FINRA Practice SIE Exam Questions And Answers With Verified Solutions, Exams of Social Security Law

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FINRA Practice SIE Exam Questions And Answers

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The redemption value of an open-end investment company's shares is based on the: previous offering price previous closing NAV NAV computed after the order is received offering price computed after the order is received NAV computed after the order is received The computation of dollar prices and accrued interest on municipal bonds is normal on what calendar basis? 30/ 30/ Actual/ Actual/365 30/ Blue-sky laws are regulated by which of the following entities? SEC MSRB FINRA state securities regulators State securities regulators At the time of issuance, which of the following securities normally has the longest period to expiration? Rights Options Warrants Repurchase agreements Warrants Regular way settlement on Treasury Bonds is:

same day next business day second business day fifth business day next business day A firm is a participant in a public offering. To sell a substantial amount of the securities to its customers, the firm agrees to repurchase the shares at no less than the original sales price. Such agreements are: prohibited as fraudulent and manipulative. Permissible if the securities are deposited into escrow. prohibited unless the firm immediately sets aside funds for the repurchase permissible if the customers retain the right to sell the securities into the open market. prohibited as fraudulent and manipulative Under SEC S-P (Consumer Privacy), which of the following information must a firm 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 the policies to protect the security of nonpublic information the policies to protect the security of nonpublic information UTMA accounts are opened under the tax ID number of the: minor donor parent custodian minor Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items EXCEPT: gifts

meals lodging commissions commissions Describe the difference between primary distribution and secondary distribution. a primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares If a market maker posts a quotes of 10.00 - 10.10 (25x10), which of the following actions is the market maker willing to take? sell 1,000 shares at $10 and buy 2,500 shares at $10. buy 2,500 shares at $10 and sell 1,000 shares at $10. sell 100 shares at $10 and buy 250 shares at $10. buy 250 shares at $10 and sell 100 shares at $10.10 buy 2,500 shares at $10 and sell 1,000 shares at $10. All of the following risks apply to both foreign and domestic debt instruments EXCEPT: political exchange repayment interest rate exchange 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 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 treasury bonds What is the concept of an annuity contract? the kind of annuity selected partly determines the payment amounts 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 are general obligations of the fed gov 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 with direct purchases of stock from public companies exposure to non-correlated assets with steady returns Which of the following outcomes are possible for the writer of a covered call option? profit limited and loss limited profit limited and loss unlimited profit unlimited and loss limited profit unlimited and loss unlimited profit limited and loss limited when is interest on treasury notes paid?

quarterly semiannually annually at maturity semiannually an associated person who is not a registered representative is permitted to engage in which of the following activities? accept an unsolicited customer order provide account opening forms to a new customer discuss the attributes of a particular investment product prequalify prospective customers as to investment objectives provide account opening forms to a new customer a transaction in which a writer covers a position by purchasing an option is called: closing sale closing purchase opening sale opening purchase closing purchase which of the following actions is required of a broker-dealer's anti-money laundering program? designating an AML compliance officer filing of the firm's AML program with FINRA conducting background checks of all employees identifying to regulators the employees responsible for Currency Transaction Reports designating an AML compliance officer Under the Securities Act of 1933, registration is required for which of the following securities? Eurodollar bonds municipal securities American depository receipts (ADR's)

securities issued by the federal government ADR's Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? same stock on the same day in a margin account same stock in different accounts on the same day the same stock in different account in the same household the same stock in a cash account without paying for the stock in full the same stock in a cash account without paying for the stock in full the last transaction in XYZ 5.50s 2030 was at 102. this bond is selling at par premium discount asset value premium Upon expiration, all in-the-money S&P 100 index call options are settled by the delivery of which of the following? cash S&P 100 index stocks S&P ETF's same number of S&P 100 index put options 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 qualified distributions are excluded from federal income tax

a customer buys 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? $ $ $ $38 $ Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? volunteering as a youth soccer league coach gambling resulting in winnings in excess of $10k driving part time for a transportation network company on weekend selling nonproprietary investment company securities products through her firm driving part time for a transportation network company on weekends in over-the-counter market, the term "spread" refers to the difference between the: bid and asked prices offered and asked prices indicated and firm prices opening and closing prices bid and asked prices Which of the following Form U4 reportable events results in a statutory disqualification? personal bankruptcy filing written customer complain alleging misappropriation of assets a felony theft charge a felony conviction for a DUI charge a felony conviction of a DUI charge Which of the following actions is required when a firm receives cash in excess of $10k from one customer in one business day?

