SIE Study
Qualified higher education expenses in a 529 plan include which of the following expenses for elementary and secondary public school?
$10,000 tuition
The par value of preferred stock is
$100
What is the limit of a political contribution that a municipal finance professional (MFP) can make?
$250 per election cycle
A broker/dealer that is required to perform a calculation of its customer reserve requirement under SEC Rule 15c3-3 must make any deposit required no later than how many days after the date of the calculation?
2
Who must review institutional communications?
registered principal
Retail communications and the names of the people who prepared and approved them must be kept on file for a)3 years. b)5 years. c)10 years. d)Indefinitely.
3 years
Any changes to information on Form U4 must be updated within how many days? a)10 days b)20 days c)30 days d)90 days
30
If member terminates registered person, must notify FINRA within how many days? 15 30 60 90
30
A broker/dealer sent a customer's stock certificate to transfer, but has not received new certificates or validation from the transfer agent. After how many days will this not be considered a "good control location" for its customer's securities under the SEC Customer Protection Rule (SEC Rule 15c3-3)? a)1 b)7 c)25 d)40
40
An investor wishes to puchase 1000 shares at $1 per share. What is margin requirement? 500 1000 2000 2500
500 It would typically be 1000. But, the 2000 minimum only applies when they are opening an account
Director of public corp wishes to sell his stock in the company. Under rule 144, how long is the holding period? 3, 6, 12, 24 months??
6 months
if mutual fund does not offer dividend reinvestment at the NAV then the maximum allowable sales charge is 8.5 8 7.5 6.25
6.25
Which of the following is an example of capital risk?
A company must liquidate due to bankruptcy.
If an investor is considering working with a registered rep, what is a resource they can go to to check their background?
BrokerCheck
Which of the following is true of treasury stock? a)It is stock that has been repurchased by the issuing corporation. b)It is authorized but unissued. c)It is accepted by the Federal Reserve as marginable. d)It receives dividends.
a)It is stock that has been repurchased by the issuing corporation.
Which of the following must be filed to establish a corporate margin account?
Corporate resolution
A predispute arbitration agreement includes all of the following EXCEPT a)The parties waive their right to go to court. b)Arbitration procedures are more limiting than court proceedings. c)Arbitrators never have to explain the reasons for their awards. d)Arbitration is final and binding upon the parties.
c)Arbitrators never have to explain the reasons for their awards.
A customer is concerned about access to her account in the event of a major business disruption, such as a power outage that impacts major cities on the Eastern Seaboard. How can her registered representative provide reassurance? a)Inform the customer that FDIC protects brokerage accounts up to a specified level b)Assure the customer that major disasters of that magnitude seldom occur c)Remind the customer about the firm's Business Continuity Plan that was provided at account opening and is also available on the firm's website, and mail the customer a copy of the plan. d)Tell the customer that her account is protected by SIPC
C.. Business continuity
Which of the following statements is true? a)Only out of the money options premiums have time value. b)Only at the money options have intrinsic value. c)Both at the money and out of the money options have no intrinsic value. d)Neither at the money nor out of the money options premiums have time value.
C.. no intrinsic value regardless
The amount by which the price of a municipal bond exceeds the par value is said to be the a)Discount. b)Spread. c)Premium. d)Markup.
C... premium
The major difference between an open-end investment company and a closed-end investment company is in the
Capitalization.
Which of following is an appropriate investment for LGIP international mutual fund sector fund commercial paper private equity fund
Commercial paper because you want low volatility
All of the following describe hedging EXCEPT a)It controls risk. b)It can limit upside profit potential. c)It involves disproportionate risk to generate profits. d)It limits losses.
c)It involves disproportionate risk to generate profits.
