Sie exam practice

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?
A) Monthly
B) Quarterly
C) semiannually
D) Annually

Quarterly

A savings account at a bank is guaranteed by which of the
following entities?
A) FDIC
B)SIPC
C) Federal Reserve
D) Department of the Treasury.

FDIC

In which of the following situations is an employee of a public
company permitted to trade upon information without
violating insider trading laws?
A) An independent securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than
expected.
B) The employee's neighbor works for the government and informs him that
the government will award a major contract to the company next month. |
C) The employee's spouse works in the corporate headquarters and shares
with him a conversation overheard at work regarding possible acquisition
targets.
D) A coworker informs the employee of a conversation he had with the
administrative assistant to the company's general counsel regarding key
developments in an ongoing class action lawsuit.

A) An independent securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than
expected.

To offer its shareholders a privilege to obtain its shares at a
fixed price, which of the following products does a
corporation issue?
A) Puts
B) Rights
C) Futures
D) Preferred stock

Rights

All of the following risks apply to both foreign and domestic
debt instruments except:
A) political.
B) exchange.
C) repayment.
D) interest rate.

Exchange

Which of the following products is adversely impacted if the
issuer's credit rating is downgraded?
A)Mutual funds
B) Unit investment trusts (UITs)
C) Exchange-traded funds (ETFs)
D) Exchange-traded notes (ETNs)

Exchange-traded notes (ETNs)

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

C) Asset-backed securities

A municipal finance professional works for broker-dealer ABC, which seeks to underwrite a municipal securities offering by a town. The mayor is running for re-election. The professional contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to contribute further without impacting ABC's municipal securities business, what is the maximum additional contribution allowed?
A) $50B) $100C) $150D) $250

The correct final answer is A) $50.
The employee already contributed $200, and the total allowed contribution within 12 months is $250. Since they've already given $200, they can contribute an additional $50 to stay within the limit.

The owner of which of the following products is most exposed
to inflationary risk?
A) Utility stocks
B) Treasury bills
C) Treasury bonds
D) Blue chip industrials

C) Treasury bonds

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-split stock position
will be:
A) 50 shares at $25 per share.
B) 50 shares at $100 per share.
C) 200 shares at $25 per share.
D) 200 shares at $100 per share.

B) 50 shares at $100 per share.

Under Rule 144A, an issuer or restricted stock Is permitted to :
sell to which of the following investors?
A) Financial institutions
B) Accredited investors
C) Qualified institutional buyers (QIBs)
D) Nonaccredited investors who have previously purchased
restricted stock

C) Qualified institutional buyers (QIBs)

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

D) Transfer agent.

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?
A) Credit
B) Liquidity
C) Political
D) Nonsystematic

D) Nonsystematic risk

At issue, which of the following debt securities mature in one
year or less?
A) FNMA bonds
B) GNMA bonds
C) Treasury notes
D) Money market instruments

D) Money market instruments

No-load mutual funds may have lower expense ratios than
load mutual funds for which of the following reasons?
A) No-load funds do not charge 12b-1 fees.
B) No-load funds are not permitted to charge a 12b-1 fee greater
than 25 basis points.
C) Sales charges for load mutual funds increase their annual expense
ratios.
D) Fund management fees for no-load funds are always lower than
load funds.

B) No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points.

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 insider information if
the customer shares them with his registered representative
except:
A) pending transactions.
B) declared stock dividends.
C) top management changes.
D) imminent financial liquidity problems.

B) declared stock dividends.

Which of the following actions is required of a broker-dealer's
anti-money laundering (AML) program?
A) Designating an AML compliance officer
B) Filing of the firm's AML program with FINRA
C) Conducting background checks of all employees
D) Identifying to regulators the employees responsible for Currency
Transaction Reports (CTRs)

A) Designating an AML compliance officer

Which of the following actions violates FINRA rules regarding
selling away?
A) Recommending to a customer the services of another broker-
dealer (BD)
B) Sharing commissions with another registered representative in
the same BD
C) Advising customers to buy mutual funds at amounts just below a
discount level
D) Engaging in private securities transactions without written prior
consent of the employing BD

D) Engaging in private securities transactions without written prior
consent of the employing BD

Which of the following statements is true about treasury |
stock?
A) It has voting rights. |
B) It receives dividends. |
C ) tis issued stock that has been subsequently reacquired by the
corporation.
D) tis authorized stock that has not been issued and is held in the
corporation's treasury.

