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SIE Exam flashcards
1
Q

The Investment Advisers Act of 1940 regulates which of the following?
A) The markup charged by a financial services firm on a securities transaction.
B) The fee charged by an accountant for providing advice concerning securities.
C) The fee charged by a bank to hold securities.
D) The fee charged by an accountant when filing a clients tax returns.

A

B) The fee charged by an accountant for providing advice concerning securities.

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2
Q

Promoting fair and equitable practices among members BEST describes:

A

self-regulatory organizations (SROs)

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3
Q

Uses an A-B-C test to determine whether an entity is subject to its rules.

A

Investment Advisers Act of 1940

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4
Q

Securities listed on an exchange, but not traded in the OTC market BEST describes:

A

the third market

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5
Q

_____ stand ready to buy or sell securities at their quoted prices, while traders execute trades for the firm’s clients.

A

Market makers

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6
Q

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

A

Convertible preferred stock

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7
Q

Preemptive rights give existing stockholders the right to:

A

maintain their proportionate interest in a corporation.

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8
Q

Securities may be sold over _____ days through unsolicited broker’s trades or to a dealer that is acting as principal.

A

90

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9
Q

Preferred stock that allows stockholders to share in dividends paid to common stockholders.

A

Participating preferred stock

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10
Q

Who derives the MOST benefit from a put provision attached to a bond offering:

A

bondholders

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11
Q

Some serial maturities are structured so that principal and interest payments represent approximately equal annual payments over the life of the offering.

A

Level Debt Service

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12
Q

When does an arbitrage opportunity exist?

A

If the bond is available at a discount to parity.

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13
Q

____ are only necessary for partial calls.

A

Lotteries

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14
Q

A municipality borrowing for a short-term period to finance a capital project would issue:

A

Bond anticipation notes

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15
Q

For an Industrial Development Bond (IDB), the primary source that backs the bond is:

A

leasing corporations only

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16
Q

The most common security issued by government agencies is a:

A

mortgage-backed pass-through certificate.

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17
Q

_____ are created so that multiple firms share in the liability of a bond offering.

A

Syndicates

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18
Q

Jon Trask, one of your customers is long 100 shares of Plantation Inc 6% cumulative preferred stock ($100 par). Over the last three years, Plantation Inc. has had negative net income and Mr. Trask hasn’t received any dividends during that time period. How much should Mr. Trask receive in dividend income this year before common stockholders receive a cash dividend?

A

$2,400

100 shares x $100 par value x 6% x 4 years

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19
Q

The purpose of a depository facility is to:

A

hold securities in book entry form.

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20
Q 
Which of the following is the most suitable for a person who is interested in growth:
A) Common Stock
B) High-yield Bond Fund
C) High-rated Bonds
D) Preferred Stock
A

A) Common Stock

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21
Q

Which of the following is TRUE concerning electronic communication networks?
A) They can be used by only retail workers
B) They can be used by investors who want to trade anonymously
C) They can be used only by institutional investors
D) They can be used by clients who don’t want to use a broker-dealer

A

B) They can be used by investors who want to trade anonymously

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22
Q

Which of the following is NOT TRUE regarding the characteristics of options and warrants?
A) Warrants are created by the corporation whose stock underlies the instrument; options are created by contract between an option buyer and an option seller.
B) Both options and warrants can expire worthless if they are not exercised.
C) If options are exercised, a set price must be paid for the underlying security; if warrants are exercised, the securities are received at no additional cost.
D) Both options and warrants can be bought and sold in the secondary market.

A

C) If options are exercised, a set price must be paid for the underlying security; if warrants are exercised, the securities are received at no additional cost.

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23
Q

A US government bond is selling for 95.28. The dollar value is:

A

$958.88

95.28 = 95. 28/32 = 95.875% => 1000 *.95875 = $958.875

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24
Q

A convertible bond has a conversion price of $40 and is currently selling in the market at $950. The conversion ratio is:

A

25

Par Value / Conversion Price = $1000 / $40

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25
Q

Which of the following is NOT TRUE of Industrial Development Revenue bonds?
A) They are issued by local municipal governments.
B) They may be used to finance the construction of commercial property that will be used by private corporations.
C) Their credit rating is determined by an analysis of the municipal government issuing the bonds.
D) Interest is paid from rents received from private corporations.

