SIE Exam
According to FINRA rules, which of the following falls under the definition of an independently prepared reprint?
A copy of a magazine article on retirement planning issued by a publisher that is not affiliated with the member
FinCEN requires banks and broker/dealers to adhere to anti-money laundering (AML) rules, including
A designated independent party to test the procedures.
An individual has already filed a U4 form, but is now subject to statutory disqualification. Which of the following reportable events triggered the disqualification?
A felony conviction for driving under the influence (DUI)
An account under the Uniform Gifts to Minors Act earned $8,500 in interest income from bonds. The minor is 13 years old. How is this interest income taxed?
A portion is taxed at the minor's rate and a portion is taxed at the rate applied to trusts.
All the following are appropriate options that a broker/dealer can offer customers to allow them to opt out of Reg S-P Privacy Rules easily EXCEPT
A written letter.
The syndicator of a limited partnership is a corporation or person
Acting as the organizer of the partnership.
Passive ETFs are similar to index funds in all of the following ways EXCEPT
Active management
In order to open a new corporate margin account, all of the following are needed EXCEPT
An affidavit of domicile
An Emerging Market Currency ETN may be an appropriate investment for which of the following persons?
An experienced investor looking for a simple way to gain exposure to a portfolio of emerging market currencies
All of the following are true concerning mutual fund shareholder rights EXCEPT they
Approve portfolio changes when recommended by the investment adviser
What is the lowest price at which the dealer will sell a stock to the investor?
Ask
The options disclosure document of the Options Clearing Corporation (OCC) must be sent to the customer
At or prior to account approval
The highest price a dealer is willing to pay for a security is known as the
Bid price
When a customer sells a security in the secondary market, he or she will receive the
Bid price
Corporations generally issue warrants in connection with which of the following?
Bonds, in order to secure a lower interest rate
If an investor is very bullish on a stock, which of the following actions would provide the greatest potential short-term gain?
Buy one call on the stock
Which one of the following statements describes the market manipulation practice of painting the tape?
Buying and selling a security among traders to create a high level of activity to influence the price of a stock
An investor had a series of bonds in his portfolio "called" by the issuer. What "value" can he expect to receive for the bonds when he redeems them with the issuer?
Call premium value
Nonsystematic risk
Can be reduced through diversification.
Systematic risk
Cannot be diversified away and affects the market as a whole
The sum of all issued securities of a corporation is referred to as the corporation's
Capital structure
The term "double-barreled" is used to refer to which of the following?
Certain municipal bonds where a taxing authority guarantees debt service payments in the event that pledged revenues are insufficient
Which type of stock would a person own for the best assurance of receiving dividend income?
Cumulative preferred
A registered representative (RR) has a client who wants him to maintain all monies and securities for her at his brokerage. For the RR to meet the requirements for such a custodial account, he will need to do which of the followin
Establish an account in his client's or his name that contains only his client's monies and securities.
How often must performance statistics in a mutual fund prospectus be updated?
Every 12 months
An investor can be granted an extension of time by
FINRA and the transacting exchange
Which type of investment company issues certificates that can be redeemed for a fixed amount on a specified date?
Face Amount Certificate
Which of the following products has the characteristics of both a bond and a preferred stock?
Fixed rate capital security
Which of these issues one type of security only that pays monthly interest?
Ginnie Mae (GNMA)
In accordance with the Uniform Gifts to Minors Act, a donor may
Give an unlimited amount of cash.
Mrs. Johnson bought 200 shares of Intec at 18 in March. When she passed away in June, the market price of Intec was 21. What is the taxation to her daughter, who inherited the shares?
Her cost basis is 21 and the holding period is long-term.
Which of the following is TRUE regarding the review or approval of institutional communications?
Institutional communications must be reviewed or approved by FINRA
Which of the following securities acts governs the variable annuity separate account?
Investment Company Act of 1940
Which of the following is true regarding a private securities transaction?
It is a violation of Conduct Rules
Which of the following statements about the balance of payments is TRUE?
