SIE Exam Flashcards
(257 cards)
1
Q
Mr. Murrell is a conservative investor. Which of the following investments would you recommend to him?
a. buying uncover call options
b. buying long-term income adjustment bonds
c. buying common stock of an aggressive growth company
D. Buy Treasury notes
A
D. Buy Treasury Notes
2
Q
What is considered the safest of all securities
A
Treasury notes (T-notes)
3
Q
The initial maturity on a standard opition is
A
nine months
4
Q
New securities cant be purchased on margin for how long
A
30 days
5
Q
an options account agreement must be returned within ______ after the account is approved
A
15 days
6
Q
Which of the following companies would be most affected by interest rate fluctuations?
a. SKNNK Perfume Corp
b. Bulb Utility CO
c. Crapco Vitamin Supplements
d. LQD Water Botteling CO
A
B. Bulb Utility CO
7
Q
What compainies are most affected by interest-rate fluctionals becuase theyr highly leverages
A
Utilitie Companys
8
Q
What is the minimum requirement for an investor to be considered accredited
A
1, An individual with a net worth of 1M and An individual who earned 200K per years in the most recent two years
9
Q
What do you multiply the balace sheet numbers by when finding the answer
A
look at the top center it should list in-thousands, millions or tens
10
Q
how many minor and custodian can be on a UGMA account
A
1 each and per
11
Q
Sometimes a preliminary prospectus is sometimes call a what
A
red herring
12
Q
for a security offering an unlisted IPO of non NMS securities needs to be available to all purchasers for
A
90 days
13
Q
for securities offerings IPOs of NMS need a final prospectus must be available for
A
25 days
14
Q
What kind of following agreement specify that any unsold seurities are retained by the underwriters
A
firm commitment
15
Q
BBB corporation is listed on an exchange and has 4.2 million shares outstanding. what is the maximum number of shares an insider can sell underr rule 144
A
1% of the outstanding shares or the average trading volume of for the previous four weeks whichever is greater
16
Q
Bullbear Broker-Dealer is managing an IPO that wont be on the NYSE, Nasdaq or any exchange. How long after the effective date must Bullbear provide a final prospecturs to all purchasers of the security
A
90 days
17
Q
A preliminary prospectus would include which of the following
A
An SeC disclaimer, That names of the officers of the issuing corporation, An explanation of whtat the funds raided by the offering would be used for
18
Q
Which federal law regulates the initial sale of stock to the public
A
Securities Act of 1933
19
Q
Which of the following my be included in a tombstone advertisement
A
The number securities to be sold, the issuers name, All underwriters names
20
Q
The psot filling cooling off period usally last about
A
20 days
21
Q
at what point is a broker-dealer allowed to accept payment for a new issue
A
Once the registration is effective
22
Q
What is not exempt from a registration under the Securities Act of 1933
A
ADR’s
23
Q
If a corporation goes bankrupt it must distribute any remaining assest in the following order
A
- unpaid workers
- IRS
- Secured creditors
- General creditors
- Subordinated debentures
- Preferred stockholders
- common stockholders
24
Q
what is the most common stockholders receive
A
voting rights
25
what cant stock holders of common stock vote on
distributions of dividens
26
statutory (regular) voting
investors receive 1 vote for evey share they own multiplied by the number of positions to be fillled on the board of directors but have the splite the votes evenly for each
27
Cumulative voting can be
voted any way they want
28
stock that the issuer repurchases from the outstanding shares is called
treasury stock
29
oustanding shares formulat
issued-treasury
30
buybacks
decrease the amount of shares outstanding usally drives up the price of the stock
31
tender offers
takeover bid
32
split stock
increase the number of shares and decrease the price
33
revers stock split
decrease the shares and price is increased
34
cash dividends
stock price-dividen is new price of the stock
35
stock dividens
number of shares increase as price decreases
36
Par valuse is normally
100
37
Cumulative preferred
an investors is owned the diffrence of what it purchased at to what the company pays as the company is in the rears
38
callable preferred
is a call option in the investor advantage
39
American depositary receipts (ADR)
no voting, they receipts for foreign securitys in US markets and theyr negotiable
40
Warrants are
certificates that entitle the holder to buy a spcecific amount of stock at a fixed price (also refered to derivative securities)
41
The par value of a common stock is
used only for bookkeeping purposes
42
Which preferred stocks would most likely pay the highest dividend if issued by the same corporation
callable preferred
43
Rights are automatically received by
common stockholders
44
which of the following is/are true of warrants
everythings listed
45
STU corporation would like to offer its existing shareholder the privilege to purchase additional shares at a fixed price. Which securities would STU issue
Rights
46
Go Bonds fund what
Schools, libraries, police departments, fire stations and require voter approval
47
Since Municipal Go bonds are backed by huge taxing power of municipality