A

C) Their credit rating is determined by an analysis of the municipal government issuing the bonds.

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26
Q

When purchasing Treasury notes, an investor should understand interest:

A

is paid semi-annually

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27
Q 
Which of the following organizations enforces municipal securities regulations for broker-dealers?
A) The FRB
B) The FDIC
C) FINRA
D) The MSRB
A

C) FINRA

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28
Q 
The Securities Investor Protection Corporation insures all of the following EXCEPT:
A) Corporate Accounts 
B) Joint Accounts
C) Margin Accounts
D) Commodity Accounts
A

D) Commodity Accounts

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29
Q

If an investor wants to build a bond portfolio that maintains a stable value, she should purchase bonds with:

A

short maturities

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30
Q

A corporation has declared a cash dividend on June 1, payable on July 25 to stockholders of record on Thursday, July 12. If securities are not delivered by July 12, what must accompany the delivery?

A

A due bill

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31
Q

An investor purchased ABC preferred stock two years ago for $25 per share. Over this time, she has received $5 in dividends and the stock is currently trading for $30 per share. What is the investor’s total return on her investment?

A

40%

(($30 - $25) + 5) / $25

$10 / $25 = 40%

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32
Q

A security has a 6% rate if return, when the inflation rate is 1.5%, and T-bills are yielding 2%. What is the real rate of return?

A

4.5%

6% - 1.5% = 4.5%

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33
Q

A security has a 6% rate if return, when the inflation rate is 1.5%, and T-bills are yielding 2%. What is risk-adjusted return?

A

4%

6% - 2% = 4%

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34
Q

A provision that provides a sales charge discount for making mutual fund repurchases without initially depositing the entire amount required.

A

Letter of intent

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35
Q 
A contingent deferred sales charge (CDSC) is associated with:
A) Class A shares
B) Class B shares
C) Class C shares
D) transfer agents
A

B) Class B shares

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36
Q

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

A

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

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37
Q

An annual fee charged against fund assets to finance advertising expenses.

A

12b-1 fee

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38
Q

XYZ Corporation has conducted a private placement to raise additional funds after IPO. This activity is referred to as a:

A

PIPE Offering

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39
Q

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

A

Does not require the firm to deliver a prospectus

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40
Q

A customer has filed the required forms in order to sell securities under Rule 144. If some of the securities were not sold within the required time frame and the customer wants to sell the remaining shares, what must happen?

A

A new form must be filed and the unsold shares may be sold within 90 days.

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41
Q

DCH, Inc., an investment banker, has entered into a firm-commitment underwriting with ABC Company to sell 10,000,000 shares of stock. What are the requirements of this arrangement for the investment banker?

A

Sell the entire issue or retain any share left unsold.

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42
Q

Advertises that municipal bonds are available and invites underwriters to bid on a new competitive issue.

A

Notice of Sale

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43
Q

In addition to providing a prospectus, a _____ advertisement may be published to announce an offering.

A

tombstone

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44
Q

Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a _____.

A

Qualified Institutional Buyer

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45
Q

A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a(n):

A

principal capacity and charged the client a markup.

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46
Q

In judging the fairness of a firm’s markup, industry rules would NOT consider:
A) Whether the security was debt or equity
B) The availability of the security in the market
C) The pattern of markups
D) Whether the client was a retail or institutional customer

A

D) Whether the client was a retail or institutional customer

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47
Q

If an investor wants to receive immediate execution, he should enter a:

A

market order

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48
Q

A customer opens a new margin account and her initial transaction is a short sale of 100 shares of XYZ at $16. What is her minimum deposit requirement?

A

$2,000

For the first short sale in a new margin account, the minimum deposit requirement is $2,000.

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49
Q

The 5% Markup Policy applies when a member is acting as a(n):
A) Investment banker
B) Sponsor of a mutual fund
C) Dealer when selling a security from inventory
D) Underwriter of a security

A

C) Dealer when selling a security from inventory

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50
Q

A buy or sell order that may not be executed.

A

A limit order

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51
Q

An order that will only be executed at a specific price or lower.

