FINRA Practice SIE Exam
The redemption value of an open-end investment company's shares is based on the:
previous offering price
previous closing
... [Show More] 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?
30/360
30/365
Actual/360
Actual/365 - 30/360
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 $10.10
buy 2,500 shares at $10 and sell 1,000 shares at $10.10
sell 100 shares at $10 and buy 250 shares at $10.10
buy 250 shares at $10 and sell 100 shares at $10.10 - buy 2,500 shares at $10 and sell
1,000 shares at $10.10
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?
$3
$32
$35
$38 - $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:
$750
$1,500
$2,000
$3,000 - $2,000
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 1,000 shares at $50, what is the new price and number of shares following the
payment of the stock dividend?
800 shares at $62.50
1,000 shares at $41.67
1,200 shares at $41.67
1,200 shares at $50 - 1,200 shares at $41.67
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 - 1,000
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 [Show Less]