C ) tis issued stock that has been subsequently reacquired by the
corporation.

Call protection is most valuable to a bond owner when bond
prices are generally:
A)rising.
B) falling.
C)stable.
D) fluctuating.

A)rising.

FinCEN accomplishes its mission to safeguard the financial
system from the abuses of financial crime, including terrorist
financing and money laundering, by enforcing:
A) SEC regulations.
B) the Bank Secrecy Act.
C) the Securities Act of 1933.
D) the Investment Company Act of 1940.

B) the Bank Secrecy Act.

Under FINRA rules, which of the following activities by a
registered representative requires written notification to her
firm? |
A) Volunteering as a youth soccer league coach
B) Gambling resulting in winnings in excess of $10,000 |
C) Driving part time for a transportation network company on
weekends
D) Selling nonproprietary investment company securities products
through her firm

C) Driving part time for a transportation network company on
weekends

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 1,000 shares at $10.00 and buy 2,500 shares at $10.10 |
B) Buy 2,500 shares at $10.00 and sell 1,000 shares at $10.10 |
C) Sell 100 shares at $10.00 and buy 250 shares at $10.10 |
D) Buy 250 shares at $10.00 and sell 100 shares at $10.10 |

B) Buy 2,500 shares at $10.00 and sell 1,000 shares at $10.10 |

A transaction in which a writer covers a position by
purchasing an option is called:
A)a closing sale.
B) a closing purchase.
C)an opening sale.
D) an opening purchase.

B) a closing purchase.

In a period of low inflation and economic recession, the
Federal Reserve is expected to take which of the following
actions?
A) Decrease taxes
B) Raise the federal funds rate
C) Buy bonds in the open market
D) Require banks to increase reserves

C) Buy bonds in the open market

Regular way settlement on Treasury bonds is: |
A) same day.
B) next business day.
C) second business day (skip day). |
D) fifth business day.

B) next business day.

In the over-the-counter market, the term "spread" refers to
the difference between the:
A) bid and asked prices. |
B) offered and asked prices. |
C) indicated and firm prices. |
D) opening and closing prices. |

A) bid and asked prices. |

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. |

B) build an order book and allocate the stock. |

UTMA accounts are opened under the tax ID of the:
A) minor.
B) donor.
C) parent.
D) custodian.

A) minor.

Blue-sky laws are regulated by which of the following entities?
A) SEC
B) MSRB.
C) FINRA
D) State securities regulators

D) State securities regulators

Which of the following considerations should a registered |
representative explain to a customer when recommendinga |
529 savings plan? |
A) The potential deductibility of contributions from state taxes
B) The potential deductibility of contributions from federal taxes |
C) The income eligibility restrictions to contribute to the account
D) The rights of the account beneficiary to the assets at the age of |
majority |

A) The potential deductibility of contributions from state taxes

The call provision 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

B) Call date and call price

The redemption value of an open-end investment company's
shares is based on the:
A) previous offering price.
B) previous closing net asset value (NAV).
C) NAV computed after the order is received.
D) offering price computed after the order is received.

C) NAV computed after the order is received.

At the time of issuance, which of the following securities
normally has the longest period to expiration?
A)Rights
B) Options
C) Warrants
D) Repurchase agreements

C) Warrants

Under FINRA rules, noncash compensation connected with
the sale of variable contracts includes all of the following
items except:
A) gifts.
B) meals.
C) lodging.
D) commissions.

D) commissions.

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?
A) Equity put option
B) Perpetual preferred stock
C) Variable rate demand note
D) Tax-deferred variable annuity

C) Variable rate demand note

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:
A) positions vacant on the board.
B) directors present at the meeting.
C) shares owned by the stockholder.
D) proxies available for voting by the board.

C) shares owned by the stockholder.

Under Federal Reserve Regulation T, a 90-day restriction is |
imposed when a customer opens and closes which of the
following positions? |
A) The same stock on the same day in a margin account
B) The same stock in different accounts on the same day |
C) The same stock in different accounts in the same household
D) The same stock in a cash account without paying for the stock in
full

D) The same stock in a cash account without paying for the stock in
full

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? A)0
B)100
C) 900
D)1,000

D)1,000

Under normal circumstances, a customer's letter of intent on
a mutual fund purchase is valid for what maximum period of
time?
A)3 months
B)6 months
C) 13 months
D) 24 months

C) 13 months.