A

A buy limit order

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52
Q

An order that will only be executed at a specific price or higher.

A

A sell limit order

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53
Q

An order that can be used to hedge a long position.

A

A sell stop order

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54
Q

An order that once activated, it may not be executed.

A

A stop limit order

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55
Q

An order that once activated, it will be immediately executed.

A

A stop order

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56
Q

An order that can be used to hedge a short position.

A

A buy stop order

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57
Q

A member firm’s _____ makes the final determination as to whether a security is in good deliverable form and may be transferred to the new owner.

A

transfer agent

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58
Q

An investor purchases a US Treasury bond in the secondary market. When is settlement?

A

The next business day

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59
Q

A broker-dealer may charge customers for services such as safekeeping of securities and transfer of securities:

A

as long as the charge is reasonable and does not unfairly discriminate between customers.

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60
Q

Necessary for the transfer agent to remove the legend from a stock if transfer from a stock if transfer is restricted.

A

Opinion Letter

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61
Q

A stockholder who allows a broker-dealer to disclose his name as the owner of record is a:

A

nonobjecting beneficial owner

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62
Q

The day on which the customer’s name is placed on or taken off the issuer’s books.

A

Settlement

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63
Q

(True or False) Regarding 529 Prepaid Tuition Plans, the beneficiary may use the tuition credits purchased at virtually any college or university in the United States.

A

False

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64
Q

A customer may contribute each year to a 529 college savings plan without incurring any taxes:

A

an amount equal to the annual gift tax exclusion.

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65
Q 
For variable annuities, which of the following payout options provide the highest payout?
A) Joint and Last Survivor
B) Life Annuity with Period Certain
C) Life Annuity
D) Unit Refund Annuity
A

C) Life Annuity

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66
Q

Which of the following is NOT a characteristic of a 529 plan?
A) There are no income limits placed on contributors
B) Withdrawals from 529 plans used for additional purposes are not subject to federal tax
C) Earnings in accounts are tax-deferred
D) Contributions are unlimited

A

D) Contributions are unlimited

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67
Q

Entity that typically sponsors a 529 plan is a:

A

state

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68
Q

A corporation will be paying a cash dividend to its shareholders. On what date will the market price of the stock be reduced?

A

Ex-date

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69
Q

Fee that helps an insurance company continue to pay annuities when annuitants live longer than expected.

A

Mortality risk charges

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70
Q

A tax-advantage college savings plan sponsored by a state or educational institution.

A

529 account

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71
Q

A tax-free exchange of one annuity for another.

A

1035 Exchange

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72
Q

A variable annuity is most suitable for a client seeking _____ over a long period.

A

capital appreciation

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73
Q

Pays an issuer if expenses for administering the annuity are more than estimated.

A

Expense risk charge

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74
Q

General partners have a fiduciary responsibility towards a limited partner(s), what does that mean?

A

The general partner must protect the interest of the partner(s)

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75
Q

If a limited partner negotiates contracts, hire/fire employees, or lend name they could:

A

be subject to unlimited personal liability

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76
Q

Limited partnerships generally avoid registration by offering securities through:

A

private placements

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77
Q

Allows cash and securities to be withdrawn from a discretionary account.

A

Full trading authority

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78
Q

For which type of investor is a fee-based account unsuitable?

A

An investor who follows a buy-and-hold strategy

79
Q

What is the maximum annual IRA contribution for a 58-year-old who only has investment income?

A

$0 because he has no earned income

80
Q

The original value of an asset for tax purposes.

A

Cost basis

81
Q

Joan invests $15,000 in a qualified annuity. At age 64, she withdraws all $22,000. What’s Joan’s basis and what’s taxed?

A

Her basis is zero, since the annuity is qualified (funded pretax) and the entire $22,000 is taxed as ordinary income.

82
Q

If a customer wishes to open an account to trade options, the account must be approved:

A

prior to the time an initial order is accepted

83
Q 
Which of the following documents allows a broker-dealer to lend a customer's securities to other clients or broker-dealer's?
A) Hypothecation agreement
B) Loan consent agreement
C) Margin disclosure agreement
D) Credit agreement
A

B) Loan consent agreement

84
Q

To determine whether churning has occurred in a discretionary account, the primary concern is:

A

the frequency of trading

85
Q

Jerry is planning to open an account at Grace Securities. Grace must furnish him with a privacy notice:

A

At the time he opens the account

86
Q

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

A

six months

87
Q

If a broker-dealer expects a seller to deliver the securities by the settlement date, how may the order ticket be marked?

