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FINRA SIE Practice Test 102 Questions with Verified
Answers
In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? A: DTC B: Issuer C: Custodian D: Transfer Agent - CORRECT ANSWER D: Transfer Agent Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in which the mayor is currently seeking re-election. A municipal finance professional who resides in the town and works for ABS contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to support the campaign further without impacting the municipal securities business of the firm, he is permitted to make an additional contribution of up to what amount? A: 50 B: 100 C: 150 D: 250 - CORRECT ANSWER A: 50 The redemption value of an open-ended investment company's shares is based on the: A: previous offering price B:previous closing NAV C:NAV computed after the order is received D: offering price computed after the order is received - CORRECT ANSWER C:NAV computed after the order is received The primary purpose of a syndicate desk in the context of an equity offering is to: A: determine the list of selling shareholders B: build an order book and allocate the stock C: solicit interest from investors in the stock offering
D: chaperone company management during the road show - CORRECT ANSWER B: build an order book and allocate the stock Roth 401(k) and Roth IRA plans share which of the following features? A: contributions are made pretax b: neither account has max contribution limits C: neither account is subject to early distribution penalties D: qualified distributions are excluded from federal income tax - CORRECT ANSWER D: qualified distributions are excluded from federal income tax All of the following risks apply to both foreign and domestic debt instruments except: A: political B: exchange C: repayment D: interest rate - CORRECT ANSWER C: repayment Direct Participation Programs (DPP) provide: A: liquidity and transparency B: exposure to non-correlated assets w/ steady returns C: market related correlations w/ higher average returns D: investors w/ direct purchases of stock from public companies - CORRECT ANSWER B: exposure to non-correlated assets w/ steady returns Upon expiration, all in the money S&P 100 index call options are settled by the delivery of which of the following: A: cash B: S&P 100 index stocks C: S&P exchange traded fund D: the same number of S&P 100 index put options - CORRECT ANSWER A: cash Call provisions of a bond stipulates which of the following factors? A: maturity date B: call date and call price C: original issue discount D: coupon rate and call date - CORRECT ANSWER B: call date and call price
Under a system of statutory voting, a common shareholder has as many votes for each vacancy on the board of directors as the number of: A: positions vacant on the board B: directors present at the meetings C: shares owned by the stockholder D: proxies available for voting by the board - CORRECT ANSWER C: shares owned by the stockholder A customer is an officer of a company that is involved in some significant changes. All of the following items are examples of corporate affairs that could be considered inside info if the customer shares them w/ his registered representative except: A: pending transactions B: declared stock dividend C: top management changes D: imminent financial liquidity problems - CORRECT ANSWER B: declared stock dividend Which of the following investment risks is the greatest risk in a variable life insurance policy? A: credit risk B: market risk C: inflation risk D: interest rate risk - CORRECT ANSWER B: market risk Which of the following Form U4 reportable events results in a statutory disqualification: A: a personal bankruptcy filing B: written customer complaint alleging misappropriation of assets C: felony theft charge D: felony conviction for a DUI charge - CORRECT ANSWER D: felony conviction for a DUI charge -key word CONVICTION An associated person who is not a registered representative is permitted to engage in which of the following activities? A: accept an unsolicited customer order
B: provide account opening forms to a new customer C: discuss the attributed of a particular investment product D: prequalify prospective customers as to investment objectives - CORRECT ANSWER B: provide account opening forms to a new customer Which of the following outcomes are possible for the writer of a covered call option? A: profit limited and loss limited B: profit limited and loss unlimited C: profit unlimited and loss limited D: profit unlimited and loss unlimited - CORRECT ANSWER A: profit limited and loss limited Which of the following investments are generally traded according to their average life rather than their stated maturity dates? A: corporate bonds B: government bonds C: asset backed securities D: fixed rate capital securities - CORRECT ANSWER C: asset backed securities If a market maker posts a quote of 10.00 - 10.10[25x10], which of the following actions is the market maker willing to take? A: sell 1000 shares @ $10.00 and buy 2,500 shares at $10. B: Buy 2,500 shares at $10.00 and sell 1,000 shares at $10. C: Sell 100 shares at $10.00 and buy 250 shares at $10. D: buy 250 shares at $10.00 and sell 100 shares at $10.10 - CORRECT ANSWER B: Buy 2,500 shares at $10.00 and sell 1,000 shares at $10. A company announces a tender offer to its shareholders w/ the intent to buy a max of 1 million shares of its outstanding stock @ $10 per share and sets no minimum number of shared to be purchased. An investor wants to participate and tenders his 1,000 share position. At the close of the offer, only 900,000 shares have been tendered. How many, if any, of the investor's shares will the company purchase? A: 0 B: 100 C: 900
D: a qualified institutional buyer (QIB) - CORRECT ANSWER B: an accredited investor Upon Expiration, all in-the-money S&P 100 Index call options are settled by the delivery of which of the following? - CORRECT ANSWER Cash Which of the following statements is true about treasury stock? - CORRECT ANSWER It is issued stock that has been subsequently reacquired by the corporation In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? - CORRECT ANSWER Transfer Agent Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program? - CORRECT ANSWER Designating an AML compliance officer A registered representative (RR) wants to participate in a private securities transaction. Which of the following actions must the RR take? - CORRECT ANSWER Send written notice to his supervisor outlining the activity and compensation structure A customer BUYS a 1 ABC Jan 35 PUT for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? - CORRECT ANSWER $ The call provision of a bond stipulates which of the following factors? - CORRECT ANSWER Call date and call price When is interest on Treasury notes paid? - CORRECT ANSWER Semiannually The owner of which of the following products is MOST exposed to inflationary risk? - CORRECT ANSWER Treasury bonds (because it's long-term)
