your clients wants to set aside some money for her niece, who just turned 30, but the client has some reservations. The client does not wish her niece's numerous creditors to have access to the money until after the client dies, but she wants her niece to have easy access to the money at that time. You recommend that she open
a TOD registration on an account in her name.
A corporate qualified retirement plan that replaces a portion of the retiree's preretirement income is called
a defined benefit plan.
inal Exam 2× Test Id: 207071582 Question #41 of 85 Question ID: 1329102 The residents of the city of Rocky Beach, California recently voted in favor of issuing a bond. The proceeds of the bond will be used to build a stadium for the local minor league hockey team, the Sea Lions. Though the bond's costs are expected to be covered by the ticket revenue from the stadium, the bond contains a provision that requires the city to pay the bond's interest payments as well as the principal at maturity if the ticket sales are insufficient. This bond is an example of
a general obligation (GO) municipal bond.
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.
When opening a new account, a registered representative should make a bona fide effort to obtain the name of a trusted contact if the new customer is at or above
age 65.
The gross national product (GNP) for a country is best defined as
all the goods and services produced by the businesses in a nation.
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.
Seabird Airlines, Inc., is required by the Securities and Exchange Commission (SEC) to give a notice of corporate actions for all of the following actions except
an interest payment on a bond
An investor holds a bond in which the issuer is scheduled to repay small portions of the principal at intervals over a few years and the majority in the final year. This investor is holding a
balloon bond.
Automatic disqualification for an individual to be registered in the securities industry would not include
being charged with a securities-related misdemeanor.
The Achieving a Better Life Experience (ABLE) Act of 2014 enabled the establishment of ABLE accounts for certain individuals. All of the following regarding ABLE accounts are true except
contributions to ABLE accounts are tax deductible at the federal level.
Regarding delivery for listed option contracts when exercised, all of the following are false except
currency and index options are cash settled in U.S. dollars.
A bond offered at par has a yield to maturity
equal to its coupon rate.
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.
new customer performs a series of rapid, losing trades. When asked, the customer expresses no concern about the losses. The broker-dealer should consider
filing a SAR with FinCEN.
A registered representative is required to participate in an annual training plan prepared by his member firm. The training must be within the scope of the broker-dealer's business activities, and its supervisory needs, to comply with FINRA's
firm element requirement.
The holder of stock rights has the right to do all of the following except
hold the rights indefinitely for future use.
An investor who commits a sizable portion of her portfolio to long-term AAA-rated bonds would be exposing herself to
interest rate risk.
Your broker-dealer is a fully disclosed firm. This means that it
introduces its business to a carrying firm.
The SEC may impose all of the following on a firm or person except
jail sentence.
Your client Max purchased stock of a company in the business of manufacturing private jets. Two years ago, his securities had lost most of their value immediately following a newly enacted luxury tax on purchases of more than $300,000. The investment most likely suffered a loss due to
legislative risk.
Under the Investment Company Act of 1940, an investment company may take all of the following forms except
limited partnership.
Jeremy owns several units of the Curtis Equipment Leasing LP. He volunteers his expertise in equipment purchasing to the partnership. In doing so, he may
lose the limited liability of a limited partner.
stock is about to undergo a corporate action in which the shares will be cancelled and the shares of a different company will be issued to shareholders. This action is most likely the result of a
merger or acquisition.
Once issued, a corporate bond's current yield
moves in the same direction as current interest rates.
A bond is trading at a price of $1,200 in the secondary market. If purchased at this price and held to maturity, this will
reduce the investor's return.
The formula for determining a gain or loss for tax purposes is sales proceeds minus adjusted cost basis. In this formula adjusted cost basis
represents a return of capital invested (principal).
In general, a corporation assumes the most risk when it obtains funds from the sale of
secured bonds.
If the Midlands Pencil Corporation has issued several different debt securities, an investor would expect the lowest income stream
secured debt.
Under the Uniform Transfer to Minors Act (UTMA), a custodian may invest in all of the following except
sell short blue-chips stocks.
An investor sells a stock not currently owned in their portfolio. This is
short bearish position.
A customer has expressed interest in exchange-traded funds (ETFs) and wishes to discuss them with you. You could tell him all of the following except
short sales and trading on margin are not available for ETF transactions.
A breakpoint sale is defined as the sale of mutual fund shares in an amount
slightly below a breakpoint.
A customer submits a written complaint stating that funds were stolen from an account held at a member broker-dealer. Resolution of this complaint will take place by
the Code of Procedure (COP).
A broker-dealer allows a representative to operate her business from home. All of the following statements regarding home offices are true except
the address and telephone number of this location may not be advertised.
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.
all of the following statements about a bond selling above par value are true except
the nominal yield is lower than the yield to maturity.
All of the following are rights of a common stockholder except
the right to a dividend.
A broker-dealer firm's registration to do business in a given state may be revoked by
the state's administrator.
Registered persons must complete the regulatory element of continuing education within 120 days of all of the following anniversaries of licensing except
the third anniversary.
All of the following are characteristics of hedge funds except
they are regulated under the Investment Company Act of 1940.