A

Long

88
Q

All of the following are considered a qualified institutional buyer EXCEPT:
A) A mutual fund which has $450 million securities
B) The CEO of a financial institution which has $150 million of securities
C) An insurance company with $240 million of securities
D) A bank which has a net worth of $40 million

A

B) The CEO of a financial institution which has $150 million of securities

  • Banks and savings and loan associations can have a net worth of $25 million to be a QIB
89
Q

Which of the following statements is TRUE regarding preemptive rights?
A) Both common and preferred stockholders receive rights
B) Neither common nor preferred stockholders receive rights
C) Common stockholders receive rights
D) Preferred stockholders receive rights

A

C) Common stockholders receive rights

90
Q

Which of the following statements is TRUE about the SEC Customer Protection Rule?
A) A broker-dealer may only hold securities in its vault
B) The customer protection rule only applies to funds and/or securities in a cash account
C) If a client sells securities and fails to deliver them within 10 business days of the settlement date, the broker-dealer must buy-in the customer
D) A creditor of a broker-dealer is considered a customer of the broker-dealer

A

C) If a client sells securities and fails to deliver them within 10 business days of the settlement date, the broker-dealer must buy-in the customer

91
Q

(True or False) Employee participants should be aware of the risk of investing too much in their employer’s stock.

A

True

92
Q

(True or False) The employer determines the investments into which the contributions are allocated.

A

False

93
Q

All of the following are reasons for the SEC to deny the effectiveness of an issuer’s registration statement, EXCEPT:
A) The securities are extremely risky and may result in losses for most investors
B) The financial statements submitted in the registration statement did not conform to accepted accounting standards
C) The issuer failed to discuss an obvious business risk in the registration statement
D) The issuer failed to pay the required fee when the registration statement was submitted

A

A) The securities are extremely risky and may result in losses for most investors

94
Q

A not-held order can be accepted with:

A

a client’s verbal authorization

95
Q

An investor asks a registered representative to underline the most important facts found in a preliminary prospectus. The register representative may:

A

not do this since it violates federal securities laws

96
Q 
A change in which of the following account record information from a customer account, does NOT require the broker-dealer to send a notice to the customer?
A) Annual income
B) Investment objectives
C) Name
D) Address
A

A) Annual income

97
Q

The beneficial owner of stock held in street name is the:

A

customer

98
Q

A primary prospectus of securities is being made for a company listed on the NYSE. Prospectuses must be delivered:

A

Only on purchases made at the public offering price

99
Q

(True or False) The customer’s original purchase price for the stock is found on a sell order ticket.

A

False

100
Q

(True or False) The location of the securities is found on a sell order ticket.

A

True

101
Q

A customer enters a sell stop-limit order for 100 shares at 18.50. The last round-lot sale that took place before the order was entered was 18.88. Round lot sales that took place after the order was entered were at 18.60, 18.25, 18.38, 18.50 and 18.63. The execution price is:

A

18.50

102
Q

An individual may sell the greater of ___% of outstanding shares or the _____ for the preceding four weeks.

A

1%; weekly trading volume

103
Q

A corporation intends to raise additional funds from its existing shareholders to avoid diluting their interest in the company. The corporation will be engaging in a:

A

rights offering

104
Q 
Immediately prior to the effective date of an underwriting, an adverse event occurs that causes a sharp decline in the price of the stock. Which of the following clauses permits the underwriter to withdraw without a penalty?
A) All-or-none
B) Best-efforts
C) Market-out
D) Penalty bid
A

C) Market-out

105
Q

A managed account in which advisory and transaction charges are included in one comprehensive fee.

A

A wrap account

106
Q

A broker-dealer includes dividends, interest, as well as realized and unrealized gains and losses when performing calculating for:

A

FOCUS reports

107
Q

A broker-dealer is ready to issue a favorable research report. Information barriers must exist between what two departments?

