FINRA Practice SIE Exam

a customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. the customer will break even when the stock is selling at what price per share at expiration? $3 $32 $35 $38

$38

a company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stock at $10 per share and sets no minimum number of shares to be purchased. an investor wants to participate in this offer and tenders his 1,000 share position. at the close of the offer period, only 900,000 shares have been tendered. how many of the investor's shares will the company purchase? 0 100 900 1,000

1,000

Company ABC announces a 20% stock dividend for its common shareholders. if a customer holds 1,000 shares at $50, what is the new price and number of shares following the payment of the stock dividend? 800 shares at $62.50 1,000 shares at $41.67 1,200 shares at $41.67 1,200 shares at $50

1,200 shares at $41.67

under normal circumstance, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? 3 months 6 months 13 months 24 months

13 months

a decline in the GDP must last for at least how many quarters to be considered a recession? 1 2 3 4

2 quarters

The computation of dollar prices and accrued interest on municipal bonds is normal on what calendar basis? 30/360 30/365 Actual/360 Actual/365

30/360

an investor owns 100 shares of XYZ common stock at the current market price of $50 per share. if XYZ conducts a 1-for-2 reverse stock split, the investor's post stock-split position will be: 50 shares at $25 per share 50 shares at $100 per share 200 shares at $25 per share 200 shares at $100 per share

50 shares at $100 per share

Under the Securities Act of 1933, registration is required for which of the following securities? Eurodollar bonds municipal securities American depository receipts (ADR's) securities issued by the federal government

ADR's

which of the following products is adversely impacted if the issuer's credit rating is downgraded? mutual funds unit investment trusts (UIT's) exchange-traded funds (ETF's) exchange-traded notes (ETN's)

ETN's

a savings account at a bank is guaranteed by which of the following entities? FDIC SIPC Federal Reserve Department of the Treasury

FDIC

Blue-sky laws are regulated by which of the following entities? SEC MSRB FINRA state securities regulators

State securities regulators

when a broker-dealer charges a commission on a securities transaction, it has acted as: an agent a principal underwriter a market maker

agent

A married couple who earned income that exceeded $300k in each of the prior two years and reasonably expects the same for this current year is: a qualified investor an accredited investor an institutional investor a qualified institutional buyer

an accredited investor

which of the following investments are generally traded according to their average life rather than their stated maturity dates? corporate bonds government bonds asset-backed securities fixed-rate capital securities

asset-backed securities

in over-the-counter market, the term "spread" refers to the difference between the: bid and asked prices offered and asked prices indicated and firm prices opening and closing prices

bid and asked prices

the primary purpose of a syndicate desk in the context of an equity offering is to: determine the list of selling shareholders build an order book and allocate the stock solicit interest from investors in the stock offering chaperone company management during the road show

build an order book and allocate the stock

If a market maker posts a quotes of 10.00 - 10.10 (25x10), which of the following actions is the market maker willing to take? sell 1,000 shares at $10 and buy 2,500 shares at $10.10 buy 2,500 shares at $10 and sell 1,000 shares at $10.10 sell 100 shares at $10 and buy 250 shares at $10.10 buy 250 shares at $10 and sell 100 shares at $10.10

buy 2,500 shares at $10 and sell 1,000 shares at $10.10

in a period of low inflation and economic recession, the federal reserve is expected to take which of the following actions? decrease taxes raise the federal funds rate buy bonds in the open market require banks to increase reserves

buy bonds in the open market

the call provision of a bond stipulates which of the following factors? maturity date call date and call price original issue discount coupon rate and call date

call date and call price

Upon expiration, all in-the-money S&P 100 index call options are settled by the delivery of which of the following? cash S&P 100 index stocks S&P ETF's same number of S&P 100 index put options

cash

a transaction in which a writer covers a position by purchasing an option is called: closing sale closing purchase opening sale opening purchase

closing purchase

Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items EXCEPT: gifts meals lodging commissions

commissions

a customer is an officer of a company that is involved in some significant changes. all of the following items are examples of corporate affairs that could be considered inside information if the customer shares them with his registered representative EXCEPT: pending transactions declared stock dividend top management changes imminent financial liquidity problems

declared stock dividend

which of the following actions is required of a broker-dealer's anti-money laundering program? designating an AML compliance officer filing of the firm's AML program with FINRA conducting background checks of all employees identifying to regulators the employees responsible for Currency Transaction Reports

designating an AML compliance officer

Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? volunteering as a youth soccer league coach gambling resulting in winnings in excess of $10k driving part time for a transportation network company on weekend selling nonproprietary investment company securities products through her firm

driving part time for a transportation network company on weekends

which of the following actions violates FINRA rules regarding selling away? recommending to a customer the services of another broker-dealer sharing commissions with another registered representative in the same BD advising customers to buy mutual funds at amounts just below a discount level engaging in private securities transactions without written prior consent of the employing BD

engaging in the private securities transactions without written prior consent of the employing BD

