Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SIE > First 100 > Flashcards

First 100 Flashcards

You may prefer our related Brainscape-certified flashcards:
SIE Exam flashcards
1
Q

True or False: A market maker publishing a firm quote is obligated to honor the price and the number of shares quoted?

A

True. A BD providing a firm quote is obligated to honor both the price and size displayed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define debt service.

A

The total of all interest and principal payments for a bond offering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What type of stock may be entitled to extra dividends?

A

In profitable years, participating preferred stockholders may be paid both prior to, and after, common stockholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The formula for finding conversion ratio on convertible preferred stock is: ______ ÷ ____________

A

The formula for finding conversion ratio is: Par ÷ Conversion Price (par for preferred is $100)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

True or False: The MSRB has no authority or control over municipal issuers.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

An investor who sells a bond between its coupon payments is entitled to _______ interest for the time he owned the bond.

A

Accrued

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

List the government agencies that issue securities that are based on mortgages.

A

Government Nat. Mortgage Assoc. (GNMA), Federal Nat. Mortgage Assoc. (FNMA) and Federal Home Loan Mortgage Corp. (FHLMC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Identify the acronym: IC Act of ‘40

A

Investment Company Act of 1940

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Equity holders are owners and are entitled to receive __________, which are derived from corporate ________.

A

Equity holders are owners and are entitled to receive dividends, which are derived from corporate profits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

List some examples of marketable Treasury securities

A

T-bills, T-notes, T-bonds, T-STRIPS, TIPS and Cash Management Bills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

May Eurodollar bonds be issued in the U.S.?

A

No, and they are not registered with the SEC.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Which federal law governs the registration of RRs and their firms?

A

The Securities Exchange Act of 1934

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

__________ stock is the amount of stock a corporation is legally permitted to issue.

A

Authorized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the dollar price of a T-bond with a bid of 98-24 and a par value of $100?

A

98 and 24/32. Convert fraction into a decimal 24 ÷ 32 = .75. Now multiply $100 by 98.75% = $98.75.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is often required before a revenue bond can be issued?

A

Conducting a feasibility study

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does ownership of a GNMA pass-through certificate represent?

A

An undivided interest in a pool of residential mortgages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Ben’s margin account has a market value of $800,000 and a debit balance of $350,000. How much SIPC coverage is provided?

A

In a margin account, SIPC covers the net equity (market value minus debit). In this example, $450,000.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

True or False: Short-term bonds typically have higher coupon (interest) payments.

A

False. Long-term bonds typically pay more interest since investors assume greater default risk.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

True or False: Common stockholders have the right to vote for the payment of dividends.

A

False. Dividend payments are determined by the board of directors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

True or False: SIPC is backed by the full faith and credit of the U.S. government.

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

True or False: Investors may exercise a bond’s call privilege any time after issuance.

A

False. Only issuers may exercise the call privilege after the call protection period has passed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

_________ stocks are associated with major companies that have records of high earnings and dividend payments.

A

Blue-chip stocks are associated with major companies that have records of high earnings and dividend payments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the Pink Sheets?

A

A real-time electronic quotation system for OTC equities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Corporate bonds that are rated below investment grade are referred to as __________ or ____ bonds.

A

Corporate bonds that are rated below investment grade are referred to as high-yield or junk bonds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Standard & Poor’s four ratings for municipal notes are ______, ______, ______, ______.

A

Standard & Poor’s four ratings for municipal notes are SP-1+, SP-1, SP-2, SP-3.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

How does the Dutch Auction set the interest rate on Auction Rate Securities?

A

It sets the lowest interest rate at which all the securities being offered will clear the market (net clearing rate).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Is default possible on a municipal offering?

A

Yes. Only U.S. Government issues are considered free of default risk.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

True or False: Junk bonds typically offer lower yields.

A

False. Since the issuer is more likely to default, junk bonds offer a higher rate of return.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

For a Treasury auction, what’s the difference between a competitive bid and non-competitive bid?

A

Competitive bids indicate both a quantity and price, while non-competitive bids only indicate a quantity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Who issues debt?

A

Corporations, municipalities, the U.S. government and its agencies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

In a ____, a dealer sells bonds to another dealer and agrees to repurchase them at a specific time and price.