A

Research and trading

108
Q

A person is NOT subject to a statutory disqualification if he:
A) Has been suspended from membership in any SRO
B) Stands accused of stock manipulation
C) Is subject to an order of the SEC which precludes his industry activities
D) Was expelled from a foreign securities exchange

A

B) Stands accused of stock manipulation

109
Q

Describes the responsibilities that a firm must follow to conduct business.

A

Written Supervisory Procedures

110
Q

The primary concern for investors who use a buy-and-hold strategy to maintain their portfolios is:

A

The allocation of assets

111
Q

Compliance meetings must be attended by registered representatives no less frequently than:

A

annually

112
Q 
Which of the following choices is NOT considered to be a leading economic indicator?
A) Plant and equipment orders
B) Industrial production
C) Building permits
D) Index of consumer expectations
A

B) Industrial production

113
Q

Under MSRB rules, firms that transact business in municipal securities are required to notify customers of the availability of a investor brochure:

A

Annually

114
Q 
Which of the following choices is a lagging economic indicator?
A) Stock prices
B) Money supply
C) Index of Industrial Production
D) Average prime rate
A

D) Average prime rate

115
Q

Tend to move directly with the business cycle and show what’s currently happening in the economy.

A

Coincident indicators

116
Q

A person who is responsible for supervising the margin department of a broker-dealer is required to be qualified by taking the:

A

Operations Professional Exam (Series 99)

117
Q

If the responsibilities of a broker-dealer representative involve assisting in the underwriting of common stock, which exam is required?

A

Investment Banking Representative Exam (Series 79)

118
Q

In what type of offering are proceeds paid to both the issuer and selling shareholders?

A

Split

119
Q

A client’s number of annuity units never changes in:

A

periodic payment variable annuities

120
Q

They are designed to deliver a multiple of the performance of an index or other benchmark.

A

Leveraged Exchange-Traded Funds

121
Q

Debt instruments linked to the performance of a commodity, currency, or index.

A

Exchange-Traded Notes

122
Q

A covered call writer can be described as being:

A

Short the call, and long the stock

123
Q

An registered person has purchased two tickets to attend a basketball game with a client. If the tickets cost $85 each, which of the following statements is NOT TRUE?
A) Under FINRA rules, this is considered entertainment.
B) If the registered person did not attend the game and gave one of the tickets to the client, it is a violation.
C) If the registered person did not attend the game and gave both of the tickets to the client, it is a violation.
D) This doesn’t require the approval of a principal of the firm.

A

B) If the registered person did not attend the game and gave one of the tickets to the client, it is a violation.

124
Q

All of the following statements concerning hedge funds are TRUE, EXCEPT the funds:
A) May engage in short selling
B) Must register under the Investment Company Act of 1940 if offered to U.S. residents
C) May borrow funds in an attempt to boost returns
D) May concentrate assets in a few positions

A

B) Must register under the Investment Company Act of 1940 if offered to U.S. residents

(Because the funds accredited investors)

125
Q

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

A

determined by the investor.

126
Q

For an _____ bond, an issuer is only expected to pay interest if it has sufficient income.

A

income

127
Q

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

A

Expansion

128
Q

Option trades settle:

A

(T+1)

129
Q

To be a trusted contact person for a senior investor, the only requirements are that:

A

they’re a natural person and are at least 18 years old.

130
Q

A corporation will be paying a cash dividend to its shareholders. On what date will the market price of the stock be reduced?

A

Ex-date

131
Q

Funds that hold diversified portfolios of stocks, bonds, and money-market instruments.

A

Asset Allocation Funds

132
Q

Measures price sensitivity for fixed-income securities given changes in interest rates.

A

Duration

133
Q

A firm is not permitted to accept an exercise notice from a customer for a listed equity option after:

A

5:30 p.m. Eastern Time on the expiration date of the option

134
Q

Jamie has inherited 500 shares of an investment company. She calls her broker to redeem the shares and is informed that the kind of investment company she owns makes no provision for future purchases or redemptions. What kind of investment company does she own?

A

A closed-end fund

135
Q

Makes no provision for future purchases or redemptions from the issuing fund. Shares are bought and sold in the open market in the same manner as the common stock of corporations.