A registered representative uses discretion if he chooses which of the following? a)Time and price b)Time of execution c)Number of shares d)Price
c)Number of shares
An analyst sends a memo to investment banking department. This is permissible if also sent to SRO under no circumstances only upon SRO approval If the memo is also sent to legal
If it is also sent to legal sent to legal or compliance
A variable life policy's nonforfeiture provision
Entitles the policyowner to the cash value less any outstanding loan amount if the policy is terminated
Which of the following is true of REITs?
If they are publicly owned, they must be registered with the SEC
All of the following regarding preferred stock dividends are correct EXCEPT a)The dividend is based on par value. b)The dividend is interest rate sensitive. c)The dividend is fixed or stated. d)Like common stock dividends, the dividend may change.
Like common stock dividends, the dividend may change
All of the following are true of the organizational structure of a balance sheet EXCEPT
Liquid items appear on the left and illiquid and fixed items appear on the right.
Which of the following corporate bonds is secured by real estate?
Mortgage Bond
The settlement on options when they are exercised may be either physical or cash. Which of the following statements is NOT true? a)Most stock options are physically settled. b)Physically settled options are usually American style. c)Cash settled options are typically European style. d)Most stock options are cash settled.
Most stock options are cash settled.
An indication of interest on a new issue of corporate securities is binding on
Neither the customer nor the dealer.
Under what conditions may a FINRA member firm sell an initial public offering (IPO) to one of its nonregistered employees? a)The amount of the purchase is small and not disproportionate to the size of the issue. b)The employee promises in writing to hold the securities for 2 years. c)The member firm failed to make a bona fide public offering at the offering price. d)Under no circumstances
Never
All of the following are types of new stock underwritings EXCEPT a)Firm. b)All-or-none. c)Not held. d)Standby.
Not held
Which of the following best fits the definition of an investment adviser?
Publisher of reports used to promote particular securities
An equity REIT invests in a)GNMAs. b)Stocks. c)Mortgages. d)Real estate.
Real estate
All of the following describe the Municipal Securities Rulemaking Board (MSRB) EXCEPT a)Regulates state and local government issuers of municipal securities. b)Writes rules and regulations for municipal firms. c)Regulates municipal advisors. d)Principal regulator of the municipal securities market.
Regulates state and local government issuers of municipal securities. It has nothing to do with the issuers, just the issuees
Under Regulation T, the 90-day restriction applies to a customer who purchases and subsequently sells
Same stock in a cash account without having first fully paid for the purchase.
All of the following statements about zero-coupon corporate bonds are true EXCEPT a)They are issued only in bearer form. b)They are sold at a deep discount with no current yield. c)The return is accreted over the life of the bond. d)The holder will receive full face value at maturity.
They are issued only in bearer form.
Research analyst has meeting with employee from investment bank
This is okay as long as there is a compliance officer
Not an exempt transaction
Treasury notes
In order to register as a registered representative, individuals must complete which of the following forms? a)Form U4 b)Form U5 c)Form U10 d)Form U14
U4
Which of the following is FALSE regarding warrants? a)Warrants can trade separately from the common stock. b)Warrants have a longer life than rights. c)Warrants are issued at a discount to the underlying equity in order to make security offerings more attractive to the investor. d)Warrants typically have a long life, perhaps even perpetual; the subscription price is above the stock's current market value.
Warrants are issued at a discount to the underlying equity in order to make security offerings more attractive to the investor. Nah, they are sold at premium
Disclosing a part of the qualification examination to another person or using portions of present or past examinations for study purposes is deemed
a violation
Which of the following signatures does FINRA require on a new account form? a)A principal of the broker/dealer b)The customer and the customer's spouse c)The customer's d)The registered representative's
a)A principal of the broker/dealer Kevin Miller is signed at the bottom
Under the Anti-Money Laundering Regulations, when a broker/dealer knows that a client makes several wire transfers in one business day for a total of more than $10,000 in currency, the broker/dealer must a)Complete a currency transaction report (CTR). b)Notify the state police. c)Notify the FBI since interstate commerce is involved. d)Complete a suspicious activity report (SAR).
a)Complete a currency transaction report (CTR). Broker/dealers are required to file a Currency Transaction Report (CTR) for single transactions involving currency that exceed $10,000, or multiple transactions during any one business day that total more than $10,000.