they usally have higher rating and lower yields
48
Revenue bonds are issued to fund municipal facilities that will generate
enough income to support the bonds (tolls, airports, hospitals)
49
If you see the word coveanant think of what
revenue bonds
50
In Negoticated Offering a the issuer chooses the underwriters
a group of underwriters is called a syndicate
51
to enusre the best deal Go Bonds will post on what
Daily Bond Buyer
52
what is a municpal adviser
a firm or professionals that provide professional advice on bond sales
53
Under the MSRB place all syndicates in order
1. Presale orders
2. Syndicate group
3. designated orders
4. Member orders
54
Special tax bonds are backed by what
sales tax on fuel, tabacco, alcohol business license taxes and so on
55
Double barreled bonds are issued to fund what
side walks, construction streets sewers and so on
56
Publice Housing Authority Bonds (PHA's) also called new housing authority bonds (NHA) are issued for what
to build and improve low-income housing
57
Moral obligation bonds need what
legislative approval
58
Rank the municipal bonds from safest to riskiest
1. Public Housing authority bonds
2. Moral obligation bonds
3. Revenue Bonds
4. Industrial development revenue bonds
59
Municipal nots typically have maturities of how long
one year or less
60
Tax Anticipation Notes (TAN's)
notes provide financing current operations in anticipation of furture taxes
61
Revenue anticpation notes (Ran's)
Notes provide financing for current operations for furture revenue
62
Tax and Revenue Anticipation Notes (TRAN's)
combination of both Tans and Rans
63
Rating for Municipal notes are rated best to worst
1. Moody
2. Standard &Poor's
3. Fitch
64
Local Government Investment Pools are
exempt from registration with the US. Securities and Exchange Commission
65
Municipal Bonds typcially have a ______ yield than most other bonds
lower
66
Taxable equivalent yield (TEY) formula is what
(Municipal yield)
divided by
100%-investors tax bracket (unless otherwise stated the Municipal yield will be 5%)
67
Municipal securities settle in how many days
2 days
68
What is the limit that MSRB governes on gifts valued per year
$100
69
quick ruls for the G-2, G-3, G7
in order:
Qualification
Requirements
Info concerning
70
Which municipal securities could have a rating of Mig 2
Tax-exempt commercial paper, PN, Tran
71
What is not true about general obligation bonds
They are issued to fund revenu-producing facilities
72
If a securities broker sells 100 GO Bonds to a customer what is the markeup
whatever is fair and resasonable
73
Which of the following documents include all relevant information about a municpal issue
Official statement
74
A special assessment bond is back by
charges on the benefitted property
75
According to MSRB rules brokerage firms must keep all municipal securites advertising
a minimum of 3 years and easely accessible for 2 years
76
According to MSRB rules, which are considered to be forms of advertising
1. Market Letters and Seminar Text
77
What is not a municipal note
AON becuase an AON is considered long term
78
What is not a type of municipal fund security
A 529 plan
79
All things being equal which municipal bond would most likely have the lowest coupon rate
PHA riskier bonds have a higher coupon rate
80
Under the MSRB rules all syndicates must establish an allocation of orders. Place the typical allocation of orders in order from first to last
Syndicate, Presale, Member, Designated
81
What three main types of investment companies are there from the Act of 1940
1. Managment investment companies
2. Face amount certificate companies
3. Unit investment trusts
82
How much of a company must be spread out
75%
83
The management company cant own more that what %
10%
84
No more then what % of the management company can be invested in one companys securites
5%
85
An open-end fund is more commonly known as a
mutual fund
86
Are Hedge funds exempt from SEC registration
Yes
87
Life-Cycle funds are also called
targeted or age based funds
88
Letter of Intent (LOI) are good as long as the investors deposits the money with in how many months
13
89
LOI's may be backdated up to
90 days
90
ETF's are typically registered as what but act more like what
open-end funds, closed-end funds
91
Exchange traded notes (ETN) are
unsecured debt securities issued by a bank or financial institutions
92
Variable life policies have a
fixed premium
93
Which is true for mutual funds
The issuer continously offers new shares, Shares are redeemed with the issuer
94
For an investment company to be considered diversified, what is the maximum percentage of outsanding shares that the investment company can own of anyother company
10%
95
A fund that uses leverage, options, short sales, as well as other speculative investment strategies in an attemp to maximuze gains is called a
Hedge Fund
96
What is true for a LOI
remaines in effect for 13 months, may be backdated for up to 90 days, shares may be held in escrow
97
What is the maximum sales charge for a mutual fund
8 and 1/2% built into the public offering
98
Which is exempt from the Investment Company Act of 1940
Fixed-annuities
99
Which of the following is true of private-equity funds
They are exempt from SEC registration and They may purchase private companies
100
