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SIE > Trading Settlement, And Corporate Actions Quiz > Flashcards

Trading Settlement, And Corporate Actions Quiz Flashcards

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SIE Exam flashcards
1
Q

Internal procedures which limit and control the passing of sensitive potentially non public information between the departments of a corporation or firm to aid in protecting investors against violations of insider trading laws are known as

A

Chinese walls

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2
Q

The liquidity of an investment is best described as

A

Whether the investment can be sold as quickly and profitably as expected should the investor wish to sell

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3
Q

Which of the following statements is correct in regard to broker/dealer?

A

A principal is a dealer and sells securities from its own inventory
An agent is broker and trades securities for a customer. As an agent a firm does not own the security
Securities firms may act in the capacity of both a principal and an agent and are referred to as broker/dealers

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4
Q

When a market maker does not honor a published quote that could be considered a market manipulation practice of

A

Backing away

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5
Q

ABC Corporation shares are currently trading at $50 per share. ABC is about to perform a two for one stock split. After the split an investor who currently owns 100 shares of ABC stock would own

A

200 shares at $25

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6
Q

Which of the following statements regarding limit orders is true?

A

A limit may never be executed

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7
Q

Sell ABC short 20 stop 20.50. The ticker tape shows: 19, 20, 21, 20.50, 20.25. At what price was the trade executed?

A

21

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8
Q

When a customer sells a security in the secondary market he or she will receive the

A

Bid price

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9
Q

James owns 300 shares of LYPA stock which is currently trading at $60 per share. The company announces a 1:3 reverse split. What will James own after the split?

A

100 shares at $180 per share

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10
Q

Which of the following is the risk that an issuer may not be able to meet interest or principal payments on fixed income securities?

A

Business/ credit risk

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11
Q

Liability to contemporaneous traders for inside trading means

A

Insider traders may be liable to traders with no insider information who traded at the same time and lost money.

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12
Q

An investor owned stock in the corporation where he was an officer. Two day md before it was made public that the company would file or for a financial restructure he hold his truck $50000. After the news became public the stock would have been worth $10,000. What is the maximum civil penalty that can be imposed on this investor to the insider Traded act of 1988 AcT

A

$120,000

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13
Q

A customer instructs his broker /dealer to purchase 200 shares of Dunham Corporation m. Two days after date the customer decided that he no longer wants the shares. Which statement is correct

A

The customer has entered into a legally binding contract

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14
Q

All of the following investments are subject to currency exchange risk

A

US treasury Bonds

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15
Q

What is the lowest price at which the dealer will sell a stock to the investor?

A

Ask

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16
Q

Which of the following products might be offered by a cyclical company?

A

Bulldozers

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17
Q

Which of the following represents the order in which market orders are filed?

A

Priority precedence and parity

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18
Q

Companies are required to notify FINRA of corporate actions such as dividends stock soloist or rights offering and rights offerings within what time period?

A

10 days prior to the record date

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19
Q

What type of risk is involved where an investor may sustain a loss of a security must be sold quickly?

A

Liquidity risk

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20
Q

The Act that requires financial institutions to develop implement and monitor procedures that prevent its agents and associates from misusing non public information is the

A

Securities and Exchange Act of 1934

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21
Q

One of your clients bought 100 shares of TBS at 20. The stock has now risen to 55, and the client would like to protect her profit. Which of the following orders should be entered?

A

Sell stop at 54.88

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22
Q

An investor could achieve diversification in his portfolio by holding

A

Stocks and or bonds of companies in different industries
Stocks and or bonds of companies in different geographic regions
A variety of investment instruments

23
Q

Sustained inflation over time will erode the value of a dollar. This is known as

A

Purchasing power risk

24
Q

The options position limit on XYZ stock is 200,000 contracts. Bob (a high roller) is short 150,000 XYZ Dec 50 puts. Which of the following trades would put Bob in a violation of position limits?

A

Buy 60,000 XYZ Mar 60 calls

25
Q

James owns 300 shares of LYPA stock which is currently trading at $60 per share. The company announces a 1:3 reverse split. What will James own after the split?

