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FINRA Practice SIE Exam 100% Correct Answers
The NAV of the shares to be redeemed of an open-end investment company is determined by the: previous offering price previous closing NAV NAV computed after the order is received offering price computed after the order is received - ANSWER NAV computed after the order is received
The normal computation dollar prices and accrued interest on municipal bonds is done on which of the following calendar bases? 30/ 30/ Actual/ Actual/365 - ANSWER 30/
Which of the following is the regulating agency for Blue-sky laws? SEC MSRB FINRA state securities regulators - ANSWER State securities regulators
Which of the following securities, at the time of issuance, typically has the longest period to expiration? Rights Options
Warrants Repurchase agreements - ANSWER Warrants
Regular way settlement on Treasury Bonds is: same day next business day second business day fifth business day - ANSWER next business day
A firm is a participant in a public offering. In order to sell a large quantity of the securities to its customers, the firm agrees to buy back the shares at no less than the original sale price. Such agreements are: prohibited as fraudulent and manipulative. Permissible if the securities are deposited into escrow. prohibited unless the firm immediately deposits funds necessary for the repurchase permissible provided the customers have the right to sell the securities into the open market. - ANSWER prohibited as fraudulent and manipulative
Under SEC S-P (Consumer Privacy), which of the following is something a firm MUST include in its customer privacy and opt-out notices? the address of the firm's website the fee to opt out from the privacy program the deadline by which to opt out from the privacy program policies to protect the security of nonpublic information ANSWER policies to protect the security of nonpublic information
UTMA accounts are opened under the tax ID number of the: minor donor
A married couple who earned income that exceeded $300k in each of the prior two years and reasonably expects the same for this current year is: a qualified investor an accredited investor an institutional investor a qualified institutional buyer - ANSWER an accredited investor
The owner of which of the following products is MOST exposed to inflationary risks? utility stocks treasury bills treasury bonds blue chip industrials - ANSWER treasury bonds
What is an annuity contract? - ANSWER the type of annuity chosen in part determines the dollar amounts payable to the annuitant
Which of the following statement is true about all US Gov agency issues? they are exempt from federal taxes they are exempt from registration under the Securities Act of 1933 they are issued in bearer form only they represent general obligations of the fed gov - ANSWER they are exempt from registration under the Securities Act of 1933
Direct participation programs (DPP's) provide: liquidity and transparency exposure to non-correlated assets with steady returns market-related correlations with higher average returns investors direct purchases of stock from public companies - ANSWER exposure to non-correlated assets with steady returns
Which of the following is a possible outcome for the writer of a covered call? limited profit and limited loss limited profit and unlimited loss unlimited profit and limited loss unlimited profit and unlimited loss - ANSWER limited profit and limited loss
when does treasury note interest become due? quarterly semiannually annually at maturity - ANSWER semiannually
which of the following activities may be done by an associated person who is not a registered representative? take an unsolicited customer order provide account opening forms to a new customer discuss the characteristics of a specific investment product pre-qualify potential customers as to investment goals - ANSWER provide account opening forms to a new customer
A trade in which a writer closes a position by buying an option is known as: closing sale closing purchase opening sale opening purchase - ANSWER closing purchase
Which of the following is a requirement of a broker-dealer's AML program?
S&P 100 index stocks S&P ETF's same number of S&P 100 index put options - ANSWER cash
Roth 401(K) and Roth individual retirement accounts (IRA's) plans share which of the following features? contributions are made pretax neither account has maximum contribution limits neither account is subject to early distribution penalties qualified distributions are excluded from federal income tax - ANSWER qualified distributions are excluded from federal income tax
ABC bought 1 ABC Jan 35 put for a premium of $3. At the same time, the customer also buys 100 shares of the underlying ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? $ $ $ $38 - ANSWER $
Under FINRA rules, for which of the following activities by a registered representative would written notification to her firm be required? volunteering as a youth soccer league coach gambling win over than $10k driving for transportation network company during weekend selling investment company's nonproprietary securities products of her firm Best Answer driving for transportation network company during weekends
In an over-the-counter market, the "spread" refers to the difference between the:
bid and asked prices offered and asked prices indicated and firm prices opening and closing prices Best Answer bid and asked prices
Which of the following is a statutory disqualification Form U4 reportable event? filing a personal bankruptcy customer written complain alleging asset misappropriation a felony charge for theft a felony conviction of a DUI charge -ANSWER a felony conviction of a DUI charge
Which of the following is the required action when a firm receives more than $10k in cash from a customer on any one business day? file a Currency Transaction Report (CTR) file a SAR with the SEC provide the customer with a receipt for the cash transfer freeze the customer's account for five days for the funds received - CORRECT file a CTR Which one of the following does a bank's savings account product fall under? FDIC SIPC FR Treasury Department - CORRECT FDIC
Which of the following is a plausible explanation for why no-load mutual funds have lower expense ratios relative to load mutual funds? no-load funds do not have 12-b1 fees no-load funds are not allowed to charge a 12b-1 fee greater than 25 basis points sales charges for load mutual funds increase their annual expense ratios
Stability in the value of a debt portfolio is greatest when: interest rates are rising interest rates are falling maturities of the debt securities are long maturities of the debt securities are short - ANSWER maturities of the debt securities are short
which of the following investment risks is the greatest risk in a variable life insurance policy? credit risk market risk inflation risk interest rate risk - ANSWER market risk