All of the following risks apply to both foreign and domestic debt instruments EXCEPT: political exchange repayment interest rate

exchange

Direct participation programs (DPP's) provide: liquidity and transparency exposure to non-correlated assets with steady returns market-related correlations with higher average returns investors with direct purchases of stock from public companies

exposure to non-correlated assets with steady returns

Which of the following actions is required when a firm receives cash in excess of $10k from one customer in one business day? file a Currency Transaction Report (CTR) file a suspicious activity report (SAR) with the SEC issue a cash transfer receipt to the customer place a five-day hold on the customer's account for the funds received

file a currency transaction report (CTR)

which of the following statement is true about treasury stock? it has voting rights it receives dividends it is issued stock that has been subsequently reacquired by the corporation it is authorized stock that has not been issued and is held in the corporation's treasury

it is issued stock that has been subsequently reacquired by the corporation

which of the following communications with the public is considered misleading? historical illustrations based on factual performance product comparisons that illustrate material differences a research report that includes a buy recommendation for a specific security literature providing a 10-year performance information to support predictions of future performance

literature providing 10-year performance information to support predictions of future performance

which of the following responses describes an advantage of index funds the protection of principal during bearish markets high turnover to take advantage of market opportunities higher management fees due to active management of the fund lower management fees due to passive management of the fund

lower management fees due to passive management of the fund

a member of a stock exchange responsible for providing liquidity in a security by being willing to buy and sell at all times is known as a: broker underwriter market maker transfer agent

market maker

which of the following investment risks is the greatest risk in a variable life insurance policy? credit risk market risk inflation risk interest rate risk

market risk

Stability in the value of a debt portfolio is greatest when: interest rates are rising interest rates are falling maturities of the debt securities are long maturities of the debt securities are short

maturities of the debt securities are short

UTMA accounts are opened under the tax ID number of the: minor donor parent custodian

minor

at issue, which of the following debt securities mature in one year or less? FNMA bonds GNMA bonds treasury notes money market instruments

money market instruments

Regular way settlement on Treasury Bonds is: same day next business day second business day fifth business day

next business day

No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? no-load funds do not charge 12-b1 fees no-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points sales charges for load mutual funds increase their annual expense ratios fund management fees for no-load funds are always lower than load funds

no-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points

a RR is reviewing the following portfolio: 30% ABC Energy company, 30% health care company, 30% ETF, 10% money market funds. which of the following risks is inherent in this portfolio? credit liquidity political nonsystematic

nonsystematic

the last transaction in XYZ 5.50s 2030 was at 102. this bond is selling at par premium discount asset value

premium

Which of the following outcomes are possible for the writer of a covered call option? profit limited and loss limited profit limited and loss unlimited profit unlimited and loss limited profit unlimited and loss unlimited

profit limited and loss limited

A firm is a participant in a public offering. To sell a substantial amount of the securities to its customers, the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: prohibited as fraudulent and manipulative. Permissible if the securities are deposited into escrow. prohibited unless the firm immediately sets aside funds for the repurchase permissible if the customers retain the right to sell the securities into the open market.

prohibited as fraudulent and manipulative

an associated person who is not a registered representative is permitted to engage in which of the following activities? accept an unsolicited customer order provide account opening forms to a new customer discuss the attributes of a particular investment product prequalify prospective customers as to investment objectives

provide account opening forms to a new customer

Roth 401(K) and Roth individual retirement accounts (IRA's) plans share which of the following features? contributions are made pretax neither account has maximum contribution limits neither account is subject to early distribution penalties qualified distributions are excluded from federal income tax

qualified distributions are excluded from federal income tax

under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? financial institutions accredited investors qualified institutional buyers non accredited investors who have previously purchased restricted stock

qualified institutional buyers (QIBs)

a customer has a cash balance in her account together with long positions in several securities. she has made no securities transactions in the account during the past 18 months. how often must the firm send her an account statement? monthly quarterly semiannually annually