Open-end funds may issue
common stocks
101
TUV balanced fund has a net asset value of $21.40 and a public offering price of $22.60. What is the sales charge %
5.30
102
Which funds can be purchased on margin
ETF's
103
All of the follwoing are ways a variable annuity can be purchased except
payment deferred immediate annuity
104
which of the following life insurance products has a fixed premium
Variable life
105
Which of the following are true about variable annuities
Investors purchase accumulation units during the pay in phase and If the performance of the securities held in the separate account exceeds the assumed interest rate, payouts increase
106
A Direct participation program (DPP) is what
can raise money to invest in real estate, oil and gas and equipment leasing
107
Real-estate investment trust (REITS)
invest in realesate
108
By Law what are the two functions of a limited partnership
1 is a limited partner aka the investor and the other is the general partner the one that will be active
109
The certificate of Limited partnership must be filed where
SEC and the secretary of state
110
The general partner has to sign the subscritpion agreement to officially accespt what
an investor into the DPP
111
Real estate limited partnerships (RELP) types are listed from safest to riskiest
Public Housing
Existing properties
new construction
raw land
112
What is the riskiest oil and gass DPP
Exploratory
113
Unlike coorporations DPP have what
an ending date
114
True or False REITS are traded in the secondary market
True and they have a finite number of shares outstanding
115
As for taxation REITS can avoid being taxed like a corporation if
75% income related to realestate
75% assets are in realestate
90% of income is distrubuted to shareholders
116
Which of the following is not true of real-estate investment trusts
They are redeemable securities
117
When making a public offering, which of the following documents is a limited parnership required to file with the SEC
Certificat of limited parnership
118
Passive income can be written off against which of the following
Passive losses
119
Which of the following types of oil and gas partnerships is the riskiets
Exploratory
120
Which of the following documents must be signed by a general partner to accepts a new limited partner
Subscription agreement
121
Which two of the following corporate characteristics are the easiest for a limited partnership to avoid
Having a perpetual life and Having free transferability
122
Which of the following is a benefit of investing in a direct participation program
Professional management, pass through of income and losses, and limited liability
123
Which of the following partnership documents includeds the rights and responsibilities of the general and limited partners?
The partnership agreement
124
Depletion deductions may be claimed for
income oil and gas programs
125
Which of the following real-estate investment trust have income that is derived at least partially from rent collect
Equity REIT's and Hybrids
126
Options may be used for what
hedging
127
In option transaction order is what
the first time is an opening and the second is a closing. it must be placed on the order ticket this way
128
Narrow based index options trade until when
4pm EST
129
Broad based index options trde until when
4:15 EST
130
Index options is setteled when
the next business day
131
The Options Clearing Corporation (OCC) is what
the issuer and guarantor of all listed options
132
What is the Options and Disclosure Document (ODD)
must be received prior to the account being approved
133
Who must approve all new account and option order tickets
Registered Options Principal (ROP) a manager with a Series 4
134
How soon must the customer get the Options Account Agreement back to the ODD
15 days
135
Regular options expiration is when
the third friday at 1159pm EST
136
When a client wants to exercise an option they own they contact their broker-dealer. the broker contact whom
OCC
137
What options are delivered by cash vice stocks?
Indexoption and foreign currency options
138
What is Delta Neutral
An equity option position that has been fully hedged
139
What is Net Delta
The number of shares that must be maintained to offset the risk the investor is facing
140
Which options strategies are bearish
Buying Puts and Selling Calls
141
What are the possible outcomes for the writer of a covered call option
Limited profit and limited loss
142
Declan is opening a new options account at a broker-dealer. Declan must return the signed options account agreement
with ing 15 days after approval of the account
143
An investor is long 1 GHI Oct 30 call. If GHI has a current market value of 33, which of the following is True?
The option is in the money
144
An investor reads in the newspaper that JKL Dec 60 puts are trading for 6 when JKL is at 64. What is the time value of these options
6
145
What is the following is TRUE regarding options contract
The OCC sets the contract size, The OCC sets the strike prices, The OCC sets the expiration dates
146
Who is the issuer and guarantor of all listed options
The OCC
147
When is the last time an investor can exercise an option contract
5:30 EST on the third Friday of the expiration month
148
What is the break even point for an investor who writes a Sep 40 call 3?