A

In a repo, a dealer sells bonds to another dealer and agrees to repurchase them at a specific time and price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What group of stockholders receives dividends first?

A

Preferred stockholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

True or False: The Investment Company Act of 1940 requires mutual fund managers to register.

A

False. The Investment Advisers Act of 1940 is the Act that requires money managers to register.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Explain the concept of holding securities in street name.

A

This is when client securities are held by and registered in the name of the BD

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Describe an asset backed security.

A

A security whose value and income are collateralized by group of assets, usually bank receivables (e.g. mortgages).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

For what types of securities is a trustee required?

A

Bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What are not considered equity securities?

A

Fixed-income products, such as bonds and notes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

What are some examples of tax-free money-market instruments?

A

Municipal notes and tax-exempt commercial paper

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

ABC hasn’t paid dividends in four years. If declared in year 5, what will a 3% non-cumulative preferred owner receive?

A

$3. Since the shares are non-cumulative, ABC is only required to pay the full amount for year 5.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

True or False: Interest paid on corporate bonds is entirely tax-exempt.

A

False. Corporate bond interest is taxed at the federal, state, and local level.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

The Securities Exchange Act of 1934 regulates the __________ _______.

A

the Secondary Market.

42
Q

A _____ call is a situation where an issuer redeems an entire bond issue before maturity.

A

A full call

43
Q

Issuers of bonds may be referred to as __________.

A

debtors.

44
Q

When interest rates go up, bond prices go ____.

A

Down

45
Q

Identify the acronym: OTC

A

Over-the-Counter

46
Q

If a bond’s price has risen from 98 to 108, what has likely happened to interest rates?

A

Rates have probably fallen, which has caused the increase in the bond’s price

47
Q

What are Auction Rate Securities (ARS)?

A

Long-term bonds (municipal or corporate) with a variable interest rate set periodically through a Dutch Auction

48
Q

True or False: A penny stock has a bid price of less than $1.00 per share?

A

False. A penny stock is an unlisted security whose bid price is less than $5.00 per share

49
Q

______ and _________ are generally bundled as single investment securities.

A

Warrants and bonds are generally bundled as single investment securities.

50
Q

True or False: With approval of the board, preferred dividends can be skipped in some years.

A

True. Unlike bond interest, preferred dividends are not required to paid each year

51
Q

Existing stockholders receive ______ right for every one share owned.

A

Existing stockholders receive one right for every one share owned.

52
Q

Who is a lock-up agreement meant to protect?

A

Shareholders/investors

53
Q

What does a put feature on a bond allow?

A

Bondholders may put (redeem) the bond back to the issuer prior to maturity.

54
Q

MIG stands for ___________________________.

A

Moody’s Investment Grade.

55
Q

______ stock is the amount of stock a corporation has already sold to investors.

A

Issued stock is the amount of stock a corporation has already sold to investors

56
Q

How does S&P and Moody’s further differentiate their ratings?

A

S&P uses + or - , while Moody’s uses 1, 2, 3.

57
Q

True or False: Marketable Treasury securities can be bought and sold between investors.

A

True

58
Q

True or False: SIPC provides coverage for both commodities and futures accounts.

A

False

59
Q

Under Rule 144, restricted stock must be held for ___ months before it can be sold.

A

Under Rule 144, restricted stock must be held for six months before it can be sold.

60
Q

Bond interest is stated ___________ and paid ________________.

A

stated annually and paid semi-annually.

61
Q

Industry disputes are handled through ______________.

A

Arbitration.

62
Q

What will SIPC cover in a customer’s margin account?

A

Only the customer’s equity (securities clear of any outstanding loan)

63
Q

Does the MSRB have the authority to enforce its own rules?

A

No. The MSRB has no enforcement authority.

64
Q

True or False: Callable preferred shares allow an investor to buy shares of common stock at a fixed price.

A

False. If preferred shares are callable, the issuer is allowed to buy back the shares at a fixed price.

65
Q

What voting method permits one vote for each share owned to be voted for each director?

A

Statutory

66
Q

Identify the acronym: NASAA

A

North American Securities Administrators Association

67
Q

Who is responsible for the formulation and interpretation of rules for the municipal industry?

A

The MSRB

68
Q

True or False: The FDIC is backed by the full faith and credit of the U.S. government.

A

True

69
Q

What system is used for the issuance of Treasury securities?

