SIE Missed Questions

What do unsponsored ADRs trade on

OTC

Regulation FD

addressed the distribution of material, nonpublic information to select individuals, such as research analysts.

When must a firm give a privacy notice?

when the account is opened

current yield

annual interest payment / current price

How much must a gift be worth for the firm to have to maintain records of it?

any amount

Most volatile preferred stock if interest rates are stable

convertible

how are t bills quoted

discount yield

A town has started the construction of public sewers. This project is likely paid by

fees paid to use the sewers

blue sky laws require a RR to...

file an application, pass an exam, and pay a fee

A grant anticipation note is normally paid from

funds received from the federal government

If a broker-dealer decides to change the method that it uses to maintain its records to electronic storage media, what is the firm's obligation?

notify primary regulator 90 days prior to implementation

How long do rights typically last

less than 60 days

What falls more if interest rates are rising: long term bond prices or short term bond prices?

long term, exposed to interest rate risk for longer

How often do Ginnie Mae pass-through certificates pay interest and principal?

monthly

Are Federal National Mortgage Association (FNMA) bonds backed by the US government?

no

Can a person subject to statutory disqualification be associated with a member firm?

no

Can the proceeds of a short sale be used for the purchase of stock?

no

Does the MSRB have the power to regulate municipal bond issuers?

no

are employees of a commercial bank associated persons?

no

can BD employees purchase Equity IPOs?

no

can investment/pension income be used to contribute to an IRA?

no

does a qualified plan have tax-free distributions?

no

must a firm officer who only provides capital to the firm be fingerprinted?

no

Does a customer confirmation have to include whether or not the member firm is the investment banker for the issuer of the security?

no, that's in a research report

If an RR or immediate family member wants to open an account at an external firm they need

prior approval from their firm and to notify the external firm that they work for a BD

how long do warrants typically last

several years to perpetuity

Whose approval is required before a municipality can begin making payments on a moral obligation bond

state legislature

Yankee bonds

issued in the U.S. by foreign corporations and governments, are dollar-denominated securities, and trade in U.S. markets

If firm trades the same as an open customer order

it must fill the customer order at the same price or better

A broker-dealer receives an order from a client to purchase 1,000 shares of ABC stock. Before executing the order, the broker-dealer purchases the same security for its own account at a price that would have satisfied the client's order. The broker-dealer's transaction is considered:

trading ahead

What type of fixed income security always trades at a discount

treasury bills

TRUE or FALSE: A temporary hold can apply to either the entire account or specific disbursements

true

How many owners do Spousal IRAs and Uniform Transfers to Minors (UTMA) accounts have?

1

For how long can a broker-dealer is permitted to hold a customer's mail without instructions concerning a valid reason:

3 months

How are US treasury notes and bonds quoted?

32nd of a point

How often are broker dealers required to send balance sheets?

6 months

A broker-dealer must maintain customer account records for how long after an account is closed

6 years

According to current regulations, if a client redeems his mutual fund shares, the fund company must send the payment within:

7 days

how long do options typically last

9 months up to 3 years

Sales charge formula

(POP - NAV) / POP

When are reinvested dividends and capital gains in an IRA taxed?

All growth, distributions, and accumulations in an IRA are tax-deferred. Any tax consequences will occur when distributions to the holder of the account begin.

If a customer purchases shares of one stock and sells short shares of another stock, how can she settle these transactions?

By executing both transactions in a margin account and depositing the required cash for both transactions.

What do sponsored ADRs trade on

NYSE or Nasdaq

A type of order that becomes a market order when a round-lot trades at or through a particular price is called a:

Stop order

Compromise of Creditors

When the proceeds of a short sale of property is used to settle the payment of a mortgage at less than its full amount, must be reported to FINRA

In judging the fairness of a firm's markup, industry rules would NOT consider:

Whether the client was a retail or institutional customer

What is a prime broker?

