SIE practice test 1A

Which of the following investments is the MOST suitable for a person who is interested in aggressive growth? A.Common stock B.High-yield bond fund C.High-rated bond D.Preferred stock

A

A convertible bond has a conversion price of $40 and is currently selling in the market at $950. The conversion ratio is: A.25 B.23.75 C.40 D.38

A.

The FDIC provides coverage for: A. CDs B. Fixed Annuities C. Life Insurance D. Variable Annuities

A. CDs The Federal Deposit Insurance Corporation (FDIC) provides coverage for deposits at a bank, in the event the bank has financial troubles. FDIC will cover CDs, but not insurance, or fixed and variable annuities.

A brokerage firm purchases 600 shares of stock from a customer and places the securities into its inventory. In this case, the firm likely acted as a(n): A. Dealer B. designated Market Maker C. Agent D. Underwriter

A. Dealer

Banks savings account are guaranteed and insured by the: A. SIPC B. FDIC C. Federal Reserve Board D. Department of the Treasury

B

Which of the following statements is TRUE concerning electronic communication networks (ECNs)? A. They can be used only by retail investors. B. They can be used by investors who want to trade anonymously. C. They can be used only by institutional investors. D. They can be used by clients who don't want to use a broker-dealer.

B

When a bond is called, the bondholder receives the: A.Call price B.Call price plus accrued interest C.Market price D.Market price plus accrued interest

B.

A U.S. government bond is selling in the market at 96.22. The dollar value of this bond is: A.$950.87 B.$952.80 C.$966.875 D.$9,587.50

C

A bond is selling at a premium. This indicates that: AThe yield to maturity is greater than the nominal yield BThe market price is less than the par value CInterest rates have decreased since the bond was issued DThe nominal yield is less than the current yield

C

When purchasing Treasury notes, an investor should understand: A.Delivery is in either book entry or physical form B.Interest is paid at maturity C.Interest is paid semi-annually D.Principal is adjusted for inflation

C

Which bonds are considered the most liquid? A.Corporate bonds B.Municipal bonds C.Treasury bonds D.Mortgage bonds

C

Which of the following organizations enforces municipal securities regulations for broker-dealers? A.The FRB B.The FDIC C.FINRA D.The MSRB

C

Which of the following securities trades in fractional units of 1/32 of a point? A.Convertible bonds B.Municipal bonds C.Treasury bonds D.Corporate bonds

C

Which of the following regulates the resale of restricted securities? A.Rule 147 B.Regulation D C.Rule 144 D.Rule 145

C.

Which of the following securities has the longest period until expiration? A.Rights B.Options C.Warrants D.Repurchase agreements

C.

The purpose of depository facility is to: A. Clear transactions in equity securities B. Clear transactions in fixed-income securities C. Hold securities in book-entry form D. Ensure that dividend payments are sent to investors by the issuers of the securities

C. Hold securities in book-entry form he Depository Trust Corporation (DTC) is a subsidiary of the Depository Trust & Clearing Corporation (DTCC) and its primary function is to hold securities in book-entry form. This allows broker-dealers to buy and sell securities on behalf of their customers without the costs and time associated with physical certificates. A change of ownership is made from the account of the selling broker-dealer to the account of the buying broker-dealer. The DTC is not a clearing facility

How often to Treasury Notes pay interest to investors? A. quarterly B. Annually C. Semiannually D. At Maturity

C. Semiannually

A common shareholder is not entitled to: A.Vote for the board of directors B.Receive dividends if voted for by the board of directors C.Give or sell shares to anyone she wishes D.Appoint officers of the corporation

D.

If a municipal bond is backed by the revenues of a facility and the income is insufficient to make the debt service payment, which of the following statements is TRUE? A.The bond's indenture will need to be amended. B.The bond's interest rate will increase. C.The issuer is required to close the facility. D.The issuer will default on its next payment.

D.

A corporation wants to offer its shareholders the ability to obtain shares at a fixed price. Which security should the corporation issue? A. Puts B. preferred stock C. Futures D. Rights

d. Rights