A

An auction

70
Q

True or False: MSRB rules regulate the municipal activities of BDs, banks, and the employees of these institutions.

A

True. The MSRB also regulates municipal advertising.

71
Q

How are voting issues determined, by shares or shareholders?

A

Voting issues are determined based on a majority of shares.

72
Q

How do shareholder’s typically inspect their company?

A

By reviewing the annual and quarterly reports that are distributed by the corporation

73
Q

The maximum maturity of commercial paper is ____ days.

A

270 days

74
Q

Which Act created SIPC?

A

Securities Investor Protection Act of 1970 (SIPA)

75
Q

What is the longest duration for a warrant?

A

Perpetual

76
Q

List the types of secured corporate bonds.

A

Mortgage bonds, equipment trust certificates, collateral trust bonds and asset backed securities

77
Q

Issuers/affiliates repurchasing their own shares may not buy the shares in the last ____ minutes of the trading day.

A

Issuers/affiliates repurchasing their own shares may not buy the shares in the last 30 minutes of the trading day.

78
Q

Calculate the price of a Treasury bond that is quoted at 98 16/32.

A

Turn the fraction to a decimal: 16 ÷ 32 = .50, add it to the percentage of par, then multiply $1,000 by 98.50% = $985.

79
Q

The Maloney Act of 1938 is credited with creating which SRO?

A

The NASD. In 2007, the regulatory units of the NASD and NYSE merged to create FINRA.

80
Q

Local general obligation bonds are backed by what type of tax?

A

Property tax (e.g., school district bonds)

81
Q

Fixed-income investors receive _________, while stockholders receive __________.

A

Fixed-income investors receive interest, while stockholders receive dividends.

82
Q

A BD that does not hold a customer’s cash or securities is known as a _____________.

A

A BD that does not hold a customer’s cash or securities is known as a non-carrying firm.

83
Q

May a warrant be detached and traded separately?

A

Yes

84
Q

Municipal bond interest is exempt from __________ tax.

A

Municipal bond interest is exempt from federal tax.

85
Q

True or False: The interest rate reset periods on Auction Rate Securities range from 7, to 28, or 35 days.

A

True

86
Q

What is a market maker?

A

A person who enters quotes and stands ready to buy and sell securities for his own account on a regular basis

87
Q

Identify the acronym: SRO

A

Self-Regulatory Organization (such as FINRA)

88
Q

The ______________ is where trades of NYSE or AMEX exchange-listed securities occur in the over-the-counter market.

A

The third market is where trades of NYSE or AMEX exchange-listed securities occur in the over-the-counter market.

89
Q

The following would be a quote for what security? Bid 4.26 Asked 4.22

A

T-bill

90
Q

What is NASAA’s primary responsibility?

A

To establish and modify the Uniform Securities Act (USA), which is the basis for most states’ securities laws.

91
Q

What is forced conversion?

A

An issuer calls bonds at a point where the stock is worth more than the bond’s call price.

92
Q

Warrants are a ______-term right to buy stock at a preset price.

A

Warrants are a long-term right to buy stock at a preset price.

93
Q

Identify the acronym: COP

A

Code of Procedure

94
Q

Name some of the advantages of buying convertible bonds.

A

Consistent interest payments, appreciation if stock rises, downside protection if stock falls (since it’s still a bond).

95
Q

How often will VRDOs adjust their interest rate?

A

At specified intervals such as daily, weekly, or monthly. VRDOs may allow owners to put (sell) back to the issuer.

96
Q

What is the OTCBB?

A

The Over-the-Counter Bulletin Board – provides electronic quotes for non-Nasdaq (OTC equity) stocks

97
Q

What are the two general types of Treasuries?

A

1) Marketable (negotiable) and 2) Non-marketable (non-negotiable)

98
Q

True or False: The Code of Procedure can be used by a customer against a member firm to resolve a monetary dispute

A

False. This situation would be handled under the Code of Arbitration.

99
Q

Calculate the price of a corporate bond quoted at 98 ¾.

A

Convert fraction into a decimal: 3 ÷ 4 = .75 and then multiply $1,000 by 98.75% = $987.50

100
Q

A Nasdaq-listed stock trades in the __________ market.

A

A Nasdaq-listed stock trades in the secondary market.

SIE (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions