FINRA SIE Practice

FINRA SIE

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?

$50

Which of the following outcomes are possible for the writer of a covered call option?

A) Profit limited and loss limited

The primary purpose of a syndicate desk in the context of an equity offering is to:

B) Build an order book and allocate the stock

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?

D) Non-systematic

Direct participation programs (DPPs) provide:

B) Exposure to non-correlated assets.

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:

C) A Market Maker

Which of the following actions violates FINRA rules regarding selling away?

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

What is the cost basis of an inherited mutual fund?

A) The NAV of the shares when the owner dies

All of the following risks apply to both foreign and domestic debt instruments except:

B) Exchange

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?

C) Variable rate demand note

The redemption value of an open-end investment company's shares is based on the:

C) NAV computed after the order is received

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:

B) an accredited investor

Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program?

A) Designating an AML compliance officer

Which of the following communications with the public is considered misleading?

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

In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions?

C) Buy bonds in the open market

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?

D) $38

Which of the following comparisons best describes the essential difference between a primary distribution and a secondary distribution?

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.

Under the Securities Act of 1933, registration is required for which of the following securities?

C) American Depositary Receipts (ADRs)

Which of the following investment risks is the greatest risk in a variable life insurance policy?

B) Market risk

No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons?

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

Which of the following statements is true about treasury stock?

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

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?

D) 1,000

Which of the following investment risks is the greatest risk in a variable life insurance policy?

B) Market risk

Which of the following products is adversely impacted if the issuer’s credit rating is downgraded?

D) Exchange-traded notes (ETNs)

Call protection is most valuable to a bond owner when bond prices are generally:

A) Rising

Which of the following investments are generally traded according to their average life rather than their stated maturity dates?

C) Asset-backed securities

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:

A) Prohibited as fraudulent and manipulative

Which of the following considerations should a registered representative explain to a customer when recommending a 529 savings plan?

A) The potential deductibility of contributions from state taxes

Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items except:

D) Commissions

Roth 401(k) and Roth individual retirement account (IRA) plans share which of the following features?

D) Qualified distributions are excluded from federal income tax

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