It is the sum of all transactions between a country and the rest of the world over a specified period of time.
All of the following statements are true regarding a security EXCEPT
It may not be transferred between parties.
Which of the following is NOT true regarding a nonqualified retirement plan?
It needs IRS approval
An annuity owner chooses the straight life annuitization option because
It provides the maximum cash flow of all his options.
Variable life policy provisions allow for
Loans against a percentage of the policy's cash value.
Which of the following is a function of depositories?
Move securities from one participant's account to another participant's account
After the first annuity payment is calculated in a variable annuity, future payments are calculated by
Multiplying the number of annuity units by the current redemption value of a unit.
A registered representative (RR) has acquired a new customer with an existing portfolio that has five holdings that are equally weighted in the portfolio: technology, pharmaceuticals, energy, S&P 500 index fund, and money market fund. The RR notes that in addition to market risk, this portfolio is subject to which of the following risks?
Nonsystematic
The Fed Funds rate is the interest rate that
One bank charges another for overnight borrowing.
Your client is 78 years old and has recently shown signs of memory lapses when he meets with you. It has been about 3 months since you have spoken with this client when you notice a significant amount of activity in the account, including the sale of securities and requests for funds to be removed. You are concerned about fraud in the account. What action can you take to address your concerns?
Place hold on account
Which of the following is a lagging indicator?
Prime rate. The prime rate is a lagging indicator. A lagging indicator changes after GDP does.
Which of the following represents the order in which market orders are filled?
Priority, precedence and parity
Which of the following best fits the definition of an investment adviser?
Publisher of reports used to promote particular securities
The expense limitation clause of a life insurance policy
Requires the insurance company to pay administrative expenses above the maximum charges stated in the policy.
All of the following are agency issues backed by government-guaranteed or insured mortgages EXCEPT
SLMA
Which of the following is a characteristic of term bonds?
Same date maturities
Which of the following facts concerning UGMA accounts is incorrect?
Securities are registered in the name of the minor.
Which of the following describes a variable rate demand note (VRDN)?
Security with a stated maturity date, floating interest rate, and an option to put the security back to the financial intermediary daily or weekly
One of your clients bought 100 shares of TBS at 20. The stock has now risen to 55, and the client would like to protect her profit. Which of the following orders should be entered?
Sell stop at 54.88
In order to participate in a private securities transaction, a registered representative (RR) must do which of the following?
Send prior written notice to his supervisor outlining the transaction, his role, and the compensation structure
Which transaction can only be executed in a margin account?
Short sale of common stock
Which situation would cause U.S. exports to become less competitive than foreign exports
Strong US dollar
A client requested that his registered representative call his brother who is interested in investing. The client's brother is on the National Do-Not-Call registry. The registered representative should
Tell the client he cannot call his brother without the brother's written permission.
Which of the following is true concerning fees charged by investment advisers?
advisory fees must be disclosed prior to advice being given.
All of the following apply to preferred stock EXCEPT
all preferred stock is cumulative for past dividends and allows for a dividend catch up at some point in the future
When a customer buys a security in the secondary market, he or she will pay the
ask price
A broad market index ETN carries all of the following risks EXCEPT
business risk
When an in-the-money S&P 500 Index call option is exercised, it settles in
cash
The type of investment risk that impacts buying power and results in devaluation of assets is called
inflation risk
The cash value of a variable life insurance company must be calculated
monthly
If a limited partnership interests are distributed in a public offering, what is the name of the disclosure document?
prospectus
Sustained inflation over time will erode the value of a dollar. This is known as
purchasing power risk
When the holder of a put option exercises his option, this means that he is exercising his
right to sell stock at the strike price
Realized appreciation is
the net appreciated value in a security that has been sold
Which of the following is the highest yield when a bond is trading at a discount?
yield to maturity
When a registered representative decides to place a mutual fund advertisement, which of the following is a requirement?
Written approval from a registered principal of the firm.