A

100 shares at $180 per share

26
Q

When a customer buys a security in the secondary market he or she will pay the

A

Ask price

27
Q

The type of risk that includes influences such as competing pressures market share and competence of management and is usually managed with a long term focus is called

A

Business risk

28
Q

Government securities regular settlement is

A

Next day

29
Q

Which of the following describes a tender offer?

A

Shareholders selling into the tender must deceived the shares not long

30
Q

Maximum civil and criminal penalties for an individual for insider trading violations are

A

$5,000,000 and or 20 Years imprisonment

31
Q

A corporation pays a stock dividend to

A

Conserve cash

32
Q

The ABC European Bond Fund invests in the debt of European corporations and other companies doing business in Europe. Investors in this fund are subject to all of the following risks

A

Currency exchange risk
Interest rate risk
Inflation risk

33
Q

A specialist receives an order to buy XYZ 200 shares 20 stop 19. This means that

A

The order is triggered at or above 20 and filled at 19 or lower

34
Q

If an investor cannot specifically identify redeemed shares IRS assumes that reporting will be in the basis of

A

First in first out

35
Q

Which of the following best describes cash settlement?

A

The customer pays for the securities on trade date

36
Q

The options limit on ABC stock is 75,000 contracts in the same side of the market. Which of the following positions would violate the position limit?

A

Long 50,000 ABC June 60 calls Long 25,000 ABC Sept 55 calls and Short 10,000 ABC June 50 puts

37
Q

ABC corporation announces that it will be acquiring XYZ corporation XYZ shareholders will receive one share of ABC stock for every two shares of XYZ they own. This corporate action is an

A

Acquisition

38
Q

A customer placed a market order. This means

A

No price is set and the order is to be filled at the best available market price

39
Q

Of the following examples which would be exempt from liability under insider trading laws?

A

There are no exceptions from liability under inside trading laws

40
Q

Which of the following is true concerning physical safety of mutual fund holdings?

A

Physical safety of funds assets is the responsibility of the custodian
The shareholder needs to maintain share certificates since funds use book entry accounting
If certificates are held they must be surrendered in good order before shares can be redeemed

41
Q

Which of the following factors will most likely create reinvestment risk?

A

Falling interest rates

42
Q

The insider trading act of 1988 has set guidelines for imposing penalties including civil actions in a federal court. The maximum penalty a court can impose for insider trading violation is

A

An amount up to 3 times the profit gained of loss avoided

43
Q

Sam was having difficulty selling his investments due to a lack of demand in the secondary market. What does that say about his investments?

A

The have a high liquidity risk

44
Q

The cyclical and constantly fluctuating nature of interest rates has the most direct impact on

A

Market values of fixed income securities

45
Q

If the prime interest rate increases bond prices will generally

A

Decrease

46
Q

Why does a diversified portfolio tend to carry a lower degree of investor risk?

A

Not all market segments or investment types in a diversified portfolio will move in tandem with one another.

47
Q

ABC Corp a newly formed corporation is developing a machine to harness wind power to create energy. Because ABC currently has no earnings and is still in the growth phase, it is unable to pay cash dividends to its investors. However ABC is very optimistic about its new product and wants to provide some sort of dividend to its current shareholders. ABC board of directors declares a 20% stock dividend to its current shareholders. An investor who currently owns 1,000 shares valued at $50 per share would own what after the stock dividend?

A

1,200 shares at $41.67

48
Q

The type of investment risk that impacts buying power and results in a devaluation of assets is called

A

Inflation risk

49
Q

Which of the following statements describe a market manipulation practice of painting the tape?

A

Buying and selling a Security among traders to create a high level of activity to influence the price of a stock

50
Q

The highest price a dealer is willing to pay for a security is known as the

A

Bid price

51
Q

Which TWO of the following positions are bullish?

A

Long Calls

Short Puts

52
Q

Government securities regular settlement is

A

Next day

53
Q

A technician or chartist would most likely enter a sell stop order

A

At or below the support level for the stock

54
Q

Which of the following is synonymous with market risk?

A

Systematic risk

SIE (23 decks)

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