SIE Exam Focus Study Cards from All Exams

For how long may a letter of intent be backdated?

90 days

What's the maximum criminal penalty for individuals who violate the insider trading rules?

$5 million fine and/or 20 years in prison

A registered representative may lend money to another individual in each of the following situations, EXCEPT:

The other individual is in danger of failing to make payment on a transaction

Shares of an initial public offering (IPO) may be sold to:

Registered representatives of a broker-dealer that only sells mutual fund shares

What's the maximum criminal penalty for a firm that violates the insider trading rules?

$25 million fine

Mutual funds that invest in stocks of companies that have good fundamentals, but are in sectors that are currently out of favor with the market are referred to as:

Value funds

An affirmative statement which indicates that an account is eligible to purchase IPOs must be verified every:

12 months

Which of the following BEST describes switching?

The sale of shares of one mutual fund with the proceeds of the sale used to purchase shares of another mutual fund

All material information that's known about a municipal security must be disclosed to a customer in which of the following situations?

On solicited and unsolicited transaction

Which of the following is responsible for issuing new mutual fund shares and canceling shares that are redeemed by investors?

Transfer Agent

According to the SEC, the original records maintained by a broker-dealer must be:

In a format that's acceptable to the SEC

Which of the following mutual funds is MOST suitable for an investor who will be in need of funds in a short period and wants to protect his principal amount?

Money-market mutual fund

A registered representative previously operated a sole proprietorship and requested protection from bankruptcy. The representative did not disclose her affiliation with the proprietorship when she filed Form U4. Which of the following statements regarding the application is TRUE?

The registered representative has filed a statement with false or misleading statements.

Which of the following statements is TRUE if interest rates rise?

Both bond and bond fund prices will fall.

Obtaining best execution includes all the following factors, EXCEPT:

The number of market makers for the security

A French company would like to have its stock traded in the U.S. securities markets. This would most likely be accomplished through the issuance of:

American Depositary Receipts

A unit investment trust (UIT):

Represents an undivided interest in a fixed account

What's the maximum profit for the buyer of a call option?

Unlimited

Which of the following choices would NOT be subject to the holding period restriction under Rule 144?

Restricted stock acquired under an investment letter

Restricted stock acquired under a stock option plan

Control stock acquired under a private placement

Control stock acquired through an open-market purchase

Control stock acquired through an open-market purchase

Which of the following is classified as a joint account?

An account shared between two brothers.

An account established under UGMA/UTMA.

An account with third party trading authorization.

A spousal IRA.

Two Brothers

A firm is the managing underwriter of a follow-on offering of a security that's listed on the NYSE. The aftermarket prospectus delivery rule:

Does not require the firm to deliver a prospectus

Requires the firm to deliver a prospectus for 25 days

Requires the firm to deliver a prospectus for 40 days

Requires the firm to deliver a prospectus for 90 days

Does not require the firm to deliver

If a customer exceeds SIPC limits:

The customer is a general creditor

The SEC rules regarding record retention generally require that records be kept in an easily accessible location for the:

two years

Which of the following is TRUE if a mutual fund investor chooses to implement a systematic withdrawal plan from the fund?

The withdrawals may result in a reduction of capital.

Which of the following transactions involving a registered representative (RR) is a violation of industry rules that FINRA established regarding private securities transactions?

An RR selling securities in private transactions without the supervision and prior written consent of her employing broker-dealer

Which of the following statements BEST describes exchange-traded notes (ETNs)?

ETNs are debt instruments linked to the performance of a commodity, currency, or index

Which of the following is found in a preliminary prospectus?

The number of shares being issued

Which of the following has the most interest-rate risk?

A 30-year premium bond

A 30-year zero coupon bond

A 10-year premium bond

A 10-year zero coupon bond

A 30-year zero coupon bond

Which types of investments have historically shown a great deal of sensitivity to regulatory risk?

Limited partnerships

Corporate bonds

Common stocks

Variable annuities

Limited Partnerships

Final arbitration awards against registered representatives and/or firms are reported on which of the following forms?

Form U6

According to MSRB rules, the maximum gift that may be made to another person in relation to municipal activities is:

$100

When discussing the purchase of a variable annuity with a client, the RR is not required to disclose:

Probate fees

An equity inverse exchange-traded fund (ETF) is most similar to:

Selling stock short

A previously registered person was convicted of a felony 14 years ago and has served out his sentence in federal prison. If he's now seeking employment as a registered representative, he should be informed that:

He may be hired as a registered representative

He may not be hired as a registered representative

He may be hired to provide investment advice to customers, but will not be permitted to receive compensation based on these transactions

He may be hired to provide financial advice, but will not be permitted to become registered

He may be hired as a RR

When interest rates are trending upward, the economy will normally be in which phase of the business cycle?

