SIE TEST #3

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 A) a secondary registration. B) an initial public offering (IPO). C) An additional public offering (APO). D) a secondary market offering.

An additional public offering (APO). LO 7.b

Which of the following are true of Roth IRAs but not Traditional IRAs? A) Distributions are required after reaching 72. B) Distributions are not required after reaching 72. C) Anyone with income may contribute. D) Contributions are typically deductible.

Distributions are not required after reaching 72. LO 23.a

Investors face many different risks. Which of the following would be factors of systematic risk? I. Decreasing GDP II. Global security threats III. Call risk IV. Net sales A) II and IV B) III and IV C) I and II D) II and III

I and II LO 6.a

Roth IRAs I. have no minimum required distributions at any age. II. have higher contribution limits than those allowed for a traditional IRA. III. allow the withdrawal of earnings tax free as long as the account has been opened for two years. IV. can be contributed to in the same year as a traditional IRA. A) I and IV B) I and III C) II and IV D) II and III

I and III LO 23.a

Which of the following are true of qualified plans but not true of nonqualified plans? I. Contributions are not tax deductible. II. Contributions are tax deductible. III. Plan needs IRS approval. IV. Plan does not need IRS approval. A) II and IV B) I and IV C) I and III D) II and III

II and III LO 23.b

A municipal securities dealer has just made a contribution to the mayor's reelection campaign. How long must the firm wait before it can enter competitive bids on proposed bond issues by the city? A) No waiting period B) Can never underwrite a bond for the city again C) Six months D) Two years

No waiting period LO 32.g

A partnership account wants to trade on margin. When would this be permitted? A) Only if it is specifically stated as being permitted in the partnership resolution B) Never C) Only if it is not restricted from doing so in the partnership resolution D) Always

Only if it is not restricted from doing so in the partnership resolution

Which of the following is the most junior security? A) Equipment trust certificates B) Subordinate debentures C) Collateral trust certificates D) Preferred stock

Preferred stock LO 2.f

Which of the following projects would be funded by general obligation (GO) bonds? A) Public housing B) Sports stadiums C) Airports D) Public schools

Public schools LO 2.h

When is the electronic filing of all information on customer complaints by broker-dealers with Financial Industry Regulatory Authority (FINRA) due? A) Within 15 days of the end of each calendar quarter B) Semiannually, in June and December C) Within 15 days of the end of each calendar year D) Within 30 calendar days of receipt of the complaint

Within 15 days of the end of each calendar quarter LO 32.c

Of the following strategies, which is considered most risky in a strong bull market? A) Buying puts B) Writing puts C) Writing calls D) Buying calls

Writing calls LO 3.g

A broker-dealer that accepts the risk of holding a particular security in its account to facilitate trading and provide liquidity in that security is best described as A) a market maker. B) a holding company. C) a clearing corporation. D) a direct participation program.

a market maker. LO 8.c

Broker-dealers must comply with Securities and Exchange Commission (SEC) rules and regulations when conducting business. A broker-dealer that does not comply may be subject to all of the following except A) a prison sentence for principals of the firm ranging from two to five years. B) suspension or revocation of its registration. C) fines. D) censure.

a prison sentence for principals of the firm ranging from two to five years. LO 9.a

When the supply for money exceeds the demand, A) interest rates rise, making consumer borrowing easier. B) interest rates fall, making consumer borrowing easier. C) interest rates rise, making consumer borrowing more difficult. D) interest rates fall, making consumer borrowing more difficult.

interest rates fall, making consumer borrowing easier.LO 13.c

When the demand for money exceeds the supply, A) interest rates fall, making consumer borrowing easier. B) interest rates rise, making consumer borrowing more difficult. C) interest rates rise, making consumer borrowing easier. D) interest rates fall, making consumer borrowing more difficult.

interest rates rise, making consumer borrowing more difficult. LO 13.d

All of the following are true of a revocable living trust except A) its primary purpose is to avoid estate taxes for the grantor. B) the grantor can add items to the trust. C) the grantor is subject to the tax consequences of the trust while alive. D) the grantor can remove items from the trust.

its primary purpose is to avoid estate taxes for the grantor. LO 22.d

Short-term purchases and sales of a mutual fund to take advantage of price fluctuation is known as A) front running. B) market timing. C) price-spotting. D) time spotting.

market timing. LO 4.d

Those who look to hide money from government agencies and law enforcement to avoid the payment of taxes or to fund criminal enterprises often look to launder money in the following order: A) layering, placement, integration. B) placement, layering, integration. C) placement, integration, layering. D) integration, layering, placement.

placement, layering, integration. LO 25.b

Call risk is most closely associated with A) financial risk. B) market risk. C) currency risk. D) reinvestment risk.

reinvestment risk. LO 6.b

Regulation T, the initial margin requirement, is set by A) the Federal Reserve Board (FRB). B) the president and Congress. C) the Securities and Exchange Commission (SEC). D) the Comptroller of the Currency.

the Federal Reserve Board (FRB). LO 24.c

If an investor is long an option contract and wishes to exercise the contract, the investor notifies the broker-dealer, who then notifies A) the Securities and Exchange Commission (SEC). B) the Options Clearing Corporation (OCC). C) the Federal Reserve Board (FRB). D) the Financial Industry Regulatory Authority (FINRA).

the Options Clearing Corporation (OCC). LO 3.k

A member firm is assigned an exercise notice by the Options Clearing Corporation (OCC). The member firm may assign the exercise notice to one of its short customers by any of the following methods except A) on a random-selection basis. B) to the customer having the oldest short position. C) in any way that is fair and reasonable. D) to the customer having the largest short position.

to the customer having the largest short position. LO 3.k