SIE Final Exam #2 Missed Questions
A customer buys 100 shares of XYZ at 49 and buys 1 XYZ Jan 50 Put @ $5. Just prior to expiration, the stock is trading at $49. The customer closes the option position at a premium of $2. One week later, the stock moves to $55 and the customer sells the stock position in the market. The net gain or loss on all transactions is: A. $300 loss B. $300 gain C. $600 loss D. $600 gain
$300 gain
On the same day in a margin account, a customer sells short 100 shares of ABC at $44 and buys 1 ABC Jan 45 Call @ $2.50. The customer will break even at: A. $41.50 per share B. $42.50 per share C. $46.50 per share D. $47.50 per share
$41.50 per share Short stock/Long Call breakeven = Short Sale Price - Premium
A customer shorts 1,000 shares of ABC stock @ $5 per share in a margin account. The customer must deposit: A. $2,000 B. $2,500 C. $4,000 D. $5,000
$5,000
A 5 year 2 1/4% Treasury Note is quoted at 100-12 - 100-16. The note pays interest on Jan 1st and Jul 1st. A customer buys 5M of the notes. Approximately how much will the customer pay, disregarding commissions and accrued interest? A. $5,006.00 B. $5,018.75 C. $5,025.00 D. $5,028.75
$5,025
A customer buys 100 shares of ABC at $87 and buys 1 ABC Jan 85 Put @ $4. ABC goes to $72 and the customer exercises the put. The customer's loss is: A. $400 B. $600 C. $1,500 D. $1,900
$600
A customer sells short 100 shares of ABC stock at $60 and sells 1 ABC Oct 60 Put @ $6. The market falls to $30 and the put is exercised. The gain or loss is: A. $600 gain B. $600 loss C. $2,400 gain D. $2,400 loss
$600 gain
Under Rule 147, intrastate offerings cannot be resold out of state for how long after the initial sale date? A. 6 months B. 12 months C. 18 months D. 24 months
6 months
ABC 8% $100 par preferred is trading at $105 in the market. The current yield is: A. 6.6% B. 7.6% C. 8.6% D. 10.6%
7.6% CY = Annual Income/Market Price 8/105 = 7.6
Restricted stock is best described by which of the following? A. A security which was never registered and can only be sold in the public markets when it is either registered, or sold under an exemption provision B. A security of an issuer which has been bought in the open market by an officer or director of that company C. A security purchased by a non-accredited investor in a Regulation D private placement D. A security which is purchased by an issuer that is not exempt from the provisions of the Securities Acts
A. A security which was never registered and can only be sold in the public markets when it is either registered, or sold under an exemption provision
Which of the following is NOT personal information related to a customer account? A. Information received from a credit rating agency about that customer B. Data mined from that customer's activities on the member firm's website C. Aggregated information about activities in all customer accounts at that broker-dealer D. Data mined from that customer's activities on web sites linked to the member firm's web site
Aggregated information about activities in all customer accounts at that broker-dealer
Which of the following best describes "structuring"? A. Depositing or withdrawing cash in amounts just over $10,000 B. Depositing or withdrawing cash in amounts just under $10,000 C. Diversifying among asset classes in amounts just over $10,000 D. Diversifying among asset classes in amounts just under $10,000
B, Depositing or withdrawing cash in amounts just under $10,000
The reported net income of a company has declined at a faster rate than operating income. This could result only from an increase in: A. depreciation expense B. interest expense C. cost of goods sold D. product returns
B, Interest expense
A registered representative receives an order from an institutional client to buy a large block of ABCD stock. The firm has information barriers in place. Which statement is TRUE about orders placed to buy ABCD stock at the firm prior to the filling of the block order to buy? A. The registered representative can place an order to buy ABCD stock personally, but other buy orders received by the firm cannot be filled B. Other buy orders received by the firm can be filled, but the registered representative cannot place an order to buy ABCD stock C. Buy orders from both the registered representative and other clients of the firm can be filled D. Orders placed by either the representative or the clients of the firm cannot be filled
B, Other buy orders received by the firm can be filled, but the registered representative cannot place an order to buy ABCD stock
Which statement is TRUE about a non-qualified variable annuity? A. Contributions to the contract are tax-deductible B. Investments held in the separate account grow tax-deferred C. Withdrawals from the contract prior to retirement age are tax-free D. Withdrawals from the contract after retirement age are tax-free
B. Investments held in the separate account grow tax-deferred
The Broker Loan Rate is best described as the rate at which: A. brokers loan money to banks which then purchase securities B. brokers borrow from banks using customer securities as collateral C. customers charge brokers for borrowing their securities for stock loans D. the Federal Reserve charges member banks for overnight loans
Brokers borrow from banks using customer securities as collateral
Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no later than: A. Trade Date B. Confirmation Date C. Settlement Date D. Statement Date
C, Settlement date
