More SIE Review
face-amount certificate company
An investor has entered into a contract to pay an investment company a specific sum of money in exchange for the company's agreement to pay the investor a specific (larger) sum of money on a specific date in the future. The investment company must be
strike price, the price the investor can purchase stock at
An investor is long 1 May 35 call at 5. The 35 in this contract represents
long 900 shares at 15
An investor is long 300 shares of MAS at 45. The stock has just undergone a 3:1 split. The investor's new position is
the price of the bond move higher
An investor owns a bond carrying a 4% coupon. Interest rates in the marketplace have been moving downward and are currently at 2.5%. Given the current interest rates in the marketplace, this investor should see
$5,300
An investor sells short 1 MJS June 55 put at 2. The current market value of LMN is 56. The investor's maximum loss potential is (Put sellers are bullish. Therefore, the maximum risk is if the stock falls to 0. The maximum potential loss, therefore, is the strike price less the premium received for the put (55 − 2 = 53). The maximum loss per contract is $5,300. The current market value of the stock at the time the put was sold short is of no consequence.)
Negotiable jumbo CDs
are issued in denominations of $100,000-$1 million and trade in the secondary market. Most jumbo CDs are issued with maturities of one year or less. These CDs are unsecured promissory notes backed only by the credit standing of the issuing institution.
before or during the sales presentation
If a prospectus is being used to close a mutual fund sale, it must be given to the investor
Being highly liquid
Money market securities can be associated with which of the following characteristics?
contract is at parity
On a long call, when the premium is equal to the intrinsic value, which of the following is true?
36 months
Once a customer account has been opened at a broker-dealer, rules require that updating information on the account record occur no less frequently than once every
Business risk
Portfolio diversifying might be used to reduce which of the following risks?
exchanges or over the counter (OTC)
REIT shares can trade on
push bond prices lower in the open market
The Federal Reserve Bank is raising interest rates, this will
may affect contributions into a Coverdell ES
The income level of a donor
unlimited
The maximum gain on a long call is
premium
The maximum gain on a short call is
unlimited
The maximum loss on a short call is
prospectus
The operating characteristics of LGIPs are similar to those of money market funds, and they keep a $1 net asset value (NAV). They are not required to register with the SEC and therefore there is no
money market mutual fund investing in short-term corporate debt
Your client, Dana McRae, has no investment experience. She just retired and won't be in a high tax bracket. She also is concerned about volatility of her investments. She is more concerned about preserving her principal than getting a high rate of return. Which of the follow would you recommend?
short stock position
gives an investor unlimited risk potential if the stock should rise because the investor must eventually buy back the stock at the higher price...unlimited risk. The sale of a naked call requires that, if exercised, the writer must buy the stock in the market and deliver it at the strike price. Again, because the stock can rise to some unlimited price, the position carries unlimited risk.
financial risk
risk that an issuer will be unable to meet interest and principal payments on debt obligations
face-amount certificate company
offers the investor a certificate with a face amount on it. The investor buys it for a discount from the face amount, with the agreement being that the company will pay the investor the face amount on a specific date in the future.
FINRA
oversees trading in the over-the-counter (OTC) market
Real estate investment trusts (REITs)
pay dividends and pass gains through to investors but not losses.
Sell stop orders
placed below the current market price and become market orders once the price touches or passes through the stop price
bid price
price the broker-dealer is willing to pay when buying a security, price a customer will receive when selling a security
Interest
specific rate of return the borrower pays the investor for use of the funds
current yield
stated coupon rate / current market price (so if stated rate is 4% -- coupon rate is $40)
accounts grow tax deferred
Which of the following are true of both qualified plans and nonqualified plans?
Holding a stock and selling above its cost basis if over 12 months later would be a long-term gain
Which of the following are true of long-term or short-term gains or losses?
next available price after the market price falls to 39
Which of the following best describes how a sell stop at 39 order would be filled?
time of execution of the trade & At what price to execute the trade
Which of the following choices would a registered representative be able to make for a customer in a nondiscretionary account?
Withdrawals may not be free of state taxation
Which of the following is true when opening an out-of-state Section 529 plan?
open-end management investment company
Which of the following issues only common stock?
Credit and hypothecation agreements
Which of the following must be signed by a customer wanting to open a margin account?
Long calls
Which of the following positions will mitigate the risk of a short call position?
Selling short
Which of the following transactions has the most risk?
Sell 100 ABC to open
Which of the following transactions, if any, cannot be done in a cash account?
fund pays a small dividend; market value of the portfolio declines.