A broker-dealer is permitted to accept payment for anew
issue from a new customer when the:
A) registration is effective.
B) red herring is delivered.
C) preliminary prospectus is amended.
D) transaction takes place during the cooling-off period.

A) registration is effective.

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?
A) The spot exchange rate
B) The counter currency's inflation rate
C) The trade balance between the two countries
D) The credit rating of the counter currency's government

A) The spot exchange rate

Which of the following comparisons best describes the
essential difference between a primary distribution and a
secondary distribution?
A) A primary distribution can only be made for equity issues while a
secondary distribution can be made for both equity and debt issues.
B) A primary distribution can only be made for issues that exceed a specified
dollar amount while a secondary distribution can be made for issues of all
sizes.
C)A primary distribution must be made at a fixed public offering price (POP)
while a secondary distribution must be made at the current market price. |
D) 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.

D) 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.

When is interest on Treasury notes paid?
A) Quarterly
B) Semiannually
C) Annually
D) At maturity

B) Semiannually

Which of the following statements is true regarding a
customer account held as tenants in common?
A) The owners must equally share the assets.
B) The ownership of the decedent's assets is governed by their will
or state law.
C) Tenants in common is permitted for use only for two individuals.
D) Tenants in common is permitted for use only for married couples
or family members.

B) The ownership of the decedent's assets is governed by their will or state law.

Stability in the value of a debt portfolio is greatest when:
A)interest rates are rising.
B) interest rates are falling.
C) maturities of the debt securities are long.
D) maturities of the debt securities are short.

D) maturities of the debt securities are short.

The computation of dollar prices and accrued interest on
municipal bonds is normally on what calendar basis?
A) 30/360
B) 30/365
C) Actual/360
D) Actual/365

A) 30/360

Which of the following actions is required when a firm
receives cash in excess of $10,000 from one customer in one
business day?
A)File a Currency Transaction Report (CTR)
B) File a Suspicious Activity Report (SAR) with the SEC
C) Issue a cash transfer receipt to the customer
D) Place a five-day hold on the customer's account for the funds
received

A)File a Currency Transaction Report (CTR)

Roth 401(k) and Roth individual retirement account (IRA)
plans share which of the following features?
A) Contributions are made pretax.
B) Neither account has maximum contribution limits.
C) Neither account is subject to early distribution penalties.
D) Qualified distributions are excluded from federal income tax.

D) Qualified distributions are excluded from federal income tax.

Which of the following responses describes an advantage of
index funds?
A) The protection of principal during bearish markets
B) High turnover to take advantage of market opportunities
C) Higher management fees due to active management of the fund
D) Lower management fees due to passive management of the fund

D) Lower management fees due to passive management of the fund.

Which of the following stakeholders has first claim priority in
a Chapter 11 proceeding?
A) Equity holders
B) Secured debt holders
C) Unsecured debt holders
D) Preferred stockholders

B) Secured debt holders

Under industry regulations, an initial purchase of $3,000 of
common stock in a margin account requires a cash deposit of:
A) $750.
B) $1,500.
C) $2,000.
D) $3,000.

C) $2,000.

A decline in the gross domestic product (GDP) must last for at
least how many quarters to be considered a recession?
A)1 quarter
B)2 quarters
C)3 quarters
D)4 quarters

B)2 quarters

A registered representative (RR) wants to participate in a
private securities transaction. Which of the following actions
must the RR take?
A) Request a meeting with his supervisor to lay out the structure of
the deal
B) Call his supervisor and inform her of the deal and the RR's.
potential involvement
C) Send written notice to his supervisor outlining the activity and
compensation structure
D) Initiate the paperwork required by the policies of the firm once
the activity has begun

C) Send written notice to his supervisor outlining the activity and
compensation structure

Which of the following statements is true about all U.S.
government agency issues?
A) They are exempt from federal taxes.
B) They are exempt from registration under the Securities Act of
1933. |
C) They are issued in bearer form only. |
D) They are general obligations of the federal government.

B) They are exempt from registration under the Securities Act of 1933. |

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)a broker.
B) an underwriter.
C) a market maker.
D) a transfer agent.

C) a market maker.