Which of the following is a function of the Internal Revenue Service (IRS)? a)Determine, assess, and collect personal and corporate taxes b)Manage federal finances c)Enforce federal finance and tax laws d)Issue coinage and currency
a)Determine, assess, and collect personal and corporate taxes
In accordance with the Uniform Gifts to Minors Act, a donor may a)Give an unlimited amount of cash. b)Include the value of collectibles in the account. c)Only revoke gifts of cash. d)Give cash gifts up to $15,000 annually.
a)Give an unlimited amount of cash.
Which of the following is true of REITs? a)If they are publicly owned, they must be registered with the SEC. b)At least 50% of their gross income must be from real estate-related activities. c)They are generally known as limited partnerships. d)They must distribute at least 80% of their earnings to qualify for special tax treatment.
a)If they are publicly owned, they must be registered with the SEC.
Which statement about "best execution" is true? a)Member firms must use reasonable diligence to determine the best market for executing a customer's order to ensure the best possible price. b)Even if an order can be executed directly with a market, member firms can always use a third party between a member and the best market for a security. c)FINRA determines the best market for executing a trade. d)Member firms randomly select a market for execution.
a)Member firms must use reasonable diligence to determine the best market for executing a customer's order to ensure the best possible price.
The custodian of a fund is responsible for which one of the following functions? a)Recording the fund's physical assets b)Handling redemptions c)Participating in the sale and distribution of the fund's shares d)Disbursement of dividend and capital gains distributions
a)Recording the fund's physical assets
Disclosure, care, conflicts of interest, and compliance represent the four component obligations of a)Regulation Best Interest. b)Regulation T. c)Regulation S-P. d)Regulation SHO.
a)Regulation Best Interest.
Which of the following does NOT fall under the classification of an investment company according to the Investment Company Act of 1940? a)Variable annuities b)Face amount certificates c)Unit investment trusts d)Management companies
a)Variable annuities
A firm is acting in the capacity of a broker and receiving a commission. The firm is performing as a)An investment adviser. b)A dealer. c)An agent. d)A principal.
agent
Publications reporting total return data for an investment should use the recommended reporting period of a)5 years and 10 years. b)1 year, 5 years and the lesser of 10 years or life of the investment. c)1 year, 5 years and life of the investment. d)3 years and 5 years.
b)1 year, 5 years and the lesser of 10 years or life of the investment. they playing conservative
Which one of the following statements is correct regarding jurisdiction and authority of SROs and broker/dealers? a)A broker/dealer may execute a securities transaction if their associated persons have passed the appropriate qualifying exam and are registered, even if they have not yet paid the fees that are due. b)Broker/dealers must join an SRO in order to charge commissions and markups. c)SROs can sanction member firms for noncompliance, but not their registered representatives. d)SROs must conduct an inspection of a member under its jurisdiction within 9 months of the member's registration with the SEC.
b)Broker/dealers must join an SRO in order to charge commissions and markups.
The term "double-barreled" is used to refer to which of the following? a)Certain municipal bonds where the source of revenues is a special tax levied on the sale of such items as alcoholic beverages, tobacco, and firearms b)Certain municipal bonds where a taxing authority guarantees debt service payments in the event that pledged revenues are insufficient c)The arrangement whereby municipalities issue bonds to finance the construction of industrial plants which are leased to private companies d)A municipal authority or commission created to finance a project for which the debt service is funded by legislative appropriations
b)Certain municipal bonds where a taxing authority guarantees debt service payments in the event that pledged revenues are insufficient this is just a safety net in case the revenue falls short... saving the small municipalities
When a broker/dealer (B/D) firm receives a large buy order from a customer and buys the same stock for their own account prior to executing the customer's order, the B/D is guilty of a)Pumping and dumping. b)Front running. c)Free riding. d)Shadowing.
b)Front running.
