SIE Progress Exam 01A

When issued, which security has a maturity of one year or less?

Money market instruments

FNMA bonds are generally issued with which maturity profile?

Longer

GNMA bonds are generally issued with which maturity profile?

Longer

Which security type always matures in one year or less?

Money market instruments

Which U.S. Treasury security is issued with maturities of 2 to 10 years?

Treasury notes

ABC Corporation's charter authorized the issuance of up to 1,000,000 shares of stock. The company has issued 100,000 shares, but has 5,000 shares of treasury stock. How many shares of ABC's stock are outstanding?

95,000

If a company is authorized to issue 1,000,000 shares and has issued 100,000 shares, how many shares remain authorized but unissued?

900,000

A company has 100,000 shares issued and 5,000 shares of treasury stock. Which figure is NOT the correct number of outstanding shares?

105,000

A corporation has sold 100,000 shares to investors and later repurchased 5,000 as treasury stock. How many shares were originally issued?

100,000

A company has 100,000 shares issued and 5,000 shares in treasury. How many shares are outstanding?

95,000

Concerning dispute arbitration:

FINRA helps to administer the process

Which statement about the SEC and securities arbitration is correct?

The SEC does not administer the arbitration process

Who determines the outcome of a securities arbitration proceeding?

The arbitrators

What is FINRA's role in securities arbitration?

FINRA helps administer the process

Which organization determines the process of administering securities arbitration in practice for member disputes?

FINRA

The OTC Markets Group is BEST defined as:

A quotation system for securities that are not listed on either the NYSE or Nasdaq

Which statement best explains why OTC Markets Group is not an exchange?

It provides quotations rather than acting as an exchange market

The OTC Markets Group should NOT be described as which of the following?

An execution system

The OTC Markets Group is primarily used for securities that are:

Not listed on either NYSE or Nasdaq

Which term refers to exchange

listed securities traded over

During periods of rising interest rates, an investor can expect:

Long

Which bond characteristic generally does NOT change after issuance when market rates rise?

The bond's nominal coupon rate

During a period of rising interest rates, bond yields generally:

Rise

When rates rise, which usually falls less in price?

Short

When market interest rates rise, which bonds usually suffer the greatest price decline?

Long

For a Treasury note, interest accrues based on:

Actual number of days per month, 365 days per year, plus settlement of T+1

Which day

count convention is more typical for many corporate and municipal bonds rather than Treasury notes?

Treasury notes settle on which schedule?

T+1

Treasury notes accrue interest using which method?

Actual number of days in the month and a 365

Which combination is NOT correct for Treasury notes?

30/360 and T+2

The Municipal Securities Rulemaking Board (MSRB) does NOT regulate which of the following?

Municipal issuers

Which entity is NOT regulated by the MSRB?

Municipal issuers

The MSRB has authority over which of the following?

Municipal salespersons

Dealer communications and municipal advertising are regulated by the:

MSRB

Which of the following is directly regulated by the MSRB?

Municipal dealers

Which of the following securities assist in financing importing and exporting operations?

Bankers' acceptances (BAs)

Which instrument is a short

term U.S. government obligation rather than a trade

Eurodollar CDs are best described as:

Deposits of U.S. dollars in banks outside the United States

Which instrument is specifically used to finance foreign trade transactions?

Bankers' acceptances

American Depositary Receipts are used primarily to:

Trade foreign company shares in U.S. markets

What type of municipal bond permits the issuer to raise property taxes?

General obligation bond

A municipal bond backed by user fees from a project instead of taxing power is usually a:

Revenue bond

A sewer bond is most closely associated with repayment from:

A specific assessment or project revenue source

Which municipal bond is backed by the full faith and credit of the issuer?

General obligation bond

An agency bond is NOT the best answer to a question about raising local property taxes because agency bonds are:

Issued by agencies rather than local municipalities

When a bond is called, the bondholder receives the:

Call price plus accrued interest

Why is call price alone incomplete when describing what a bondholder receives at a call?