A prime-brokerage arrangement involves a variety of services offered by a broker-dealer to an active trading firm

When trading equity securities, the term dark pool is BEST defined as trading:

Between investors, allowing them to buy and sell securities anonymously without quotes being displayed

Interest on Treasury Inflation Protected Securities (TIPS) is subject to what tax?

federal, not state

Interest received from Ginnie Mae pass-through certificates is subject to which taxes?

federal, state, and local

Which orders are adjusted on the ex-dividend date

orders below market price

cost basis after a stock split is based on

original purchase price

The Securities Investor Protection Act of 1970

protects customers of failed broker-dealers

Regulation SP

protects the confidentiality of the information that broker-dealers collect from their clients

National Securities Clearing Corporation (NSCC)

provides clearing services for the majority of broker-to-broker equity trades in the United States

What must happen if a person who is associated with a FINRA member firm has been indicted or pleads guilty to any felony or any misdemeanor that involves the purchase or sale of a security, theft, robbery, burglary, extortion, forgery, or counterfeiting,

reported to FINRA

what is basis with bond pricing

same as yield to maturity

An individual who is considering the purchase of closed-end fund shares would pay:

secondary market price

Who determines the investments in a Coverdell Education Savings Account (CESA)?

the investor (self-directed)

Who is responsible for the payment of interest and principal on a general obligation (GO) bond

the issuer

How are TIPS inflation protected?

the rate of interest is fixed. However, the principal amount on which that interest is paid will vary based on the CPI

In what way are mutual funds and REITs similar?

they are actively managed

The minimum denomination for negotiable certificates of deposit is:

100,000

A client is short stock that's trading at $35.00 and wants to buy, but only if he can buy at $34.00 or lower. He should place which of the following orders?

A buy limit

The SIPC is funded by

Assessments on broker-dealers

he primary purpose of the North American Securities Administrators Association is to

Create rules, laws, and exam requirements for states

Which form reports final arbitration awards

Form U6

The tendering of equity securities is permitted if

Equity securities may be tendered only if the investor is either long the stock or long an equivalent security

Which form does the firm notify FINRA of a termination with?

Form U5

who can place orders for an account?

Only individual's with trading authority can place orders for an account. It does not indicate the husband has trading authority and as a result, the order cannot be accepted. Principals are not permitted to approve orders for accounts in which the individual does not having trading authority.

Which of the following accounts allow for its owners to have different percent interests?

Only joint tenants in common (JTIC) allow for owners to have different percent interests in the account

A customer opens a new margin account and her initial transaction is a short sale of 100 shares of XYZ at $16. What is her minimum deposit requirement?

Short sales must be executed in a margin account since they involve borrowing securities. For the first short sale in a new margin account, the minimum deposit requirement is $2,000. (17555)

Rank the following from longest to shortest life: Options, Warrants, Rights

Warrants, Options, Rights

Under FINRA, who must sign the new account form when a cash account is opened?

a principal of the firm

The Insider Trading and Securities Fraud Enforcement Act of 1988

established specific penalties for the misuse of material, nonpublic information

Who must the firm provide notice to if the account is placed on temporary hold?

account owner and trusted contact person

Does form U4 require arbitration for all disputes or just FINRA

all

What does the loan consent agreement do?

allows a broker-dealer to lend a customer's securities to other clients or broker-dealers

How often must notification of a customer's free credit balance be provided?

at least quarterly (if statements are sent more frequently, then they must be included with statements)

A municipality borrowing for a short-term period to finance a capital project would issue

bond anticipation notes

A method of voting that gives smaller, less substantial stockholders a greater degree of voting power over the larger, more substantial stockholders is:

cumulative voting

Institutional Suitability Requirements

customer can evaluate investment risks independently and the customer is using that ability

The responsibility for automated book-entry changes in the ownership of securities is a function of a

depository facility (ex. DTC)

double-barreled security

municipal security that can be paid from the revenues of a project and is also a general obligation of a municipal government.

A municipal advisor provides advice to

municipalities planning to issue securities

Do you need approval from employer for outside business activities

no

what is the maximum you can spend on a client dinner?

no max

are institutional investors exempt from SRO suitability requirements?

no, but less stringent

does being accused of a relevant crime make someone subject to statutory disqualification?

no, must be found guilty

Do preemptive rights receive the same dividends as shareholders?

no, they get no dividends

What is the limit on trustee-to-trustee IRA transfers?

none

A registered representative purchased two tickets to a concert for which he paid $175 per ticket. If the face value of the tickets is $95 per ticket, the RR may:

not give any tickets to the customer

Main difference between auction rate securities and variable-rate demand obligations?

only VRDOs have put feature

Can a firm prevent disbursements on an account on temporary hold if it has reasonable belief that financial exploitation is occuring?

yes

Do you need to disclose outside business activities to an employer

yes

Is a bankers acceptance a collateralized time draft?

yes

are time of trade disclosures for municipal securities required for unsolicited transactions?

yes

can an employee of a BD loan funds from an immediate family member without approavl?

yes

does a qualified plan have non-discrimination of participants?

yes

does a systematic withdrawal plan always result in a reduction of capital?

yes