A

Closed-end fund

136
Q

Who is responsible for creating the official statement for a municipal bond offering?

A

The issuer

137
Q

The possibility that changes in the law or regulations can have an adverse impact on the value of investments.

A

Regulatory risk

138
Q

A type of offering in which whatever is not sold is retained by the issuing corporation is a:

A

best-efforts underwriting

139
Q

An investment company that is purchased in installments and that matures at a fixed-dollar amount is called a:

A

Face-amount certificate company

140
Q

The arbitration panel for disputes that involve public customers will consist of:

A

A mix of individuals who represent the public and financial industry.

141
Q

Interest on Treasury Inflation Protected Securities (TIPS) is subject to:

A

state income tax, but exempt from federal income tax.

142
Q 
An investor who purchases stock in a closely held corporation with a small number of outstanding shares should be most concerned about which of the following types of risks?
A) Reinvestment
B) Regulatory
C) Liquidity
D) Interest-rate
A

C) Liquidity

143
Q

As it relates to private securities transactions that are executed by an associated person of a broker-dealer, compensation does not include:

A

being paid a commission by the employing broker-dealer

144
Q

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

A

six months

145
Q

Who has the responsibility to investigate the accuracy of the information in a prospects for a DPP?

A

The managing underwriter

146
Q

Short-term securities which allow the holder to purchase stock at a reduced price, they can trade in the secondary market, and shareholders receive one for each share they own.

A

Preemptive rights

147
Q

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

A

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

148
Q

Point of the business cycle, during which the demand for goods starts to overtake supply resulting in the decline of the consumer’s purchasing power.

A

Peak

149
Q

The responsibility for automated book-entry changes in the ownership of securities is a function of a:

A

depository facility

150
Q

The credit rating of a municipality will likely improve with a(n):
A) Increase in tolls
B) Increase in property taxes
C) Decrease in residents
D) Decrease in fees being charged for licenses

A

B) Increase in property taxes

151
Q

The sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions:

A

a breakpoint sale

152
Q

An investor is speculating on the decline in the value of a security and purchases put options on the stock. The news ends up being positive and it results in a rise in the value of the security and the subsequent loss of the entire investment in the put options. This loss is an example of:

A

Capital Risk

153
Q

The risk of losing all or part of an investment.

A

Capital Risk

154
Q

According to SRO rules, an email message complaining about excessive commissions sent to an RR’s personal electronic device is a _____ and must be maintained by the _____.

A

complaint; broker-dealer

155
Q

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

A

The broker-dealer

156
Q

An individual who is short stock and wants protection against an upside move in the market will probably:

A

Buy a call option

157
Q 
A corporation that has filed for bankruptcy is to be liquidated. Which of the following securities issued by that corporation has seniority in the liquidation process?
A) Mortgage bonds
B) Debenture bonds
C) Common stock
D) Participating preferred stock
A

A) Mortgage Bonds

(Secured creditors are paid first (i.e., mortgage bondholders), then unsecured creditors (debenture holders), then preferred stockholders, and last the common stockholders.)

158
Q

Which of the following securities is NOT guaranteed by the U.S. government?
A) Treasury notes
B) Treasury bills
C) Government National Mortgage Association (Ginnie Mae) certificates
D) Federal National Mortgage Association (Fannie Mae) bonds

A

D) Federal National Mortgage Association (Fannie Mae) bonds

159
Q

Unsecured debt security that is tied to the creditworthiness of the financial institution backing the note.

A

Exchange-Traded Note

160
Q

Buying and selling securities for both customers and the firm’s own account is a function of a broker-dealers:

A

trading department

161
Q

U.S. dollars on deposit in foreign banks.

A

Eurodollars

162
Q

A client is short stock that’s trading at $35.00 and wants to buy, but only if he can buy at $34.00 or lower. He should place which of the following orders?

A

A buy limit

a limit order to buy, which can only be executed at a specified price or lower.

163
Q

The person who distributes interest in a DPP is referred to as the:

A

Syndicator

164
Q

The call premium of a bond refers to the amount:

A

Over par value that the issuer must pay to exercise the call privilege

165
Q

May a brokerage firm place a temporary hold on the transfer of securities?