Expansion

The current market value of a stock is below the strike price of a call option. This situation is referred to as:

Out of the money (below)

The investments in a Coverdell Education Savings Account (CESA) are:

Determined by the investor

Determined by the firm through which it's opened

Limited to AAA rated bonds

Limited to mutual funds

Determined By the investor

If a broker-dealer's trading desks purchases a large block of stock during the last minutes of trading in an effort to drive up the price, it is:

A prohibited practice that's referred to as marking-the-close

Broker-dealers are required to send balance sheets to customers every:

6 months

Of the following broad-based indexes, the one with the largest measure of the market is the:

The Wilshire Associates Equity Index

Which of the following statements is NOT a characteristic of a 529 plan?

There are no income limits placed on contributors

Withdrawals from 529 plans used for educational purposes are not subject to federal taxation

Earnings in the account are tax-deferred

Contributions are unlimited

Contributions are unlimited

A registered person wants to set up an investment program for a charity and will not be receiving compensation for his service. Which of the following statements is TRUE?

He is required to provide written notification to FINRA.

He must receive the written approval of his broker-dealer.

He is required to provide verbal notice to his broker-dealer.

He is required to provide written notice to his broker-dealer.

He is required to provide written notice to his broker-dealer.

Stabilization:

Is used to prevent the price of newly issued stock from falling

The minimum denomination for negotiable certificates of deposit is:

$100,000

What is the market outlook for the buyers of call options?

BULLISH

During periods of deflation, the FRB will likely:

Purchase securities in the open market

Which of the following is subject to market risk?

A publicly listed partnership

A customer gives his registered representative the following instructions. Buy 100 shares of General Motors whenever you think the price is right. Under current regulations, the order:

May be accepted and may be executed anytime that day

An index option has been exercised. What is the writer of the option required to do to satisfy his obligation?

Deposit cash equal to the difference in the strike price and the value of the index.

SPDR is considered a type of:

exchange traded fund

When a brokerage firm executes trades for customers in municipal securities, all material information should be disclosed:

At or prior to the time of the trade

Which of the following actions taken by a corporation requires an investor to affirmatively opt into before he can participate?

Odd lot tender

The primary purpose of a self-regulatory organization (SRO) is to:

Promote fair and equitable practices among members

MSRB rules do NOT apply to:

Issuers

The primary purpose of the North American Securities Administrators Association is to:

Create rules, laws, and exam requirements for states

The Pink Marketplace displays:

The market makers for stocks that are not listed on either the NYSE or Nasdaq

Which of the following organizations provides clearing services for equity securities?

The National Securities Clearing Corporation (NSCC)

If a market maker has a current quote of 50.00 - 50.05 (15 x 20), this indicates that the firm is willing to:

Buy 1,500 shares at $50.00 and sell 2,000 shares at $50.05

If an investment adviser has assets under management of less than $100 million, it's regulated by which of the following?

The state(s) in which the adviser conducts business

If a company's insiders are buying its shares, what will most likely happen to the share price?

It will appreciate

Which of the following choices does NOT hold customer cash or securities?

The Depository Trust Company

A broker-dealer that maintains omnibus accounts

A prime broker

A broker-dealer

The Depository Trust Company

A customer has an account with a discount broker-dealer that specializes in online trading. If the customer is being charged a commission, the firm is MOST likely acting in which of the following capacities?

Agent

Principal

Market marker

Underwriter

Agent

The issuer and guarantor of exchange-traded options is:

The Options Clearing Corporation

The primary purpose of the North American Securities Administrators Association is to:

Enforce rules that are established by the states

Create rules, laws, and exam requirements for states

Create rules, laws, and exam requirements for interstate transactions of securities

Examine broker-dealers that are registered in a state

Create rules, laws, and exam requirements for states

A broker-dealer executes but does not process transactions. If the firm processing the transactions does not know the identity of the customers, this is known as a(n):

Prime broker

Clearing broker

Omnibus account

Fully disclosed account

Omnibus account

Which of the following organizations provides clearing services for equity securities?

The National Securities Clearing Corporation (NSCC)

If SIPC does not cover in full a customer's account in a brokerage firm that has gone bankrupt, the investor is a:

General creditor

Which of the following organizations enforces municipal securities regulations for broker-dealers?