file a Currency Transaction Report (CTR) file a suspicious activity report (SAR) with the SEC issue a cash transfer receipt to the customer place a five-day hold on the customer's account for the funds received file a currency transaction report (CTR) a savings account at a bank is guaranteed by which of the following entities? FDIC SIPC Federal Reserve Department of the Treasury FDIC No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? no-load funds do not charge 12-b1 fees no-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points sales charges for load mutual funds increase their annual expense ratios fund management fees for no-load funds are always lower than load funds no-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points a decline in the GDP must last for at least how many quarters to be considered a recession? 1 2 3 4 2 quarters when a broker-dealer charges a commission on a securities transaction, it has acted as: an agent a principal underwriter

a market maker agent at issue, which of the following debt securities mature in one year or less? FNMA bonds GNMA bonds treasury notes money market instruments money market instruments FinCEN accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing: SEC regulations the Bank Secrecy Act the Securities Act of 1933 the Investment Company Act of 1940 the Bank Secrecy Act 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 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 market risk under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? financial institutions

accredited investors qualified institutional buyers non accredited investors who have previously purchased restricted stock qualified institutional buyers (QIBs) A registered representative who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? FINRA each state's securities administrator a register principal of the RR's firm the investment management division of the appropriate regional SEC office 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 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 lay out the structure of the deal call his supervisor and inform her of the deal and the RR's potential involvement send written notice to his supervisor outlining the activity and compensation structure initiate the paperwork required by the policies of the firm once the activity has begun 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 nonsystematic which of the following products is adversely impacted if the issuer's credit rating is downgraded? mutual funds unit investment trusts (UIT's) exchange-traded funds (ETF's) exchange-traded notes (ETN's) ETN's a broker-dealer is permitted to accept payment for a new issue from a new customer when the: registration is effective red herring is delivered preliminary prospectus is amended transaction takes place during the cooling-off period registration is effective 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? DTC issuer custodian transfer agent transfer agent which of the following statement is true regarding a customer account held as tenants in common? the owners must equally share the assets the ownership of the decedent's assets is governed by their will or state law tenants in common is permitted for use only for two individuals tenants in common is permitted for use only for married couples or family members the ownership of the decedent's assets is governed by their will or state law

under normal circumstance, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? 3 months 6 months 13 months 24 months 13 months what is the cost basis of an inherited mutual fund? the NAV of the shares when the owner dies the NAV 30 days after the owner's death the same cost basis as the deceased the same cost basis as the deceased plus capital gains distribution the NAV of the shares when the owner dies an investor 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 stock-split position will be: 50 shares at $25 per share 50 shares at $100 per share 200 shares at $25 per share 200 shares at $100 per share 50 shares at $100 per share 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 a: broker underwriter market maker transfer agent market maker under industry regulations, an initial purchase of $3k of common stock in a margin account requires a cash deposit of:

$

$1,

$2,

$3,000 $2,

which of the following communications with the public is considered misleading? historical illustrations based on factual performance product comparisons that illustrate material differences a research report that includes a buy recommendation for a specific security literature providing a 10-year performance information to support predictions of future performance literature providing 10-year performance information to support predictions of future performance the primary purpose of a syndicate desk in the context of an equity offering is to: determine the list of selling shareholders build an order book and allocate the stock solicit interest from investors in the stock offering chaperone company management during the road show build an order book and allocate the stock which of the following represents the effect of a stock split? the price per share of common stock increases the price per share of common stock decreases each stockholder's proportionate ownership decreases each stockholder's proportionate ownership increases the price per share of common stock decreases 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 the past 18 months. how often must the firm send her an account statement? monthly quarterly

semiannually annually quarterly 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 information if the customer shares them with his registered representative EXCEPT: pending transactions declared stock dividend top management changes imminent financial liquidity problems declared stock dividend 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? the spot exchange rate the counter currency's inflation rate the trade balance between the two countries the credit rating of the counter currency's government the spot exchange rate to offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? puts rights futures preferred stock rights Company ABC announces a 20% stock dividend for its common shareholders. if a customer holds 1, shares at $50, what is the new price and number of shares following the payment of the stock dividend? 800 shares at $62. 1,000 shares at $41. 1,200 shares at $41.

1,200 shares at $50 1,200 shares at $41. which of the following actions violates FINRA rules regarding selling away? recommending to a customer the services of another broker-dealer sharing commissions with another registered representative in the same BD advising customers to buy mutual funds at amounts just below a discount level engaging in private securities transactions without written prior consent of the employing BD 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 to active management of the fund lower management fees due to passive management of the fund lower management fees due to passive management of the fund under a system of statutory voting, 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 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 variable rate demand note

which of the following considerations should a registered representative explain to a customer when recommending a 529 college savings plan? the potential deductibility of contributions from state taxes the potential deductibility of contributions from federal taxes the income eligibility restrictions to contribute to the account the right of the account beneficiary to the assets at the age of majority the potential deductibility of contributions from state taxes 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 of the investor's shares will the company purchase? 0 100 900 1,000 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 fixed-rate capital securities asset-backed securities which of the following statement is true about treasury stock? it has voting rights it receives dividends it is issued stock that has been subsequently reacquired by the corporation it is authorized stock that has not been issued and is held in the corporation's treasury it is issued stock that has been subsequently reacquired by the corporation

in a period of low inflation and economic recession, the federal reserve is expected to take which of the following actions? decrease taxes raise the federal funds rate buy bonds in the open market require banks to increase reserves buy bonds in the open market the call provision of a bond stipulates which of the following factors? maturity date call date and call price original issue discount coupon rate and call date call date and call price call protection is most valuable to a bond owner when bond prices are generally: rising falling stable fluctuating rising