quarterly

a broker-dealer is permitted to accept payment for a new issue from a new customer when the: registration is effective red herring is delivered preliminary prospectus is amended transaction takes place during the cooling-off period

registration is effective

to offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? puts rights futures preferred stock

rights

call protection is most valuable to a bond owner when bond prices are generally: rising falling stable fluctuating

rising

which of the following stakeholders has first claim priority in a chapter 11 proceeding? equity holders secured debt holders unsecured debt holders administrative claim holders

secured debt holders

when is interest on treasury notes paid? quarterly semiannually annually at maturity

semiannually

a registered representative wants to participate in a private securities transaction. which of the following actions must the RR take? request a meeting with his supervisor to lay out the structure of the deal call his supervisor and inform her of the deal and the RR's potential involvement send written notice to his supervisor outlining the activity and compensation structure initiate the paperwork required by the policies of the firm once the activity has begun

send written notice to his supervisor outlining the activity and compensation structure

under a system of statutory voting, a common stockholder has as many votes for each vacancy on the board of directors as the number of: positions vacant on the board directors present at the meeting shares owned by the stockholder proxies available for voting by the board

shares owned by the stockholder

FinCEN accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing: SEC regulations the Bank Secrecy Act the Securities Act of 1933 the Investment Company Act of 1940

the Bank Secrecy Act

what is the cost basis of an inherited mutual fund? the NAV of the shares when the owner dies the NAV 30 days after the owner's death the same cost basis as the deceased the same cost basis as the deceased plus capital gains distribution

the NAV of the shares when the owner dies

What is the concept of an annuity contract?

the kind of annuity selected partly determines the payment amounts to the annuitant

which of the following statement is true regarding a customer account held as tenants in common? the owners must equally share the assets the ownership of the decedent's assets is governed by their will or state law tenants in common is permitted for use only for two individuals tenants in common is permitted for use only for married couples or family members

the ownership of the decedent's assets is governed by their will or state law

Under SEC S-P (Consumer Privacy), which of the following information must a firm include in its customer privacy and opt-out notices? the address of the firm's website the fee to opt out from the privacy program the deadline by which to opt out from the privacy program the policies to protect the security of nonpublic information

the policies to protect the security of nonpublic information

which of the following considerations should a registered representative explain to a customer when recommending a 529 college savings plan? the potential deductibility of contributions from state taxes the potential deductibility of contributions from federal taxes the income eligibility restrictions to contribute to the account the right of the account beneficiary to the assets at the age of majority

the potential deductibility of contributions from state taxes

which of the following represents the effect of a stock split? the price per share of common stock increases the price per share of common stock decreases each stockholder's proportionate ownership decreases each stockholder's proportionate ownership increases

the price per share of common stock decreases

Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? same stock on the same day in a margin account same stock in different accounts on the same day the same stock in different account in the same household the same stock in a cash account without paying for the stock in full

the same stock in a cash account without paying for the stock in full

when selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? the spot exchange rate the counter currency's inflation rate the trade balance between the two countries the credit rating of the counter currency's government

the spot exchange rate

Which of the following statement is true about all US Gov agency issues? they are exempt from federal taxes they are exempt from registration under the Securities Act of 1933 they are issued in bearer form only they are general obligations of the fed gov

they are exempt from registration under the Securities Act of 1933

in the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? DTC issuer custodian transfer agent

transfer agent

The owner of which of the following products is MOST exposed to inflationary risks? utility stocks treasury bills treasury bonds blue chip industrials

treasury bonds

which of the following security types provides investors with a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis? equity put option perpetual preferred stock variable rate demand note tax-deferred variable annuity

variable rate demand note

under industry regulations, an initial purchase of $3k of common stock in a margin account requires a cash deposit of: $750 $1,500 $2,000 $3,000

$2,000

A registered representative who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? FINRA each state's securities administrator a register principal of the RR's firm the investment management division of the appropriate regional SEC office

a registered principal of the RR's firm

The redemption value of an open-end investment company's shares is based on the: previous offering price previous closing NAV NAV computed after the order is received offering price computed after the order is received

NAV computed after the order is received

Which of the following Form U4 reportable events results in a statutory disqualification? personal bankruptcy filing written customer complain alleging misappropriation of assets a felony theft charge a felony conviction for a DUI charge

a felony conviction of a DUI charge

Describe the difference between primary distribution and secondary distribution.

a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares

At the time of issuance, which of the following securities normally has the longest period to expiration? Rights Options Warrants Repurchase agreements

Warrants