43
149
What is the maximum potential loss for an investor who shorted 1 XYZ Oct 40 put for 6?
3400
150
What is the break-even point for an investor who is long 1 ABC Jan 60 put, which was purchased for 4?
56
151
Which TWO of the following options are in the money if TUV is trading at 43
TUV 40 Calls, TUV 50 puts
152
Before opening an options account, a customer must receive an
ODD
153
Which TWO of the following options are TRUE of an investor who writes a call option
The maximum potential gain is the premium and The break even point is the premium added to the strike price
154
If an S&P 500 index call option is in the money at expiration, settlement is made by delivery of
cash
155
An Investor buy 1 TUV Oct 45 put for a premium of $4 and simultaneously buys 100 shares of TUV stock for $45 per share. At expiration, the stock would have to be selling at what price per share for the investor to be able to break even
49
156
Where is the list kept for potiential terrorists or terrorist organization
The office of financial assests control (OFAC) which is held by the Treasury Department Agency
157
What does KYC mean
Know your customer
158
an account has be opened by an adult true or false
True. Minors are not allowed to open an account
159
Trust account are managed by how many parties
Only 1 the trustee
160
Is the Minor responsible for taxes
Yes
161
Discretionary accounts are when the Rep has full power and then need what
written power of attorney syned by the investor which gives trading authorization
162
What is a fiduciary
anyone who can legally make decisions for another investor
163
What must take place for a corporation to open an account
the Corporate charter (bylaws) has to state that the corporation is allowed to purchase securities on margin
164
What is an unincorporated association sometimes called
voluntary organization of two more individuals who form an organization for a specific purpose
165
What is the Regulation for a T set to (margin)
50%
166
What is a margin call referred to
Fed call, federal call or Reg T call
167
What is the min to open a margin account
2K unless otherwise stated
168
Telephone Act of 1991
no calls before 8am and 9pm local time of the potential customer
169
What does the telephone act exclude
customers who have executed a trade or had a security in the firms account in the previous 18 months
170
ABC Corporation would like to open a margin account at Raymond James Broker. To open the account we would need what
new account form, corporate resolution, corporate charter, margin agreement
171
In an initial transaction in a margin account. Brad Murrell purchases 100 shares of ABC stock at $12 a share. How much deposit to meet the margin requirment
1200
172
All of the following are true about UGMA counts except
parents of a minor can be joint custodians
173
What documents are required for an investor opening a margin account
A credit agreement, A hypothecation agreement a long consent form
173
Which of the following DOES not have to be included on a new account form
The customers signature (remember we need the representative not the customer)
173
I open a short margin account y selling short 200 shares of ABC stock at $17 per share. What is the margin call
2K
174
to make proper recommendations to a client you should know their
Age, time horizon, tax bracket and liquidity needs
175
The Patriot Act requires broker to identify their investors throught
CIP's
176
The Tax ID of _______ is required for the opening of an UTMA account
The minor
177
Janina has a joint account with Jocelyn and Joyce the other sister. If the account was set up as a joint whith tenants in common, which of the following is true
Ownership of the decedents assets in the account are governed by their will or by the laws in the state in which they live
178
What is systematic risk
anything outside of the industry or stock that has an effect on the stock price
179
what is nonsystematic risk
is more industry or firm specific that influences the stock price
180
Whats the job of a fundamental analyst
to determine if the stock is overpriced or underpriced
181
The balance sheet provides what
an image of a company's financial position at a given point in time
182
what is an income statement
tells you how profitable a company is currently
183
what is the job of a technical analysts
they decide when to buy
184
What is cyclical
house hold appliances, automobile companies, tourism, construction and manufacturing
185
what is Countercyclical
fast food, auto parts, discounts retailers
186
what are defensive stocks
utilities, food, clothing, alcohol tabacco and cosmetics
187
what are growth compaines
technology
188
What are the three main economic theories that economists usually follow
Keynesian (demand side), Ergonomics (Supply Side), and Monetarist
189
All of the following are bearish positions except
Selling naked put options
190
Which of the following best describes the discount rate
The interest rate the the Fed charges banks for loans
191
Janina wants to invest in a retirement plan that protects against purchasing power risk. Which of the following would be the most suitable investment
Variable annuities as they do not have purchasing power (inflation) risk because the return is based on the performance of the securities held in the separate account
192
Looking at the stages of the business cycle, If the economy is expanding, what stages would you expect to follow in order from first to last
Peak-Contraction-Through
193
Which two of the following actions may the Fed take to ease the money supply
Purchase T-Bills and Decrease reserve requirements
