SIE: Simulated Mock Exam #5

There are two types of do not call lists. What are they and how long do names stay on the list?

- BD list - National list - names remain on list until removed by customer

Regular-way settlement is T+2 for everything except ___, ___ ___ ___, and ___

- treasuries - money market securities - options

Unless otherwise specified, the size of a firm quote is

100 shares

The sales charge for Class A shares may not exceed

8.5% of the total investment Though they are almost always much smaller, sales charges for Class A shares may not exceed 8.5% of the money invested. For example, if an investor spends $1,000 for Class A shares, no more than $85 may be charged as a sales load.

A RR has left the securities industry and now holds a manufacturing job. Under what circumstances may this former RR continue to receive commissions from work done at the person's old firm?

A contract must have been signed by the RR and the firm specifying what commissions are still to be paid

An officer of a public company buys 1,000 shares of the company's registered stock in the open market. Regarding the sale of these shares, the officer may sell A) immediately, subject to Rule 144 volume limitations B) under Rule 144 only after a six-month holding period C) immediately, with no volume restrictions D) only after leaving (becoming unaffiliated with) the company

A) immediately, subject to Rule 144 volume limitations Because the shares were purchased in the open market (already registered), the transaction is not a private placement and there is no required holding period. The officer, however, is an affiliate and is therefore subject to the reporting and volume limitations imposed when selling under Rule 144.

Which of the following transactions, if any, cannot be done in cash account? A) sell 100 ABC to open B) buy 100 ABC to close C) any of these could be done in a cash account D) buy 100 ABC to open

A) sell 100 ABC to open Selling to open (a short sell) can only be done in a margin account. It cannot be done in a cash account.

If par value of the bond is $1,000, what is the value of 1 bond point? A) $100 B) $10 C) cannot be calculated D) $1

B) $10 A bond point is 1% of the bond's par value of $1,000 ($10)

MAS Corp has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of A) 6% B) 2% C) 10% D) 4%

B) 2% The stated MAS preferred dividend is 4%, participating up to 6%. In this year, when it has been determined that they should receive the full participating dividend, they will receive the additional participating 2%.

Transactions where the penny stock rules are applicable would be those that A) are unsolicited B) are solicited C) are neither solicited nor unsolicited transactions D) are either solicited or unsolicited

B) are solicited Unsolicited transactions (those not recommended by BD or RR) are exempt from the penny stock rules. Solicited transactions are nonexempt, and the rules therefore apply.

The time to maturity for debt instruments A) can never be longer than 30 years B) can be any length of time C) must always be between 5 and 30 years D) can never be shorter than 5 years

B) can be any length of time While 5- to 30-year maturities are common, the length of time to maturity can be shorter or longer

Which of the following best describes the calculation for gains or losses for tax purposes? A) proceeds minus dividend plus cost basis B) proceeds minus cost basis C) proceeds plus cost basis D) proceeds plus dividends minus cost basis

B) proceeds minus cost basis proceeds minus cost basis = capital gains, the dividends are not part of the calculation for capital gains

When a new associated person is hired at a BD firm, which of the following is responsible for seeing that the Form U-4 is completed and filed? A) The local FINRA district office B) the employing BD firm C) the new employee D) the SEC

B) the employing BD firm though the new employee furnishes most of the information contained in Form U-4, it is the responsibility of the employing firm to arrange for the information to be placed on the form and filed

Unless otherwise specified, the size of a firm quote is A) 10,000 shares B) 1,000 shares C) 100 shares D) 500 shares

C) 100 shares This is according to FINRA rule

How long could a temporary hold be placed on distributions in a senior's account if exploitation is expected? A) 30 days B) 60 days C) 15 days D) 45 days

C) 15 days The hold can be no longer than 15 days

Craig and Judy have just married. It is a second marriage for both of them and they both have kids from a prior marriage. Craig would like his portion of their account to go to his kids when he dies and Judy would like her portion to go to her kids when she dies. As new partners in marriage, while they are both alive they would like to have full access to the account. What type of account should they set up? A) Each should set up their own individual TOD account with LPOA B) JTWROS C) Joint TIC D) A partnership account

C) Joint TIC The JTIC account does exactly what the clients requested. The JTWROS does not separate their assets at death; instead the whole account would go to the surviving spouse. Individual accounts with LPOA and TOD would not give both full access to the account. The partnership account is for business purposes.

An official statement is a disclosure document that would be used in connection with an offering of which of the following securities? A) Limited partnership interests B) Common or preferred stock offered privately C) Municipal bonds D) U.S. Treasury notes

C) Municipal bonds An official statement serves as a disclosure document and contains any material information an investor might need about a municipal bond issue. Municipal bonds are exempt from registration under the Securities Act of 1933

Which of the following best describes how a buy stop @ 39 would fill? A) The next available price after the market price falls to 39 B) The next price below 39 after the market price falls to 39 C) The next available price after the market price rises to 39 D) The next price above 39 after the market price rises to 39

C) The next available price after the market price rises to 39 A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price.

As interest rates rise, prices of preferred stock will A) become volatile B) remain unaffected C) fall D) rise

C) fall because it pays a fixed dividend, preferred stock is interest-rate sensitive. As rates rise, prices of preferred stocks tend to fall and vice-versa

Shares to sell short have been located in order to be borrowed. Once sold short, these shares will be known as A) naked B) closed C) uncovered D) covered

D) covered Selling short requires borrowing or locating the shares to be borrowed first. These shares, because they have already been located to be borrowed, are known to be covered

An investor is short a January 30 call at 5. Maximum loss for the investor is A) 25 points or $2,500 B) 5 points or $500 C) 50 points or $5,000 D) unlimited

D) unlimited Maximum loss for a short call is unlimited. This could occur because the underlying stock can rise to some unlimited number.

A municipal finance professional (MFP) is

an employee of a FINRA member engaged in municipal security representative activities such as underwriting and trading

The term investment strategy applies to recommendations to ___ __, ___, or ___ securities. When making recommendations, both ___ and ___ items in a customer's profile should be considered.

invest in; hold; sell; financial and nonfinancial