Companies are required to notify FINRA of corporate actions, such as dividends, stock splits, or reverse stock splits, and rights or subscription offerings within what time period?
10 days prior to the record date
For how long are member firms required to keep a customer's written authorization to withdraw money from their account after the expiration date?
3 years
A background check must be performed within how many days after the Form U4 is filed with FINRA?
30 days
A customer who purchases securities in a cash or margin account must pay for the securities in
4 business days
The Investment Company Act of 1940 states that a certain percentage of a mutual fund's board of directors be unaffiliated with the fund. This minimum percentage of unaffiliated members must be at least
40% The board of directors is elected by fund shareholders and 40% of these board members must be unaffiliated with the fund. The remaining 60% may be employees, underwriters or advisers of the fund.
Which of the following CANNOT benefit from the catch-up contributions provision in IRAs?
45-year-old man currently on disability
The statute of limitations for fraudulent tactics to induce the purchase or sale of securities is
5 years from the violation or within 2 years of discovery.
Which of the following is TRUE regarding a Rule 147 offering?
80% of the proceeds must be invested in the state
All of the following are considered essential facts members must obtain when opening a new account EXCEPT
Employment history
Which one of the following comparisons would NOT make sense when deciding between investing in one mutual fund or another?
Different sectors of mutual funds
All of the following are characteristics of an Exchange-Traded Fund (ETF) EXCEPT
ETFs sell directly to investors.
In evaluating a limited partnership, which is the most important consideration?
Economic viability
Under which of the following circumstances is a company NOT permitted to restrict or close an account?
The client has sold a recently purchased security that has settled, or the client only has 55% equity in the margin account
A customer instructs his broker/dealer to purchase 200 shares of Dunham Corporation. Two days after trade date, the customer decides that he no longer wants the shares. Which statement is correct?
The customer has entered into a legally binding contract and is obligated to pay for the stock.
Which of the following best describes cash settlement?
The customer pays for the securities on trade date.
The separate account for a variable life policy had a 3% rate of return over the past year. The AIR for the policy is 6%. How will this affect the death benefit of the policy?
The death benefit will decrease but not below the face amount of the policy
A customer purchased 100 shares of XYZ stock at $30 per share. Two years later, the customer donated the shares to charity. At the time of the donation, XYZ had a market value of $50 per share. What are the tax consequences for the customer?
The donor will have a $5,000 income tax deduction.
Which of the following is considered a conflict of interest in a limited partnership?
The general partner self-dealing to insure profits without regard to the limited partners
UITs have fixed portfolios, which means that
The holdings in the portfolio are fixed for the life of the trust.
A customer has purchased $15,000 worth of XYZ Corporation over a period of time. Which of the following is true about his subsequent sale of $5,000 of XYZ stock?
The investor is allowed to specify which shares are being sold to minimize his capital gain.
Concerning valuation of a variable annuity, all of the following are true EXCEPT
The number of annuity units increases during the accumulation phase.
Under the Uniform Securities Act, the definition of an investment adviser includes
The publisher of an investment newsletter that promotes specific investments for a fee.
An investor wants to give her daughter all of the shares in her growth mutual fund. Since the initial purchase, the value of the shares has increased steadily over the life of the investment. When the shares are gifted, the cost basis of the daughter's shares will be
The same cost basis that the investor had for the shares
Under what circumstance would the Federal Reserve sell treasury bonds in the open market?
To tighten the money supply
The capital structure is the total of all securities issued by a corporation. Which of the following statements is INCORRECT concerning corporate securities?
Treasury Stock has voting rights
All of the following investments are subject to currency exchange risk EXCEPT
U.S. Treasury bonds
XYZ Corporation is a well-known seasoned issuer (WKSI) and is planning to expand operations. XYZ will need additional capital in stages for this expansion. If XYZ does a shelf offering, how much time will it have to issue additional shares before it has to refile?
Up to 3 years from the effective date of the shelf offering
What is the timeframe for filing relevant Suspicious Activity Reports
Within 30 days of INITIAL DISCOVERY