Under Rule 144A, an issuer of restricted stock is allowed to sell to which of the following investors? financial institutions accredited investors qualified institutional buyers non accredited investors who have previously purchased restricted stock - ANSWER qualified institutional buyers (QIBs)
A registered representative who wishes to place a mutual fund advertisement must receive written approval from which of the following? FINRA each state's securities administrator a registered principal of the RR's firm the investment management division of the appropriate regional SEC office - ANSWER a
registered principal of the RR's firm
which of the following stakeholders has first claim priority in a chapter 11 proceeding? equity holders secured debt holders unsecured debt holders administrative claim holders - ANSWER secured debt holders
a registered representative wants to participate in a private securities transaction. which of the following actions must the RR take? request a meeting with his supervisor to outline the structure of the deal call his supervisor and let her know about the deal and of the potential involvement of the RR send written notice to his supervisor outlining the activity and compensation structure start the paperwork that according to the policies of the firm should be done when the activity has commenced - ANSWER send written notice to his supervisor outlining the activity and compensation structure
a RR is reviewing the following portfolio: 30% ABC Energy company, 30% health care company, 30% ETF, 10% money market funds. which of the following risks is inherent in this portfolio? credit liquidity political nonsystematic - ANSWER nonsystematic
which of the following products is adversely impacted if the issuer's credit rating is downgraded? mutual funds unit investment trusts (UIT's)
24 months - ANSWER 13 months
what is the basis of an inherited mutual fund? NAV of the shares at the time of owner's death NAV 30 days after the owner's death Carryover basis same cost basis as the deceased Step-up basis same cost basis as the deceased plus capital gains distribution BEST the NAV of the shares when the owner dies
An investor owns 100 shares of XYZ common stock at the current market price of $ each. If XYZ does a 1-for-2 reverse stock split, the investor's position after the stock split will be: 50 shares @ $ 50 shares @ $ 200 shares at $ 200 shares at $100 - ANSWER 50 shares at $
member of a stock exchange who always stands ready to buy and sell a particular security, thereby providing liquidity is called a: broker underwriter market maker transfer agent - ANS market maker
under industry regulations, what is required for an initial purchase of $3k of common stock in a margin account? $ $1, $2,
$3,000 - ANS $2,
which of the following communications with the public is deemed to be misleading? historical or performance related illustrations that are based on factual performance comparisons of similar available products and point out material differences a research report that includes a buy recommendation for a particular security literature that provides 10 year performance information to support forecasts of future performance - ANSWER literature that provides 10 year performance information to support forecasts of future performance
the function of a syndicate desk, in regards to an equity offering is primarily to: choose the selling shareholders build an order book and distribute the stock collect interest in the stock offering in the investors send management of the company on a road show - ANSWER build an order book and distribute the stock
which of the following best indicates the effect of a stock split? the per share price of the common stock increases the per share price of the common stock decreases each stockholder owns a smaller percentage of the business each stockholder's proportionate ownership increases - ANSWER the price per share of common stock decreases
A customer has a cash balance in her account, as well as long positions in a number of securities. She has not executed any securities transactions in the account in the past 18 months. How often must the firm mail her an account statement? monthly quarterly
800 shares at $62. 1,000 shares at $41. 1,200 shares @ $41. 1,200 shares @ $50 - CORRECT 1,200 shares @ $41.
which of the following is a violation of the FINRA rules on selling away? recommending another broker -dealer to the customer sharing commissions with another registered representative in the same BD recommending that customers buy mutual funds at quantities just below a breakpoint price engaging in private securities transactions without written prior consent of the employing BD - ANSWER engaging in the private securities transactions without written prior consent of the employing BD
which of the following responses describes an advantage of index funds the protection of principal during bearish markets high turnover to take advantage of market opportunities higher management fees due of active management of the fund lower management fees because of the passive management of the fund - ANSWER lower management fees because of the passive management of the fund
under a statutory voting system, a common stockholder has as many votes for each vacancy on the board of directors as the number of: positions vacant on the board directors present at the meeting shares owned by the stockholder proxies available for voting by the board - ANSWER shares owned by the stockholder
which of the following security types provides investors with a stated maturity date, a
floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis? equity put option perpetual preferred stock variable rate demand note tax-deferred variable annuity - ANSWER variable rate demand note
Which of the following are some of the considerations a registered representative may want to discuss with a customer when recommending a 529 college savings plan? State tax deductibility of the contributions made to the account Federal tax deductibility of the contributions made to the account Income limits on eligibility to contribute to the account The rights of the account beneficiary to take delivery of the assets at the age of majority
- CORRECT State tax deductibility of the contributions made to the account
A company offers its shareholders a tender offer to buy up to a maximum of 1 million shares of its outstanding stock at $10 a share and specifies no minimum number of shares to be purchased. An investor would like to take advantage of this offer and tenders his position of 1,000 shares. The period for the tender offer closes with only 900,000 shares being tendered. How many of the investor's shares will the company purchase? 0 100 900 1,000 - ANSWER 1,
which of the following investments are generally traded according to their average life rather than their stated maturity dates? corporate bonds government bonds asset-backed securities