All of the following are investment company classifications as defined under the 1940 Investment Act EXCEPT a)Management company. b)Holding investment company in mineral rights. c)Face amount certificate company. d)Unit investment trust.
b)Holding investment company in mineral rights. There are three classifications of investment companies under the Investment Company Act of 1940: face amount certificate companies, unit investment trusts, and management companies.
Upon filing a registration statement with the SEC, at what point would the issuer be required to provide additional information? a)In the event of material changes in the underwriter's circumstances b)In response to an SEC deficiency letter c)When accounting for offering amendments following commencement of sales d)When accepting indications of interest
b)In response to an SEC deficiency letter
An investor who buys collateralized mortgage obligations (CMOs) would be subject to prepayment risk under which scenario? a)Inflation increases. b)Interest rates fall. c)Interest rates rise. d)Mortgages rates move higher.
b)Interest rates fall. Falling interest rates prompt homeowners who hold mortgages to prepay their loans or refinance at lower rates. Investors in mortgage securities are subject to prepayment risk. Under all of the other scenarios, interest rates would rise and investors in mortgage obligations would be exposed to extension risk. Homeowners would be less likely to refinance and investors in mortgage obligations would see the maturity of their investment lengthen, receiving their payments later than expected.
Asset allocation involves which of the following? a)Buying stocks in different market sectors b)Investing in asset classes that are not correlated in terms of performance c)Buying only non-conventional assets, like commodities and precious metals. d)Investing in stocks, only
b)Investing in asset classes that are not correlated in terms of performance
A customer deposits $7,500 in currency in his account at a financial institution. The financial institution a)Cannot accept the deposit. b)Must file an SAR. c)Is not required to do anything. d)Must file a CTR.
b)Must file an SAR. need to file suspicious activity if it is over $5000 in 24 hours
Which of the following would likely contain a rate covenant for a municipal bond issue? a)Amortization schedule b)Revenue bond indenture c)Underwriter's agreement d)Qualified legal opinion
b)Revenue bond indenture A rate covenant is a pledge to charge a rate sufficient to meet the needs of the issue. It is found in the indenture of a revenue bond.
TANs, RANs, and BANs are a)Long-term municipal obligations. b)Short-term municipal obligations. c)U.S. government obligations. d)Commercial paper.
b)Short-term municipal obligations.
If the Federal Reserve Board through the FOMC (Federal Open Market Committee) lowers the discount rate, which of the following will decline? a)Inflation rate b)T-Bill rate c)Prime rate d)Lending levels at banks
b)T-Bill rate
When two corporations agree to merge, what is the outcome? a)Shareholder approval is never required. b)The stocks of both corporations are surrendered. c)Shareholders receive only stock. d)The stock of only one of the corporations survives.
b)The stocks of both corporations are surrendered.
Which of the following is true about Treasury bills? a)They generally sell for more than par. b)They are a direct, guaranteed credit of the U.S. government. c)They pay interest semiannually. d)They mature in 1 year or more.
b)They are a direct, guaranteed credit of the U.S. government.
If a customer mails a written complaint to a registered representative's home address, what should the registered representative do? a)Personally respond to the complaint b)Turn the complaint over to the registered principal at the Office of Supervisory Jurisdiction c)Advise the customer that under FINRA rules, the customer must submit his complaint to binding arbitration for resolution d)Nothing, since complaints are only valid if mailed to FINRA
b)Turn the complaint over to the registered principal at the Office of Supervisory Jurisdiction
According to the Investment Company Act of 1940, the term "management company" applies to all of the following EXCEPT a)Closed-end companies. b)Unit investment trusts. c)Diversified companies. d)Open-end companies.
b)Unit investment trusts.