A registered representative (RR) who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? - CORRECT ANSWER A registered principal of the RR's firm A company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stock at $10 per share and sets no minimum number of shares to be purchased. An investor wants to participate in this offer and tenders his 1,000 share position. At the close of the offer period, only 900,000 shares have been tendered. How many, if any, of the investor's shares will the company purchase? - CORRECT ANSWER 1,000 (1,000 x 100 = 100,000 shares; 1 million - 900k = 100k) Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in which the mayor is currently seeking re-election. A municipal finance professional who resides in the town and works for ABC contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to support the campaign further without impacting the municipal securities business of the firm, he is permitted to make an additional contribution of up to what amount? - CORRECT ANSWER $50 ($250 is the limit PER election) Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? - CORRECT ANSWER Secured debt holders [Order of liquidation at bankruptcy:
- Unpaid wages
- Taxes (IRS)
- Secured claims (mortgages)
- Secured liabilities (bonds)
- Unsecured liabilities (debentures) and general creditors
- Subordinated debt
- Preferred Stockholders
- Common stockholders] An investors owns 100 shares of XYZ common stock at the current market price of $50 per share. If XYZ conducts a 1-for-2 REVERSE stock split, the investor's post- split stock position will be: - CORRECT ANSWER 50 shares at $100 per share
Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? - CORRECT ANSWER 13 months A broker-dealer is permitted to accept payment for a new issue form a new customer when the: - CORRECT ANSWER registration is effective Regular way settlement on Treasury bond is: - CORRECT ANSWER next business day (T + 1) Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? - CORRECT ANSWER Qualified institutional buyers (QIBs) A customer is an officer of a company that is involved in some significant changes. Which of the following corporate affairs would be considered inside information if the customer shares them with his registered representative? - CORRECT ANSWER -Pending transactions -Top management changes -Imminent financial liquidity problems Under FINRA rules, noncash compensation connected with the sale of variable contracts include... - CORRECT ANSWER -Gifts -Meals -Lodging Under a system of STATUTORY voting, a common stockholder has as many for each vacancy on the board of directors as the number of... - CORRECT ANSWER shares owned by the stockholder The redemption value of an open-end investment company's shares is based on the: - CORRECT ANSWER NAV computed after the order is received. Direct participation programs (DDPs) provide: - CORRECT ANSWER exposure to non-correlated assets with steady returns
When a broker-dealer charges a commission on a securities transaction, it has acted as: - CORRECT ANSWER an agent Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? - CORRECT ANSWER The same stock in a cash account without paying for the stock in full At the time of issuance, which of the following securities normally has the longest period of EXPIRATION? - CORRECT ANSWER Warrants Which of the following Form U4 reportable events results in a statutory disqualification? - CORRECT ANSWER A felony CONVICTION for a DUI charge Call protection is MOST valuable to a bond owner when the PRICES are generally - CORRECT ANSWER Rising (because interest RATES will be decreasing) 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? - CORRECT ANSWER Variable rate demand note What is the cost basis of an inherited mutual fund? - CORRECT ANSWER The NAV of the shares when the owner dies Blue-sky laws are regulated by which of the following entities? - CORRECT ANSWER Stated securities regulators Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? - CORRECT ANSWER Driving part time for a transportation network company on weekends (anything that receives compensation) Which of the following actions violates FINRA rules regarding selling away? - CORRECT ANSWER Engaging in private securities transactions without written prior consent of the employing BD
In which of the following situations is an employee of a public company permitted to trade upon information WITHOUT violating insider trading laws? - CORRECT ANSWER An INDEPENDENT securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than expected. When selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? - CORRECT ANSWER The spot exchange rate Which of the following represents the effect of a stock split? - CORRECT ANSWER The price per share of common stock decreases while number of shares increases. A customer has a cash balance in her account together with long positions in several securities. She has made no securities transactions in the account during hte past 18 months. How often must the firm send her an account statement? - CORRECT ANSWER Quarterly At issue, which of the following debt securities mature in one year or less? - CORRECT ANSWER Money market instruments In the over-the-counter market, the term "spread" refers to the difference between the - CORRECT ANSWER bid and ask prices Which of the following statements is true regarding a customer account held as tenants in common? - CORRECT ANSWER The ownership of the decedent's assets is governed by their will or state law To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following does a corporate issue? - CORRECT ANSWER Rights Under SEC Regulation S-P (Consumer Privacy), which of the following information must a firm include in its customer privacy and opt-out notices? - CORRECT ANSWER The policies to protect the security of nonpublic information In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions - CORRECT ANSWER Buy bonds in
the open market (this will increase the money supply causing interest rates to decrease so people can borrow money) A registered representative is reviewing the following portfolio: -30% ABC Energy Company -30% XYZ Health Care Company -30% Exchange-traded fund (Tracks the S&P 500) -10% Money Market Funds Which of the following risks is inherent in this portfolio? - CORRECT ANSWER Nonsystematic (Because most of the investments are commodities) A member of a stock exchange responsible for providing liquidity in a security by being willing to buy and sell at all times is known as... - CORRECT ANSWER a market maker No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? - CORRECT ANSWER No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points (0.25%) Under the Securities Acts of 1933, registration is required for which of the following securities? - CORRECT ANSWER American Depository Receipts (ADRs) Which of the following communications with the public is considered misleading?
- CORRECT ANSWER Literature providing 10-year performance information to support predictions of future performance Which of the following risks apply to both foreign and domestic debt instruments
- CORRECT ANSWER -Political -Repayment -Interest Rate A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered a recession? - CORRECT ANSWER 2 quarters Which of the following investment risks is the greatest risk in a variable life insurance policy? - CORRECT ANSWER Market Risk
