SIE practice exam

An investor owns 500 shares of stock whose current market value is $20 per share. The stock undergoes a split, after which the investor owns 400 shares. What is the new price of the investor's stock?

$25 per share

Interest on a 7% corporate bond would be paid to the investor as

2 semiannual checks for $35 each

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

2%

An investor discovers that exactly 2 years and 9 months ago, the investor was given fraudulent information on a security that prompted the investor to sell it. As a result, the investor lost money. How long does the investor have to bring action?

3 months

A customer writes an MMM January 70 put at 6. The maximum potential gain on this position is

600

Your customer is long 1 October 75 put at 2. The customer's maximum gain potential is

7300

Which of the following constitute a private securities transaction, or "selling away"? A registered representative executes a trade for a customer in securities of a type normally handled by the representative's broker-dealer. A registered representative's sibling has some old bonds that the representative sells as a favor through a municipal securities broker. 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.

A registered rep helps an old school friend issue securities for a small business under formation and A registered rep helps an acquaintance sell some inherited stock certificates without the acquaintance becoming a customer of the firm

By purchasing shares of stock in a company, investors can benefit from which of the following? An increase in the price of the shares An increase in price of the company's debt securities An increase in the yield of the company's outstanding debt securities The receipt of profits to be distributed

An Increase in price of shares and The receipts of profit to be distributed

Of the following stocks, which would be defined as penny stocks? Nasdaq listed stock trading at $4 per share Bulletin Board stock trading at $4 per share Exchange Listed stock trading at $4 per share "OTC Pink" stock trading at $4 per share

Bulliton board stock trading at $4 per share and OTC pink stock trading at $4 per share

Which of the following is an example of an unsecured debt security? Debenture Preferred stock Mortgage bond Income bond

Debenture and Income bond

Each SRO functions under the SEC's oversight and is accountable to the commission for enforcing federal securities laws. While the MSRB regulates all matters related to the underwriting and trading of state and municipal securities, it does not have enforcement powers of its rules. Which of the following does the MSRB rely on for enforcement of these rules?

Financial industry regulatory authority

Which of the following describes the results of a 1 for 2 reverse stock split?

Half as many shares at twice the original price

Under what circumstances could a broker-dealer firm share in a financial loss with a customer?

If the loss was due to an error on the part of the firm

Large time deposits of more than $100,000 are considered to be found in what part of the money supply?

M3

An individual is solicited with a cold call made by a registered representative. He tells the representative he is not interested in this investment or in making any future investments. Which of the following actions is required by the Telephone Consumer Protection Act of 1991?

No calls may be made to the prospect by anyone at the firm

Mutual funds that market directly to the public, using no underwriter and charging no sales charge, are called

No load funds

The performance of listed options contracts is guaranteed by which of the following?

OCC

Deductions for depletion would most likely apply to which of the following direct participation programs (DPP)?

Oil and gas income program

A registered representative wants to place advertisements in his daughters youth athletic league quarterly sponsorship booklet. He wants to convey in the weekly bulletin at his church that he specializes in retirement planning and 529 plans. Which of the following statements regarding these advertisements is TRUE?

Pre approval by a principal of the broker dealer is required

Which of the following retirement plans does not require minimum distributions once the participant has reached age 70½?

Roth IRA

A corporation has issued a single bond having successive maturity dates set from 2020 through 2030. This is known as what type of bond?

Serial

Which of the following is TRUE for U.S. Treasury-issued securities?

T-bills are purchased at a discount, while T-bonds are purchased as a percentage of par

A shareholders' meeting for ABC Corporation will take place in 8 days. A customer whose stock is being held in street name has not returned the proxy statements. Which of the following is TRUE?

The member firm may vote the shares as it wishes on minor matters

In an LP, which of the following is TRUE?

The partnership entity is not responsible for paying taxes on gains

Which of the following are TRUE regarding mutual fund sales charges? They are used to defray fund expenses, such as operating costs and salaries. They are set by the fund's transfer agent. They are not an expense to the fund, but to the investor. They are used to compensate the fund's underwriter and sales representatives.

They are not an expense to the fund, but to the investor and they are used to compensate the fund's underwriter and sales representatives

Which of the following is TRUE regarding general partners (GPs) in a limited partnership?

They should participate in the day to day management of the partnership

Associated persons or registered representatives who want to work outside of their existing employment with their current broker-dealer may do so if they provide prior written notice to the member. In which of the following would notice not be required?

They will be involved in extensive fundraising activities for a charitable institution

On October 8, an investor discovers that a security purchase that took place on August 5 of the same year was prompted by fraudulent information provided by the broker-dealer on the day of the purchase. How long does the investor have to bring action?

