SIE Unit 9 Qbank
An investor opens an account with BNZ Government Securities, a broker-dealer limiting its transactions exclusively to securities issued by the U.S. government. The account holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If BNZ's broker-dealer business should fail, the investor would receive Securities Investor Protection Corporation (SIPC) protection in the amount of A) all of the securities and all of the cash, because U.S. government securities do not go bankrupt. B) $500,000 of the securities and none of the cash. C) $0. D) $50,000 of the cash and $450,000 of the securities.
$0 Although the vast majority of broker-dealers are required to be members of SIPC, those who deal exclusively in U.S. government securities are exempt.
If a married couple have a joint account with a market value of $1 million and a debit balance of $600,000, all of which is in securities, how much coverage would this account have? A) $1 million B) $600,000 C) $500,000 D) $400,000
$400,000 A joint account has a maximum coverage of $500,000; however, in a margin account only the equity is covered, so the debit balance is subtracted from the market value, leaving $400,000 equity.
If a married couple have a joint account with a market value of $1 million and a debit balance of $600,000, all of which is in securities, how much coverage would this account have? A) $400,000 B) $1 million C) $600,000 D) $500,000
$400,000 A joint account has a maximum coverage of $500,000; however, in a margin account only the equity is covered, so the debit balance is subtracted from the market value, leaving $400,000 equity.
An investor has a cash account with $300,000 in securities and $40,000 in cash. The investor also has a restricted long margin account containing securities with a market value of $220,000 and equity of $60,000. What is the extent of this investor's Securities Investor Protection Corporation (SIPC) coverage? A) $100,000 B) $400,000 C) $280,000 D) $620,000
$400,000 Coverage under SIPC may not exceed $500,000 in cash and securities, of which up to $250,000 may be cash. In the cash account, his coverage is $300,000 in securities plus $40,000 in cash. In the long margin account, the coverage is only the equity, which is $60,000. Total: $300,000 + $40,000 + $60,000 = $400,000.
Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)? A) A firm that deals only in industrial development revenue bonds B) A firm that deals only with mutual funds C) A firm that deals only in over-the-counter (OTC) and exchange-listed stocks D) A firm that deals only in U.S. government bills, notes, and bonds
A firm that deals only in over-the-counter (OTC) and exchange-listed stocks The Securities Investor Protection Act, which established SIPC, was passed in 1970 to protect persons with brokerage accounts from loss due to failure of their broker-dealer. Firms with such accounts are required to join, with the exception of dealers exclusively in government and municipal bonds and those involved only with investment company securities.
Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)? A) A firm that deals only with mutual funds B) A firm that deals only in U.S. government bills, notes, and bonds C) A firm that deals only in industrial development revenue bonds D) A firm that deals only in over-the-counter (OTC) and exchange-listed stocks
A firm that deals only in over-the-counter (OTC) and exchange-listed stocks The Securities Investor Protection Act, which established SIPC, was passed in 1970 to protect persons with brokerage accounts from loss due to failure of their broker-dealer. Firms with such accounts are required to join, with the exception of dealers exclusively in government and municipal bonds and those involved only with investment company securities.
Under the Uniform Securities Act (USA), registrations must be renewed how frequently? A) Quarterly B) Semiannually C) Biannually D) Annually
Annually State laws require that registrations must be renewed annually for broker-dealers with an office in the state or those who direct calls into the state or receive calls from the state.
A broker-dealer and its associated persons may be subjected to sanctions for violations of the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) rules. Which of the following penalties can be levied against the associated persons? A) Censure B) Limits placed on research activities C) Imprisonment D) Loss of Securities Investor Protection Corporation (SIPC) coverage
Censure
SIPC coverage is best described by which of the following? A) Covers $500,000 in cash and securities B) Covers up to $500,000 in cash and $500,000 in securities C) Covers up to $500,000 in cash and securities but no more than $250,000 in securities D) Covers up to $500,000 in cash and securities but no more than $250,000 in cash
Covers up to $500,000 in cash and securities but no more than $250,000 in cash The maximum coverage is up to $500,000 in cash and securities but no more than $250,000 in cash.