A

Yes, for the account of a senior investor.

166
Q

A reverse repurchase agreement is sometimes referred to as:

A

A matched sale

167
Q

The payout on a variable annuity is based on a:

A

Fixed number of annuity units with a fluctuating value per unit

168
Q

For the buyer of an option, the premium paid is considered the:

A

Maximum risk

Does not have to exercise the option, therefore the premium is the most to lose.

169
Q

Which of the following is the rate that commercial banks charge on loans to broker-dealers for margin purposes?

A

Call rate

170
Q

A type of offering in which the issuing corporation is assured of receiving the full amount of the offering and anything unsold is retained by the underwriter is a:

A

firm commitment

171
Q

A project financed through revenue bonds is experiencing difficulty in that revenues are not sufficient to meet debt service payments. If, through legislative approval, the state pays interest and principal in a timely manner, the issue is MOST LIKELY:

A

Moral Obligation Bonds

172
Q

Municipal revenue bonds that are payable by the state if revenues from the project do not satisfy debt service payments.

A

Moral Obligation Bonds

173
Q

The federal securities regulation that requires disclosure by issuers offering securities to the public is:

A

The Securities Act of 1933

174
Q

May a brokerage firm place a temporary hold on a securities transaction?

A

No, since this is beyond the scope of SRO rules.

175
Q

A client has been watching a thinly traded stock and has noticed that it has not had any trading activity today. What type of risk is the MOST significant for this type of investment?

A

Liquidity risk

176
Q

If a firm places a temporary hold on a customer’s account it applies to:

A

either the entire account or specific disbursements

177
Q

Which of the following statements describes the greatest risk associated with mortgage-backed securities?
A) Borrowers might default on their mortgage payments
B) The market for mortgage-backed securities is illiquid
C) The market price of the bonds might fall due to a rating downgrade
D) Falling interest rates might accelerate early repayment of principal

A

D) Falling interest rates might accelerate early repayment of principal

178
Q

Three-month and six-month Treasury bills are auctioned by the Federal Reserve Board:

A

Weekly

179
Q

In a 529 plan, can an individual be both the donor and the beneficiary?

A

Yes, if the person is of legal age.

180
Q

A stock’s price has risen due to an overall market increase. This increase in price is considered:

A

An unrealized capital gain

181
Q

An individual who is considering the purchase of closed-end fund shares would pay:

A

a market price as determined by the supply and demand for the shares

182
Q

Invest in various types of real estate, do not have their shares listed on an exchange and offer very limited liquidity, similar to limited partnerships.

A

Nontraded REITs

183
Q

Appropriate for investors with long-term investment goals who don’t anticipate needing access to their money for at least five to seven years.

A

Variable Annuities

184
Q

A registered representative becomes aware of a potential violation of an industry rule. The BEST course of actions is for the RR to:

A

Contact his designated supervisor

185
Q 
Which of the following features applies to a variable annuity, but not to a mutual fund?
A) Tax-deferred growth
B) Management fees
C) Administrative expenses
D) Sales charge
A

A) Tax-deferred growth

186
Q

In order for the sale of stock from a joint account to be considered good delivery it must be signed by:

A

all of the owners

187
Q

Can only be executed at a specified price or lower.

A

Limit order to buy

188
Q

Can only be executed at a specified price or higher.

A

Limit order to sell

189
Q

A town has started the construction of public sewers. This project is likely paid by:

A

Fees paid to use the sewers

190
Q

A broker-dealer’s anti-money laundering (AML) compliance program must be approved:

A

In writing by a member of senior management

191
Q

Written by a bond counsel, attests to the validity and tax status of a municipal bond offering.

A

Legal opinion

192
Q

Requires all broker-dealers, investment companies, and investment advisers registered with the SEC to adopt procedures to protect the privacy of confidential information collected from their clients.

A

Regulation SP

198
Q

Joan owns 100 shares of XYZ, which is currently trading at $57 per share. She wishes to liquidate the position when she can receive $6,000 from the trade. Which of the following orders is the BEST choice to fulfill Joan’s intentions?

A

Sell limit at 60

Securities Exam (20 decks)

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