SIE Exam

A treasury bond is exempt from:

Sate and local income tax

NOT a function of a mutal fund custodian?

Managing the buying and selling of securities within the fund

If Sarah works two more years at her company, she will be fully vested. This means:

She will own 100% of the assets in her retirement account

If the beneficiary of an annuity is afraid she may die before her children are grown and she wants to make sure that payments continue ater her death. The best settlement option is:

Life with period certain

A company from Hong Kong that exports goods to California perfers a strong U.S. dollar

True

Class A shares

Front-end

Higher up -front sales charge

No or low annual 12b-1 fees

Class B shares

Back-end

Impose a contingent deferred sales charge

Higher annual 12b-1 fee

Class C shares

No up-front sales charge

No black-end load

Highest 12b-1 fee

Suitable for short-term

Debt service for double barrel bonds

Property taxes and user fees

Least susecptible to liquidty risk?

Exchange-traded common stocks

Most susceptible to liquidity risk?

Municipal securities

Not a road show

accept orders

Road show

Emphasize the attributes of the issuer

Collect indications of interest

Use demnad data to determine the price

Not considered accredited investors

A married couple who each have an annual earned income of $125,000 for two years

Accredited investors

Individuals who earned more than $200,000/year for the last two years

Married couples who jointly earned more than $300,000/year for the last two years.

Individuals/married who have a net worth greater than $1,000,000, exclusing their primary residence

A bank

Advertising during the cooling-off period

Tombstone ad

Securities Investor Protection Act of 1970 (SIPC)

$500,000 of cash and securities per customer. But no more than $250,00 can be cash

Under Rule 147, intrastare offerings cannot be resold out of state for how long after the initial sale date?

6 months

Require a registration statement filing with the SEC under Rule 145

Merger with another publicly held company

The Securities Act of 1933 requires the registration of nonexempt issues

Corporate stocks, bonds, rights, and warrants

Options

Investment compnaies and variable insurance products

Shares of limited partnerships

The maximum permitted sale under Rule 144 is the weekly average of the last

4 weeks' trading volume to be sold every 90 days

Variable annutiies during the accumulation phase

Periodic payments of fixed or varying dollar amounts can be made into separat account

Red Herring does NOT include

The issue's final POP

Red Herring

Used during the 20-day cooling off period to solicit indications of interest in the issue.

Help publicize the issue, without being considered an advertisement

Used to solicit indications of interest

Use ends when the Final Prospectus is avaiable

A corporation wishes to raise capital by issuing common stock to the public

Investment Banker

Investment Banker

Help structure new securities offerings

Decide the pricing of the issue based on market conditions

Underwrite the issue either as a principal or as an agent (best efforts)

Advise companies on mergers, acquistions, divestitures and spin-offs

Generally traded according to their average life rather than their stated maturity dates

Asset-backed securities

Required of a BD AML program

Designating an AML compliance officer

A firm is a participant in a publc offering. To sell a substanial amount of the securities to its cusomers. the firm agrees to repurcahse the shares at no less than the proginal sales price

Prohibted as fraudelnt and manipulative

Noncash compenstation

Gifts, Meals, Lodging

Possible outcomes for the writer of a covered call option

Profit limited and loss limited

Under Rule 144A. an issuer of restricted stock is permited to sell to

Qualified institutional buyers (QIBs)

Greatest risk in a variable life insurance policy

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?

$38

Longest period to expiration

Warrants

If a market maker posts a quote of 10.00 - 10.10 [25x10]

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

In a periord of low inflation and economic recession, the Fed is expected to

Buy bonds in the open market

Violates FINRA rules regarding selling away

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

A company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstandin stock at $10 pershare 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 periodm only 900,000 shares have been tendered. How many of the invesor's shares will the compnay purchase?

1,000

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 dialy or weekly basis?

Variable rate demand note

A customer account held as tenants in common

The ownership of the decedent's assets is governeed by their will or state law

When recommending a 529 savings plan

The potential deductibility of contributions from state taxes

When a BD charges a commission on a securities transactionm it has acted as

An agent

A customer's LOi on a mutual fund purchase is valid for what maximum period of time?