Which of the following organizations was created to protect investors financially from a bank failure? A) Securities Investor Protection Corporation (SIPC) B) Federal Deposit Insurance Corporation (FDIC) C) Federal Reserve Board (FRB) D) Office of Foreign Assets Control (OFAC)
Federal Deposit Insurance Corporation (FDIC) The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank.
Which of the following companies was created by an act of Congress and provides securities investors limited financial coverage in the event that the investor's servicing broker-dealer fails financially? A) Securities Investor Protection Corporation (SIPC) B) Securities Information Center (SIC) C) Federal Deposit Insurance Corporation (FDIC) D) The Office of Foreign Assets Control (OFAC)
Securities Investor Protection Corporation (SIPC) The Securities Investor Protection Corporation (SIPC) was created by Congress to meet customer claims in the event of a broker-dealer bankruptcy.
Which of the following companies was created by an act of Congress and provides securities investors limited financial coverage in the event that the investor's servicing broker-dealer fails financially? A) The Office of Foreign Assets Control (OFAC) B) Federal Deposit Insurance Corporation (FDIC) C) Securities Investor Protection Corporation (SIPC) D) Securities Information Center (SIC)
Securities Investor Protection Corporation (SIPC) The Securities Investor Protection Corporation (SIPC) was created by Congress to meet customer claims in the event of a broker-dealer bankruptcy.
Broker-dealers and registered representatives may be subject to each of the following administrative and regulatory bodies except A) Financial Industry Regulatory Authority (FINRA). B) Securities Investor Protection Corporation (SIPC). C) NYSE. D) state securities administrator.
Securities Investor Protection Corporation (SIPC). Depending on their lines of business, broker-dealers are subject to a variety of regulatory bodies, such as FINRA, the New York Stock Exchange (NYSE), the Chicago Board Options Exchange (CBOE), state administrators, and others. Those broker-dealers that have a municipal securities line of business must comply with Municipal Securities Rule Board (MSRB) rules which are enforced by FINRA. However, SIPC is not a regulatory body; rather it provides insurance protection for investors of failed broker-dealers.
Broker-dealers and registered representatives may be subject to each of the following administrative and regulatory bodies except A) Securities Investor Protection Corporation (SIPC). B) state securities administrator. C) NYSE. D) Financial Industry Regulatory Authority (FINRA).
Securities Investor Protection Corporation (SIPC). Depending on their lines of business, broker-dealers are subject to a variety of regulatory bodies, such as FINRA, the New York Stock Exchange (NYSE), the Chicago Board Options Exchange (CBOE), state administrators, and others. Those broker-dealers that have a municipal securities line of business must comply with Municipal Securities Rule Board (MSRB) rules which are enforced by FINRA. However, SIPC is not a regulatory body; rather it provides insurance protection for investors of failed broker-dealers.
All of the following are self-regulatory organizations (SROs) except A) Securities and Exchange Commission (SEC). B) Municipal Securities Rule Board (MSRB). C) Financial Industry Regulatory Authority (FINRA). D) New York Stock Exchange (NYSE).
Securities and Exchange Commission (SEC).
Which of the following acts created the SEC? A) The Securities Investor Protection Act of 1970 B) The Securities Market Improvement Act of 1975 C) The Securities Exchange Act of 1934 D) The Securities Act of 1933
The Securities Exchange Act of 1934 The Securities Act of 1933 requires the registration of most new issues; the Securities Exchange Act of 1934 created the SEC; the Securities Investor Protection Act of 1970 created the SIPC; the Securities Market Improvement Act of 1975 created the MSRB.
What is the name for the legal framework of state laws for broker-dealers, registered representatives, investment advisors and investment advisor representatives? A) The Investment Advisor Act B) The Securities and Exchange Act of 1934 C) The Uniform Securities Act D) The Securities Act of 1933
The Uniform Securities Act The Uniform Securities Act is a template for state securities laws in the United States.