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 |

B) Market risk |

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? |
A) $3
B) $32
C)335
D)$38

D)$38

Direct participation programs (DPPs) provide: |
A) liquidity and transparency.
B) exposure to non-correlated assets.
C) market-related correlations with higher average returns.
D) investors with direct purchases of stock from public companies. |

B) exposure to non-correlated assets.

A married couple who earned income that exceeded
$300,000 in each of the prior two years and reasonably
expects the same for the current year is:
A) a qualified investor. |
B) an accredited investor. |
C) an institutional investor. |
D) a qualified institutional buyer (QIB). |

B) an accredited investor. |

When a broker-dealer charges a commission on a securities |
transaction, it has acted as: |
A)an agent. |
B) a principal. |
C) an underwriter. |
D) a market maker. |

A)an agent. |

Which of the following communications with the public is.
considered misleading?
A) Historical illustrations based on factual performance
B) Product comparisons that illustrate material differences
C) Aresearch report that includes a buy recommendation for a
specific security
D) Literature providing 10-year performance information to support
predictions of future performance

D) Literature providing 10-year performance information to support
predictions of future performance

Under the Securities Act of 1933, registration is required for |
which of the following securities?
A) Eurodollar bonds |
B) Municipal securities |
C) American Depositary Receipts (ADRs) |
D) Securities issued by the federal government |

C) American Depositary Receipts (ADRs) |

Company ABC announces a 20% stock dividend for its.
common shareholders. If a customer holds 1,000 shares at
$50.00, what is the new price and number of shares following
the payment of the stock dividend?
A) 800 shares at $62.50
B) 1,000 shares at $41.67
C) 1,200 shares at $41.67
D) 1,200 shares at $50.00 |

C) 1,200 shares at $41.67

The last transaction in XYZ 5.50s 2030 was at 102. This bond
is selling at:
A) par.
B) a premium.
C)a discount.
D) asset value.

B) a premium.

Afirm 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:
A) prohibited as fraudulent and manipulative. |
B) permissible if the securities are deposited into escrow.
C) prohibited unless the firm immediately sets aside funds for the
repurchase.
D) permissible if the customers retain the right to sell the securities
into the open market. |

A) prohibited as fraudulent and manipulative. |

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 attributes of a particular investment product
D) Prequalify prospective customers as to investment objectives

B) Provide account opening forms to a new customer

Which of the following represents the effect of a stock split?
A) The price per share of common stock increases.
B) The price per share of common stock decreases.
C) Each stockholder's proportionate ownership decreases.
D) Each stockholders proportionate ownership increases.

B) The price per share of common stock decreases.

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 (ETF)
D) The same number of S&P 100 Index put options

A) Cash

Which of the following statements is true regarding the |
concept of an annuity contract?
A) Payouts of an investment in a nonqualified annuity are all income-
tax-free.
B) The kind of annuity selected partly determines the payment |
amounts to the annuitant.
C) In the case of life annuity contracts, the age and sex of the |
annuitant do not affect the payment amounts. |
D) The amounts of the periodic payments to the annuitant are |
determined by the performance of the insurance company's |
investment returns.

B) The kind of annuity selected partly determines the payment amounts to the annuitant.

Which of the following Form U4 reportable events results in a |
statutory disqualification?
A) A personal bankruptcy filing |
B) A written customer complaint alleging misappropriation of assets |
C) Afelony theft charge |
D) A felony conviction for a driving under the influence (DUI) charge |

D) A felony conviction for a driving under the influence (DUI) charge |

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 |

A) Profit limited and loss limited |

A registered representative (RR) who wants to place a mutual
fund advertisement must obtain written approval from which
of the following parties?
A) FINRA
B) Each state's securities administrator
C) A registered principal of the RR's firm
D) The investment management division of the appropriate regional
SEC office

C) A registered principal of the RR's firm

Under SEC Regulation S-P (Consumer Privacy), which of the |
following information must a firm include in its customer
privacy and opt-out notices?
A) The address of the firm's website |
B) The fee to opt out from the privacy program |
C) The deadline by which to opt out from the privacy program |
D) The policies to protect the security of nonpublic information |

D) The policies to protect the security of nonpublic information |

What is the cost basis of an inherited mutual fund?
A) The net asset value (NAV) of the shares when the owner dies
B) The NAV 30 days after the owner's death
C) The same cost basis as the deceased
D) The same cost basis as the deceased plus capital gains
distribution

A) The net asset value (NAV) of the shares when the owner dies