Until October 7th of the following year

Mr. Smith enters a trade in a stock at the same time as Mr. Jones, who has inside information regarding that company. Mr. Smith is considered

a contemporaneous trader

An investor owning 400 shares of CDS stock receives notice that the stock will be split. When the split is complete, the customer owns 600 shares of stock. The split must have been

a forward, uneven split

An offering in which one or more stockholders in the corporation are selling all or a portion of their own shares to the investing public for the first time is known as

a secondary offering

A corporation divests itself of all of the shares of another company it owns. This is known as

a spin off

A corporate bankruptcy liquidation took place. Of the following—general creditors, secured bondholders, subordinated debenture holders, accrued taxes—who was paid first and who was paid last?

accrued taxes first, subordinated bondholders last

Which of the following would be considered earned income?

bonus received from employment

An investor owns MMS call options. This investor is

bullish, hoping the stock will rise

Of the following, reinvestment risk is most closely associated with

call risk

A bond having a call feature

can be redeemed before maturity at the issuer's option

Accusations of FINRA Conduct Rule violations will heard and handled under the

code of procedure

Voting rights are a privilege generally afforded to

common shareholders only

When investing in overseas markets in foreign securities, investors should be aware of and understand

currency risk

An allowable deduction to compensate for decreasing natural resources in an oil and gas DPP are known as

depletion allowances

In the dividend disbursement process three of the four critical dates are determined by the board of directors but one is determined by either FINRA for OTC stocks or the exchange for listed stocks. Which one is it?

ex dividend

A customer has purchased a stock and then sold it before paying for the purchase. This is generally known as

freeriding

The USA PATRIOT Act's required Customer Identification Program is designed chiefly to prevent real estate fraud funding of terrorist activities use of insider information money laundering

funding of terrorist activity and money laundering

The firm element of a broker-dealer's continuing education requirement must be undergone by all registered persons who

have direct contact with the public

Under the Investment Company Act of 1940, which of the following is NOT considered and investment company

hedge fund

Private placements are primarily sold to

institutional investors

An investor requests a preliminary prospectus for a new issue. Regarding the document which of the following is TRUE?

it is made available between the registration date and the effective date

An August 15 call is written at 4. The call expires without being exercised by the owner. The writer of the call

keeps the $400 received when the call was written

Class C mutual fund shares are also known as

level load shares

Each of the following may be traded on an exchange EXCEPT

life insurance

Characteristics common to penny stocks would include which of the following?

market price less than $5 per share and unlisted

Secured corporate debt includes

mortgage debt

An investor anticipates that a fall in interest rates is imminent. This investor, now wanting to purchase bonds in order to lock in interest income, would likely buy

noncallable bonds

During the cooling-off period, underwriters of new securities may accept orders to purchase shares not accept orders to purchase shares not accept indications of interest regarding potential purchases of shares accept indications of interest regarding potential purchases of shares

not accept orders to purchase shares and accept indications of interest regarding potential purchase of shares

A mutual fund can offer all of the following to investors EXCEPT

physical custody of the fund's portfolio cash and securities

A company is considering raising capital without going through the registration process requirements mandated by the Securities Act of 1933. To be exempt from the Act, which of the following offerings might they employ?

private (nonpublic) securities offering

Securities issued by the U.S. federal government are classified as

receipts, STRIPS, and bills

When a client of a broker-dealer purchases stock on margin, in order to finance the loan, the broker-dealer

rehypothecates the stock to the bank

Under the Uniform Transfers to Minors Act (UTMA) a custodian has control over the account and can do each of the following EXCEPT

sell short and write uncovered call options

During the 20-day cooling-off period, solicitations of sales can be made solicitations of sales may not be made deficiency letters, if issued, are sent to the issuer deficiency letters, if issued, are sent to the underwriters

solicitation of sales may not be made and deficiency letters, if issued, are sent to the issuer

Which of the following records must be kept for the life of a broker-dealer firm?

stock certificate books

Listed options expire on

the 3rd Friday of the expiration month

Fingerprint cards are required by the SEC to be filed with

the US attorney general

A customer of a FINRA member firm buys securities on margin. The customer is expected to pay a rate of interest on the margin loan based on which of the following?

the broker call loan rate

A registered representative has a customer buying securities, but rather than paying in full, the customer wants to borrow some of the money needed for the purchase from the broker-dealer. It is explained to the customer that in order to borrow the money, there will be interest payable based on

the broker call loan rate

If an associated person is disciplined for violating SEC rules and regulations, and is ultimately suspended by the SEC, the member firm where the person is affiliated must report the suspension to

the exchanges where the firm is a member

Implementing monetary policy, and thereby undertaking the responsibility to maintain the stability of the U.S. financial system, is

the federal open market committee(FOMC)

While a branch office manager can initially approve an options account for trading, it must ultimately be approved by

the firm's ROP

All of the following must be on the cover page or beginning of the summary prospectus of a mutual fund EXCEPT

the name of the investment adviser

All member firm communications are held to certain standards by FINRA. All of the following characterize those standards EXCEPT

the nature of the audience (age,investment experience) need not to be a consideration at an open seminar

A party wishing to solicit proxy authority to vote a particular stockholder's shares must register with

the securities and exchange commssion

Mary Alice McVey, a registered representative with a FINRA member broker-dealer, has recently remodeled her home and now has an area with a private entrance that she would like to use instead of commuting each day to her office 20 miles away. Under FINRA rules

this would be permitted with FINRA's approval

Your firm must provide a privacy notice describing its privacy policies to customers

whenever a new account is opened and annually thereafter

Of the following strategies, which is considered most risky in a strong bull market?

writing calls