The breakeven point for the holder of a put is: A. the premium paid B. unlimited C. strike price minus premium paid D. strike price plus premium paid
C, strike price minus premium paid
The ex date for a cash dividend is Wednesday, November 6th and the Record Date is Thursday, November 7th. Which statement is TRUE? A. A buyer of the stock in a regular way trade on November 6th will receive the dividend B. A buyer of the stock in a regular way trade on November 7th will receive the dividend C. A seller of the stock in a regular way trade on November 6th will receive the dividend D. A seller of the stock in a regular way trade on November 7th will not receive the dividend
C. A seller of the stock in a regular way trade on November 6th will receive the dividend To buy stock in a regular way trade in time to get a cash dividend, it must be bought before the ex date, making Choices A and B false. A purchase on November 5th will settle on November 8th while a purchase on November 7th will settle on November 11th (it goes over the weekend) and the purchaser will not be an owner of record as of November 7th. To sell stock in a regular way trade and still retain the dividend, the stock cannot be sold until the ex-date or after. Thus, Choice C is true - if the stock is sold on November 6th, the trade will settle on November 8th and the seller will show as an owner of record on November 7th and will receive the dividend. If the stock is sold on November 7th, the trade will settle on November 11th (it goes over the weekend) and the seller will be an owner of record as of November 7th and will receive the dividend - making Choice D false.
A custodian account is established under UTMA in a State with a transfer age of 21. Legal age in the state is 18. At age 19, the beneficiary leaves college to go into business setting up a software company. The beneficiary wishes to use the assets in the UTMA account as "seed money" for the business. Which statement is TRUE? A. The beneficiary can use the account assets immediately without restriction B. The beneficiary has no access to the account assets until he or she reaches age 21 C. The beneficiary can use the account assets only with the approval of the custodian D. The beneficiary can use the assets only with the approval of the state administrator
C. The beneficiary can use the account assets only with the approval of the custodian
All of the following are permitted investments in Individual Retirement Accounts EXCEPT: A. U.S. minted gold coins B. U.S. issued securities C. Commodity futures D. Bank certificates of deposit
Commodity futures
All of the following are considered to be funded debts EXCEPT: A. mortgage bonds with 20 year maturities B. debentures with 10 year maturities C. collateral trust certificates with 15 year maturities D. promissory notes that need to be refinanced with long term debt
D, promissory notes that need to be refinanced with long term debt
Which statement is FALSE regarding the conduct of Treasury Bill auctions? A. 4 week, 13 week and 26 week T-Bills are auctioned weekly B. 1 year T-Bills are auctioned monthly C. Non-competitive bids take priority over competitive bids D. Bids are awarded based on the lowest discount yield except for 26 week bills which are sold at par
D. Bids are awarded based on the lowest discount yield except for 26 week bills which are sold at par
Regarding the notification of a broker-dealer's financial condition to customers, a brokerage firm must send semi-annual statements which include the firm's: I Balance sheet II Income statement III Net capital computation A. I only B. I and II C. I and III D. II and III
I and III
Which of the following corporate distributions are taxable to the recipient? I Cash dividend II Stock dividend III Product dividend IV Stock split A. I only B. I and III C. III and IV D. I, II, III, IV
I and III
Which of the following statements are TRUE regarding lump sum distributions from qualified plans? I They may be rolled over into an IRA without dollar limit II They may be rolled over into an IRA subject a dollar limit of $35,000 III They remain tax deferred as long as the rollover is performed within 60 days IV They remain tax deferred as long as the rollover is performed within 90 days A. I and III B. I and IV C. II and III D. II and IV
I and III
Which of the following are defined as "investment companies" under the Investment Company Act of 1940? I Face Amount Certificate Company II Unit Investment Trust III Management Company IV Oil and Gas Leasehold Partnership A. I and II only B. III only C. I, II, III D. I, II, III, IV
I, II, III
Which of the following are terms that describe economic indicators? I Leading II Lagging III Coincident IV Concomitant A. I and II only B. III and IV only C. I, II, III D. I, II, III, IV
I, II, III
Which of the following statements are TRUE regarding the trading of government and agency bonds? I Trading is performed by primary and secondary dealers II Trading is performed by the Federal Reserve III The trading market is active IV Trading takes place on the New York Stock Exchange A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV
I, II, III
Which of the following information is needed to open a new customer account? I Customer occupation and employer II Whether the customer is an officer or director of a publicly held company III The customer's country of citizenship IV The customer's birthdate A. I and II only B. III and IV only C. I and IV only D. I, II, III, IV
I, II, III and IV
Which of the following statements are TRUE about Treasury Receipts? I The underlying securities are backed by the full faith and credit of the U.S. Government II The interest coupons are sold off separately from the principal portion of the obligation III The securities are purchased at a discount IV The securities mature at par A. I and II only B. III and IV only C. I, II, IV D. I, II, III, IV
I, II, III, IV
Corporate dividend payments can be made in the form of: I Cash or company products II Listed options of that company III Additional common shares of another company IV Additional common shares of that company A. II, III, IV B. I, II, III C. I, III, IV D. I, II, III, IV
I, III, IV
A wealthy customer has been asked by his neighbor to invest in the private placement of a "start-up" technology company as a venture capital investor. This is the first time that the customer has considered such an investment. The customer contacts his registered representative and asks: "Aside from the investment risk associated with a "start-up" company, what are the other issues that I should consider before making such an investment." The registered representative should inform the customer that: I because these securities are not registered with the SEC, such an offering would be illegal in the United States II because the securities are not registered with the SEC, they can only be resold in the public markets if the company effects a registered primary distribution and is current in its SEC filings III public resale of these securities can only occur if the customer holds the securities for 6 months "at risk" and then sells the securities in measured quantities IV these securities can only be resold by the customer to underwriters that will buy the securities into their inventory and then register them with the SEC A. I and III B. I and IV C. II and III D. II and IV
II and III
Which of the following statements are TRUE about the Federal Funds rate? I The Federal Funds rate is set by the Federal Reserve and is the rate at which member banks can borrow reserves from the Fed II The Federal Funds rate is set by member banks and is the rate on overnight loans of reserves from member to member III Federal Reserve actions taken by the FOMC will influence the Federal Funds rate IV Federal Reserve actions taken by the FOMC have no effect on the Federal Funds rate A. I and III B. I and IV C. II and III D. II and IV
II and III
Which of the following actions by the Federal Reserve will tighten credit? I Repurchase Agreement II Reverse Repurchase Agreement III Matched Sale A. I only B. II only C. II and III D. I, II, III
II, III
Which of the following callers are subject to the provisions of the Federal Telephone Consumer Protection Act of 1991? I Non-profit Organization II Securities Firm III Telemarketing Firm IV Real Estate Company A. II only B. III only C. II, III, IV D. I, II, III, IV
II, III, IV
All of the following information is found in the Official Notice of Sale EXCEPT: A. maturities of the bonds B. interest rate on the bonds C. dated date on the bonds D. award date of the bonds
Interest rate on the bonds
A customer places an order to buy bonds. The order reads "Buy 5M ABC 9s M '35 @ 90 GTC." The customer has entered a: A. stop order to buy at 90 B. limit order to buy at 90 C. market order to buy D. stop limit order to buy
Limit order to buy at 90
PDQ Corporation has declared a rights offering to stockholders of record on Thursday, July 22nd, payable on Monday, August 9th. Under the offer, shareholders need 25 rights to subscribe to 1 new share at a price of $75. Fractional shares can be rounded up to purchase 1 full share. The last day to buy PDQ shares before they go ex rights is: A. Monday, July 19th B. Tuesday, July 20th C. Friday, August 6th D. Monday, August 9th
Monday, August 9th
The term "negotiable" describes all of the following EXCEPT: A. common stock B. preferred stock C. rights D. mutual funds
Mutual Funds Common stock, preferred stock, ADRs, rights and warrants are all negotiable, meaning that they are traded in the public markets. Non-negotiable securities do not trade - rather they are purchased from the issuer and redeemed with the issuer. Mutual funds are redeemable securities.
Trades of NASDAQ listed securities that take place in all markets are consolidated and reported through the: A. Network A Tape B. Network B Tape C. Network C Tape D. Network D Tape
Network C
Which of the following items are taxable to a limited partnership? I Short Term Gains II Long Term Gains III Ordinary Income A. I only B. I and II only C. III only D. None of the above
None of the above
Mutual Funds NAV Buy Chg ALPO Fund 9.51 10.39 +.02 AUDI Fund 6.82 7.45 +.04 The funds listed are: A. open end management companies B. closed end management companies C. fixed unit investment trusts D. participating unit investment trusts
Open End management companies These funds are open-end management companies, commonly called mutual funds. Closed-end management companies are not sold with a sales charge. They trade on an exchange and are bought at the prevailing market price plus a commission.
Exempted issuers are defined under the: A. Securities Act of 1933 B. Securities Exchange Act of 1934 C. Trust Indenture Act of 1939 D. Investment Company Act of 1940
Securities Act of 1933
A money purchase retirement plan would invest in all of the following securities EXCEPT: A. Tax Free Municipal Bonds B. U.S. Government Bonds C. Equities D. Variable Annuities
Tax free municipal bonds