A customer has multiple accounts at a bank that also owns accounts at a broker-dealer. All of the following accounts would be covered by FDIC insurance up to the specified limits except A) a joint savings account with a spouse. B) a checking account in a money market mutual fund. C) both spouses' individual savings account. D) an IRA in a five-year CD.
a checking account in a money market mutual fund. A money market mutual fund is not considered a deposit of the bank; it is a security, so it is not covered by the FDIC.
Broker-dealers must comply with Securities and Exchange Commission (SEC) rules and regulations when conducting business. A broker-dealer that does not comply may be subject to all of the following except A) suspension or revocation of its registration. B) fines. C) a prison sentence for principals of the firm ranging from two to five years. D) censure.
a prison sentence for principals of the firm ranging from two to five years. Broker-dealers must comply with SEC rules and regulations when conducting business. A broker-dealer that does not comply is subject to censure, limits on activities, functions, operations, suspension of its registration (or one of its associated person's license to do business), revocation of registration, and/or fines.
The SEC can do all of the following except A) fine broker-dealers who violate SEC regulations. B) approve broker-dealers to participate in the securities business. C) revoke registration of broker-dealers. D) limit activities of broker-dealers.
approve broker-dealers to participate in the securities business. The SEC does not approve anyone: they "allow" them to become reregistered.
The Federal Reserve Board (FRB) does all of the following except A) supervise the printing of currency. B) regulate and impact the money supply. C) determine monetary policy. D) enact fiscal policy.
enact fiscal policy. The FRB determines monetary policy (not fiscal) and takes actions to implement its policies, including but not limited to regulating the U.S. money supply and supervising the printing of currency.
Broker-dealers that transact securities business with customers or other broker-dealers must apply and be approved for registration with A) the Municipal Securities Rule Board (MSRB). B) the Chicago Board Options Exchange (CBOE). C) the Financial Industry Regulatory Authority (FINRA). D) the Securities and Exchange Commission (SEC).
the Securities and Exchange Commission (SEC) The SEC is the securities industry's primary regulatory body. Broker-dealers that transact securities business with customers or with other broker-dealers must apply and be approved for registration with the SEC.
Broker-dealers who transact securities business with other broker-dealers or customers must be registered with A) the Options Clearing Corporation (OCC). B) the Securities and Exchange Commission (SEC). C) the Federal Reserve Board (FRB). D) the Financial Industry Regulatory Authority (FINRA).
the Securities and Exchange Commission (SEC).
A customer has a significant amount of money in bank deposit accounts: $225,000 in a savings account titled in the customer's name; $240,000 in a checking account titled jointly with a spouse; and $100,000 in an account where the customer is custodian for a grandchild. Should that bank fail, the Federal Deposit Insurance Corporation (FDIC) insurance would cover A) $250,000 for the savings and checking accounts and $100,000 for the custodial account. B) $225,000 for the savings account, $100,000 for the custodial account, and nothing for the checking account. C) the entire $565,000. D) a total of $250,000, divided proportionately among the three accounts.
the entire $565,000. The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank. Each account listed (savings, checking, and custodial) is a separate ownership category under FDIC rules, so all the money in each of them is covered.
A customer has a significant amount of money in bank deposit accounts: $225,000 in a savings account titled in the customer's name; $240,000 in a checking account titled jointly with a spouse; and $100,000 in an account where the customer is custodian for a grandchild. Should that bank fail, the Federal Deposit Insurance Corporation (FDIC) insurance would cover A) the entire $565,000. B) a total of $250,000, divided proportionately among the three accounts. C) $225,000 for the savings account, $100,000 for the custodial account, and nothing for the checking account. D) $250,000 for the savings and checking accounts and $100,000 for the custodial account.
the entire $565,000. The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank. Each account listed (savings, checking, and custodial) is a separate ownership category under FDIC rules, so all the money in each of them is covered.