FINRA

Which of the following factors will impact the value of a variable life insurance policy?

The performance of the separate account.

A broker-dealer makes a $900 political contribution to an official of a municipality. The contribution is reported to:

The MSRB

- Broker-dealers and their municipal finance professionals (MFPs) must report all of their political contributions that are made to any official of a municipality to the MSRB. Note, any political contributions exceeding $250 made to a person for whom an MFP may vote is a violation.

Which of the following calculations describes the payout on a variable annuity?

A fixed number of annuity units multiplied by a variable dollar amount

Of the following broad-based indexes, the one with the narrowest measure of the market is the:

Dow Jones Industrial Average

If an investor writes (sells) a covered call, what are the potential profit and loss outcomes?

Limited profit and limited loss

-Writing a covered call involves an investor being long (owning) stock and then selling (writing) a call against the same stock. The investor receives the premium for selling the call, which reduces the total investment and breakeven for the position. Since the stock could potentially decline to zero, the investor's loss is limited to the stock's purchase price less the premium (i.e., stock's purchase price - option premium = maximum loss). If the stock price rises, the investor will profit. However, if the stock price rises above the call's strike price, the call will be exercised and the investor will be forced to sell her shares. Since the sale price is preset as the call strike price, the investor's potential gain is also limited (i.e., calls strike price - stock's purchase price + option premium = maximum gain).

A registered person has been indicted for investment fraud, which was unrelated to his employment at the member firm. Which of the following statements is TRUE?

No action is required by the registered person until a verdict has been reached.

No action is required since the fraud was unrelated to the registered person's employment.

The registered person is permitted to remain employed at the member firm, but the event must be reported to FINRA.

The registered person is not permitted to remain employed at the member and the event must be reported to FINRA.

The registered person is permitted to remain employed at the member firm, but the event must be reported to FINRA.

The earnings in Section 529 Savings Plans:

Accumulate on a tax-deferred basis as long as the money stays in the plan

The investment banking department of a broker dealer is generally involved in which of the following activities?

Coordinating the offering of securities between the issuer and investors to raise capital.

A customer buys an IBM call option and pays a 2.50 point premium. The aggregate dollar amount paid is:

$250.00

-Each option contract is based on 100 shares of common stock. The dollar amount paid is $250 ($2.50 x 100 shares).

What do rights (preemptive rights) allow existing shareholders to do?

Issued by corporations and they allow existing shareholders to purchase additional shares at a fixed price.

A registered person has been indicted for forgery that was unrelated to his employment at the member firm. Which of the following statements is TRUE?

The registered person is permitted to stay employed at the member firm, but the event must be reported to FINRA.

"You have to **** up really bad" - Gunner

Which of the following disclosure documents is used for a public offering of corporate securities?

Prospectus

-Disclosure documents are often required when selling newly issued stocks and bonds (i.e., in the primary market). Broker-dealers must provide investors with a prospectus when selling corporate stocks and/or bonds in a public offering. If securities are being sold privately (e.g., through a Reg. D offering), broker-dealers may provide investors with an offering memorandum or private placement memorandum. For a municipal bond issuance, the offering's disclosure document is referred to as the official statement.

What type of security gives the owner immediate control over the issuer?

Common stock

- they have voting rights

Who is responsible for sending issuer communications to objecting beneficial owners for stock held in street name?

The broker-dealer

-The broker-dealer is not permitted to release confidential, personal information of objecting beneficial owners to issuers. As a result, the broker-dealer would receive the information and forward it to the beneficial owners.

A registered representative (RR) is having dinner with a client to discuss her portfolio and different investment opportunities. What is the maximum amount that the RR could spend on dinner?

$50

$100

$200

No specific limit

There is no specific limit on what is considered legitimate business expenses, provided the giver is in attendance. Having dinner with a client to discuss investment opportunities would be considered a legitimate business expense.

The purchase price of a no-load fund is determined by:

The net asset value as computed at the end of the business day

A client sells the shares she owned of a company whose stock is a part of a major market index. If the proceeds are reinvested in an S&P 500 Index fund, the client has reduced which of the following risks?

Business

Market

Economic

DPolitical

Business

- By selling the individually owned shares, the client is no longer subject to the risks that may affect that single company. Investing the proceeds in the S&P 500 Index fund will provide the client with greater diversification

S&P is a mutual fund largest publicly traded companies has a diverse portifolio