13 months

Syndicate desk

Build an order book and allocate the stock

UTMA accounts are opened under the tax ID of the

minor

Money market instruments

Mature in one year or less

Call provision of a bond stipulates

Call date and call price

What is the cost basis of an inherited mutual fund?

The NAV of the shares when the owner dies

No-load mutual funds may have lower expense ratios than load mutual funds for

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

A savings account at a bank is guaranteed by

FDIC

Impacted if the issuer's credit rating is downgraded

ETN

Roth 401(k) and Roth individual retirement account (IRA) plans share

Qualified distributions are excluded from federal income tax

Under the Securities Act of 1933, registration is required for

ADR

Under Fed Reg T, a 90-day restriction is imposed when a customer opens and closes

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

A customer has a cash balance in her account together with long positions in serveral securities. She has made no securities transcations in the account during the past 18 months. How often must the firm send her an account statement?

Quarterly

An associated person who is not a RR is permitted to engage in

Provide account opening forms to a new customer

The last transcaction in XYZ 5.50s 2030 was at 102. This bond is selling at

a premium

When selling a fixed amount of a base currenct to purchase a counter currency. What will the customer receive?

The spot exchange rate

Corp./Muni./Agency

30/360, T+2 (3 days)

U.S. Governement/T-bonds/T-notes

Acutual/365 (Acutual)

To offer its shareholders a privilege to obtain tis shares at a fixed price

Rights

A member of a stock exchange resposible for providing liquidity in a security by being willing to buy and sell at all times is

A market maker

Direct participation programs (DPPs) provide

Exposure to non-correlated assets

In the event of a stock split, what is required to maintain a record of the shareholders eligible to receice the additonal shares?

Transfer agent

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

NAV computed after the order is received

Form U4 reportable events results in a statutory disqualification

A felony conviction for DUI charge

A BD is permitted to accept payment for a new issue from a new customer when the

registration is effective

Apply to both foreign and domestice debt instruments except

Exchange risk

Is required when a firm receives cash in excess of $10,000 from one customer in one business day

File a Currency Transaction Report (CTR)

Under staturoty voting, a common stockholder has as many votes for each vacacny on the board of directors as the number of

Shares owned by the stockholder

An investor owns 100 shares of XYZ common stock at the current market price of $50 pershare. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock position will be

50 shares at $100 per share

Stability in the value of a debt portfolio is greatest when

maturities of the debt securtires are short

Primary distribution VS. Secondary distribution

Primary involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares

U.S. governemtn agency issues

They are exempt from registration under the Securities Act of 1933

Closing purchase

A transaction in which a writer covers a position by purchasing an option

Closing sale

Selling an option you previously bought to exit your long position

Opening sale

Writing/selling a call or a put option to create a new short position

Opening purchase

Buying a call or a put option to create a new long position

A customer is an officer of a company that is involved in some significant changes. Corporate affairs that could be cosidered insider information if the customer shares them with his RR except

declared stock dividends

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

Rising

Most exposed to inflationary risk

Treasury bonds

Advantage of index funds

Lower management fees due to passive management of the fund

A RR who wants to place a mutual fund advertisement must obtain written approval from

A registrered principal of the RR's firm

Effect of a stock split

The price per share of common stock decreases

Distributions from an Individual Retirement Account must commence by age

By april 1st of the year following that person reaching age 73

Distributions after age 59 1/2 from tax qualified retirement plans are

100% taxable

Maintenance margin requirements

Short = 30%

Long = 25%

Sell stop order is executed in

Falling markets at the market price

Custodial securities with an assignment performed by the receipient of the gift

False

Interest payments on Ginnie Mae pass-through certificates are made

Monthly

What can the Fed do to combat inflation

Raise interest rates

An inverse ETF might be suitable for an investor

Who wants to hedge

Most equity securities are subject to what type of risk?

Market risk

Equipment trust certificates are issued by

airlines, railroads, and trucking companies

Rising interest rates wiill generally affect existing bondholders by

Lowering the market value of their bonds

The current yield of a bond

increases as bond market prices decline

Feasibility study

Municipal revenue bonsd to detail the economic practicality of a project

First Market trade

Exchange listed securities on that exchange (NYSE/NASDAQ)

Second market trade

Not exchange listed in OTC