Which of the following would cause a change in the net asset value (NAV) of a mutual fund share?
fee-based account
Which type of account fee structure is typically better for the moderate to active trader?
hedge fund
Your client, Chue Xiong, is a very wealthy, sophisticated investor and has many years of experience investing in aggressive strategies. He is looking for very high rates of return on a very large investment and is willing to have the money tied up for a few years. Which of the following would be suitable for him?
No stated time limit
A registered representative has left one firm to join another. Sometime later, the former employer discovers that some information on Form U-5 filed at the time of termination was inaccurate. The firm need not file an amended U-5 if at least how much time has gone by?
private securities transaction
A registered representative helps an old school friend issue securities for a small business under formation. A registered representative helps an acquaintance sell some inherited stock certificates without the acquaintance becoming a customer of the firm.
closed-end company
A company has just conducted a stock offering, by prospectus, through an investment banker. The proceeds of the offering are used to purchase a portfolio of securities. The stock, now in the hands of the public, is freely traded in the secondary market, and the portfolio is managed to generate maximum profit according to a specific investment objective. The company must be
secondary offering, additional public offering
A company is already public with several major stockholders. Sale proceeds for shares being sold to the investing public will go to some of the existing stockholders who want to divest of their shares. This is
tender offer
A company offers to repurchase outstanding debt securities it has issued directly from its bondholders for cash in what would commonly be known as
additional public offering
A company with previously issued shares outstanding wants to issue more shares to the public. These new shares are issued in what is known as
exchange market execution
A corporation sells shares to the investing public in order to raise capital. This is known as
Fully paid for marginable securities totaling $6,400 in market value
A customer receives a Regulation T margin call for $3,200. To meet the deposit requirement, which of the following can be deposited?
filing a CTR with FinCEN
A customer wishes to deposit $20,000 in cash into her account. This requires
legislative risk
A luxury tax that consumers must pay that is levied on nonessential items of a certain value or more is an example of
Immediately, at the lowest
A market order to buy must be executed when and at what available price?
common shareholders
A preferred shareholder's priority claim on assets is the preferred shareholder's priority standing over
par value
A preferred stock dividend is stated as a percentage of
30 days in each month and 360 days in each year
Accrued interest on corporate bonds is calculated using
ability to invest small amounts in many different securities, increased purchasing power in the marketplace
Advantages to the investor offered by investment companies include
short stock
All of the following are bullish positions except
NYSE-listed securities
All of the following are exempt from Regulation T except
Negotiable CDs
Being secured by no physical asset and backed only by a bank's good faith and credit, a bank's promise to pay principal and interest can be evidenced in which of the following securities that are traded in the secondary market?
trading costs for active traders
Exchange-traded funds (ETFs) offer several attractive advantages over mutual funds. All of the following would be advantages that ETFs typically have over mutual funds except
Two
Financial Industry Regulatory Authority (FINRA) normally requires that member firms provide at least how many names as emergency contacts as a part of their business continuity plan (BCP)?
Six-month holding period, with sales allowed freely thereafter
For restricted stock (unregistered) held by a nonaffiliated, which of the following applies?
taxed at either ordinary income tax or capital gains tax rates
For tax purposes, investment income is
She now has more shares at a lower cost basis
Grace Olson owns 100 shares of XYZ stock at $50 per share when the company declared a 2:1 split. Which of the following is true?
2%
MAS Corporation 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
T+2
Isaac James has some call options in his account that he would like to exercise. He wants to know when the resulting purchase of the stock would settle. You would tell him
nonsystematic risks
Risks that are unique to a specific industry, business type, or investment type are known as
subject to volume restrictions within any 90-day period
Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares
Covers up to $500,000 in cash and securities but no more than $250,000 in cash
SIPC coverage is best described by which of the following?
mortgage debt
Secured corporate debt includes
margin account
Selling to open (a short sell) can only be done in a
have the opportunity to approve or disapprove of the associated person's participation
Should a registered representative enter into a private securities transaction that would entail earning compensation, the employing member will
6%
What is the penalty, if any, for overcontribution to an IRA?
Random-selection basis
What method is used to assign exercise notices to broker-dealers with short positions by Options Clearing Corporation (OCC)?
should be less than that of the real estate it is backed by
When a corporation issues a mortgage bond, the issue's total value
be unaffected by the open-market interest rates
When interest rates in the open market move up or down, a bond's coupon rate will
Lower interest rates on loans to consumers
When the Federal Open Market Committee (FOMC) directs that Treasury securities be purchased in the open market, this will do which of the following?
hypothecation agreement
contract allowing securities to be pledged for the loan