Because the holder also receives accrued interest

A bond redeemed before maturity by the issuer normally pays the investor:

Call price plus accrued interest

If a bond is called by the issuer, the amount paid is determined primarily by the bond's:

Call provisions

Which phrase correctly completes this statement: A called bond is paid at the call price plus _____.

accrued interest

A common shareholder is not entitled to:

Appoint officers of the corporation

A common shareholder normally has the right to:

Vote for the board of directors

Common shareholders may receive dividends only if they are:

Voted by the board of directors

Which is a normal right of a common shareholder?

Selling shares to another investor

Who appoints the officers of a corporation?

The board of directors

When warrants are issued, the exercise price is:

Higher than the current market price of the stock

Which statement is usually false about newly issued warrants?

Their exercise price is below the current market price

Warrants are not typically issued:

Exactly at the current market price

When issued, warrants usually have an exercise price that is:

Higher than market

A warrant's exercise price is generally determined by:

A fixed stated price in the warrant terms

Which of the following does NOT issue securities?

FRB

Which of the following is associated with government agency securities rather than monetary

policy operations?

Which organization buys and sells securities for monetary policy but does not issue its own securities?

FRB

Which entity does issue securities among the following choices?

FHLB

Which agency

related entity issues securities to raise funds for its system?

A bondholder can find the details regarding the terms and features of her bond from the:

Indenture

Which municipal document is used to announce a new bond offering to prospective underwriters?

Notice of Sale

The underwriting agreement is best described as a contract among:

Members of the underwriting syndicate

Which document sets out a bond's specific terms, covenants, and features?

Indenture

Which municipal bond document addresses enforceability of the bond and tax status of the interest?

Legal opinion

Which of the following securities will provide an investor with protection against purchasing

power risk?

Treasury bills do not specifically protect against purchasing

power risk because they:

A standard Treasury note differs from TIPS because the note:

Pays a fixed amount and is exposed to purchasing

Which Treasury security adjusts principal based on changes in the CPI?

TIPS

Which Treasury security is a zero

coupon obligation and is highly exposed to purchasing

Which shares of preferred stock may increase the most if the value of the company's common stock appreciates?

Convertible preferred stock

Which preferred feature allows the holder to exchange preferred shares for common shares?

Convertible feature

Cumulative preferred stock is most associated with which benefit?

Receiving unpaid dividends before common stock if dividends were skipped

Participating preferred stock is best known for allowing holders to:

Receive additional distributions under certain conditions

Callable preferred stock refers to preferred shares that:

Can be redeemed by the issuer

The type of market in which an issuer raises capital by selling its securities to investors is referred to as the:

Primary market

Investor

to

Which market involves an issuer selling new securities to raise capital?

Primary market

The third market refers to:

Trading of listed securities over

The fourth market refers to:

Direct trading between institutions without a broker

Which of the following choices has the lowest priority of claims in a bankruptcy?

Common stock

In a corporate liquidation, which claim generally has the highest priority among these choices?

Secured creditors

Which claim is senior to preferred and common stock but junior to secured creditors?

Unsecured creditors

Which security has the lowest priority of claim in bankruptcy?

Common stock

Which claim is senior to common stock but junior to creditors in bankruptcy?

Preferred stock

A customer sells 1,000 shares of ZBT to her broker

dealer. Of the 1,000 shares, 500 are purchased by the broker

A broker

dealer is acting as a principal when it:

Why is exchange the wrong answer in this question?

Because an exchange is a marketplace, not the broker

A broker

dealer acts as an agent when it:

A reporting facility is used primarily to:

Report trade information

Which of the following BEST describes the nominal yield?

It's the yield based on the face value of the bond.

The nominal yield on a bond is best described as the bond's:

Stated coupon rate based on face value

To find a bond's annual interest payment, you multiply:

Nominal yield by par value

Which yield changes when a bond's market price changes?

Current yield