A broker/dealer that is required to perform a calculation of its customer reserve requirement under SEC Rule 15c3-3 must make any deposit required no later than how many days after the date of the calculation? a)Deposits would be required the same day. b)1 c)2 d)5
c) 2
A corporate investor in the 34% tax bracket buys a tax-exempt municipal bond yielding 9%. What is the correct method for determining the tax equivalent yield? a)9% multiplied by 66% b)9% divided by 34% c)9% divided by 66% d)9% multiplied by 34%
c)9% divided by 66% The taxable equivalent on a muni bond yield must be more than the muni yield. To calculate the exact amount, take the muni yield and divide it by the complement of the tax bracket. In this case, take 9% divided by (100% - the 34% tax bracket) or 9% divided by 66%. The answer is 13.6%
Under the SEC Customer Protection Rule (SEC Rule 15c3-3), fully paid and excess margin securities being held for a customer must be in a good control location. Each of the following would meet that definition EXCEPT a)Depository Trust Company (DTC). b)Current in-transfer location. c)Savings and loan (S&L). d)Clearing firm for an introducing broker/dealer.
c)Savings and loan (S&L).
When a registered representative engages in private securities transactions without the knowledge of the firm, it is known as a)Front running. b)Outsider trading. c)Selling away. d)Excessive trading.
c)Selling away.
All of the following statements about "blue sky" laws are correct EXCEPT a)They cover many of the same activities regulated by the SEC. b)They are limited to securities sold or persons who sell them within a particular state. c)They are federal laws. d)They are state regulations.
c)They are federal laws "Blue sky" laws are state regulations. They cover many of the same activities that are regulated by the SEC, such as, the sale of securities and industry participants. State laws require companies to register securities offerings before they can be sold in a particular state..
Index option strategies are the same as those for equity options except for covered writes long calls short calls long puts
covered writes this is because there is no underlying stock
Which of the following is the risk that an issuer may not be able to meet interest or principal payments on fixed income securities? a)Fixed income risk b)Credit risk c)Interest rate risk d)Purchasing power risk
credit risk not what you would think but hence creditor protection. This is what the protection is about. I guess. IDK
Under Reg S-P, a broker/dealer's procedures to safeguard its customers' personally identifiable information (PII) must provide for each of the following EXCEPT a)The customer must be given the opportunity to opt out of any disclosure of PII to nonaffiliated parties. b)The broker/dealer is not required to give the customer an opt-out option regarding sharing of PII with its affiliates. c)The broker/dealer's responsibility to protect customers' PII extends to the personal equipment (such as laptops and cell phones) of its associated persons. d)A notice to the customer describing the firm's privacy procedures must be sent with the first statement of activity in the account.
d)A notice to the customer describing the firm's privacy procedures must be sent with the first statement of activity in the account.
Which of the following is a characteristic of TIPS? a)Fixed principal b)Fluctuating interest rate c)Fixed semiannual interest payments d)Fluctuating principal
d)Fluctuating principal TIPS have a CPI-adjusted, fluctuating principal and a fixed interest rate. Because this fixed rate is applied to a fluctuating principal each semiannual interest period, the interest payment fluctuates.
A variable life insurance policyowner took a loan against his policy several years ago. Because of poor investment performance, his policy's cash value has dropped to a negative value of $500. What are the policyowner's options? a)He can reduce his death benefit to make up for the short fall in his cash value. b)Do nothing and hope the performance improves in the near future. c)He has defaulted on his loan and must pay back the loan in full or surrender his policy immediately. d)He has 31 days to pay back enough of the loan to bring the cash value positive.
d)He has 31 days to pay back enough of the loan to bring the cash value positive.
A workable indication on a block of municipal bonds is a)An offering on the bonds. b)A likely bid price. c)A quotation of both the bid and offered side of market. d)A bid for the bonds.
d)In response to an SEC deficiency letter
The agreement among underwriters, also known as the syndicate letter, is a document that a)Is an agreement that is provided to the investor for full and fair disclosure purposes. b)Is between the issuer and the underwriters and specifies the offering price of the securities. c)Is delivered to the issuer and defines the underwriting spread. d)Is an agreement between participating broker/dealers who assume liability for any unsold shares and specifies the underwriters' responsibilities and participation percentages.
d)Is an agreement between participating broker/dealers who assume liability for any unsold shares and specifies the underwriters' responsibilities and participation percentages.
All of the following are generally true about commercial paper EXCEPT a)It is issued with a 270-day maturity. b)It is issued on a 360-day basis. c)It is issued on a discount basis. d)It is issued as interest-bearing paper.
d)It is issued as interest-bearing paper.
The settlement on options when they are exercised may be either physical or cash. Which of the following statements is NOT true? a)Most stock options are physically settled. b)Physically settled options are usually American style. c)Cash settled options are typically European style. d)Most stock options are cash settled.
d)Most stock options are cash settled.
If a member firm suspects that a senior customer (age 65 or older) is being financially exploited, it may a)Liquidate the person's account and hold the proceeds in trust. b)Contact a caretaker or relative. c)Contact FINRA and report the suspected abuse. d)Place a temporary hold on disbursements from the customer's account.
d)Place a temporary hold on disbursements from the customer's account.
If a unit investment trust is ineffective, an order to liquidate may be instigated by the a)Custodian. b)Board of Directors. c)Trust supervisor. d)SEC.
d)SEC.
An asset-backed security is backed by a)Equipment owned and operated by the issuer. b)Securities of a different issuer. c)Real estate mortgage pools. d)Short-term loans on credit cards or automobiles.
d)Short-term loans on credit cards or automobiles.
Which of the following describes a principal trade? a)The broker charges a commission. b)The agent acts as a broker. c)The broker acts on behalf of the client. d)The broker/dealer sells out of the firm's inventory for a profit.
d)The broker/dealer sells out of the firm's inventory for a profit.
Under what circumstance may a FINRA member send gifts to representatives of another member? a)Under no circumstances. b)The gifts may be in any amount as long as all such gifts are clearly shown on the records of the member making the gifts. c)No single gift to an individual may exceed $25 in value with a maximum value of all gifts per individual per year equal to $100. d)The value of all gifts to an individual during a period of 1 year may not exceed $100.
d)The value of all gifts to an individual during a period of 1 year may not exceed $100.
Rule 147
intrastate offerings
An associated person may borrow money from a customer if
it is the customers sister
Why would an investor choose an index fund as a holding in her portfolio?
lower management fees
According to FINRA rules, which of the following falls under the definition of an independently prepared reprint? a)A copy of a newspaper display ad listing the broker/dealer's services b)A copy of an investment company ranking prepared by the research department of the broker/dealer c)A copy of a magazine article on retirement planning issued by a publisher that is not affiliated with the member d)An excerpt from a monthly market letter prepared by the broker/dealer and previously approved by FINRA
magazine anything that came from a publisher not affiliated with the member using the print
A background check on a registered representative may include a search for all of the following information EXCEPT a)Current and previous marital status. b)Civil litigations. c)Criminal history. d)Bankruptcies.
marital status
institutional communications
must be approved or reviewed by a principal before or after first use this is before OR after
Grandparents with a combined adjusted gross income (AGI) of $125,000 want to set up a Coverdell ESA (education savings account) on behalf of their grandchild. Which of the following is true?
must be under 18yrs old
Most common way of acquiring restricted stock? ESOP Merger Rights Offering Private Placement
private placement
A municipality has issued a double-barreled revenue bond where the net revenues generated by the facility have proven to be insufficient to service the debt. All of the following are true EXCEPT
they are marketed as revenue bonds
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
Which of the following securities is considered to be a long-term instrument?
warrants