194
What is not a leading indicator
The prime rate
195
What is measured in constant dollars
The GDP and GNP
196
Proponents of the Dow Theory look at
The DJIA and the DOW Jones Transportation Average
197
Zero coupon bonds have no
Reinvestment risk
198
A holder of which of the following securites is the most exposed to inflationary risk
US Treasury bonds with ten years until maturity
199
Which of the following risks apply to both domestic and foreign debt securities
Regulatory, Political, and interest rates
200
The greatest investment risk that an investor would face when purchasing a variable annuity is
Market Risk
201
Where would a new security trade
Primary Market (new issue market)
202
Where do U.S. Government and municipal bonds trade
Only on the OTC market
203
What is a Broker
A firm that doesn't use its own inventory to execute a trade. Think of a real-estate broker. No inventor just a middle guy
204
What is a Dealer
A firm that uses its own inventory to execute a trade
205
What is a Do Not Reduce (DNR) Order
This order says not to reduce the price of a stop or limit order in response to a dividen
206
What is an example of a nondiscretionary order
when the client calls you and tells you what type of order they want of a stock and all details
207
What is an accredited investor
the bigger investors this accounts for Institutional investors and a few smaller ones
208
Dealers can charge what
a markup or mark down
209
Brokers can charge what
a commission for trades
210
What is a good description for third market trades
on the OTC as a listed securities
211
What type of order would protect a short positions
buy stop
212
If an at the open order is not executed at the opening price, what would happen to the order
it is canceled
213
An investor with no other positions would like to purchase ABC Common stock, which currently trading at $30.30. If the investor is interested in purchasing the stock for $28.00 or less you should suggest the an entry of
Buy limit order
214
215
216
Which two of the following are true of short sellers
They have a bearish positions and they have a maximum loss
216
A not held order gives a broker discretion as to
wether to purchase, sell or sell short a security
216
Which of the two are false regarding unsolicited orders
They can not be accepted without prior approval from a principal, They must be limited in size
217
Which order features allows for partial executions
IOC (immediate or cancel)
218
Which of the following order features allows for partial execution
Buy 2K shares at 18.10 and sell 2500 shares at 18.30 (181.0 is the bid price and 18.30 is the limit price)
219
Spread in the over the counter (OTC) market refers to the difference between the
highest bid and lowest ask price
220
What is progressive taxes
income, gifts, estate
221
what is regressive taxes
payroll, sales, property, excise (goods, service, activities), gasoline and tabacco and so on
222
What are three different types of income to be taxed
Earned (active), Passive, Portfolio income
223
Are taxes determined by the mutual fund or the investor
Mutual fund
224
Are you subject to taxes on dividend by the mutual fund
Yes even if its reinvested in the fund
225
If an investor realized 30K in long term capital gains and 50K in long term capital losses. How much of the capital losses would be carried forward to the following year
17K. 50k-30k is 20K but then you write off 3k on your taxes leaving 17K to be carried over
226
If an investor sells a security at a capital loss who long must the investor wait to repurchase the same security or anything convertible (stock, options)
30 days. this is the wash sale rule
227
in relation to retirement plans at what age must you wait to start your withdraw and what happens if you take before that age
59 and 1/2 otherwise you take an additional 10% penalty.
228
What are some examples of a non-qualified plan in regards for tax breaks
457 plans, deferred compensation plan, payroll deduction plans don't meet the IRS and ERISA
229
What is the date to start withdrawing retirement otherwise they face additional charges
73 and April 1
230
All of the following are types of tax-qualified retirement plans Except
deferred compensation
231
Which of the following are True regarding Roth IRA and Roth 401K
Withdrawals from both are tax free provided that investors have held the accounts for at least five years and have reached the age of 59 and 1/2
232
If an investor buys 1K shares of stock at $30 and the stock increases to $50 how would the result be categorized
Appreciation
233
An individual investor who lives at home with their parents is covered by an employer pension plan. However, they would like more coverage at retirement and decide to put the maximum allowable contribution in an IRA. If their salary is 52K per year which of the following is True
Contribution to the IRA are fully deductible
234
Which of the following is taxable for an investor for the year in which it occurs
Cash dividend, Interest received from corporate bonds, interest received from US Government bonds
235
A customer purchased 100 shares of ABC stock at $40 per share On March 24. On March 24 one year later the customer sold the stock at $46 a share. Which two are true
They would be taxed as a short term capital gain and they would be taxed at the customer tax bracket
236
According to the wash sale rule, if a customer sold a security at a loss, which of the following is true
The customer cannot purchase call options on the same security for 30 days before or after the sale and be able to claim the loss (as they can exercise the option)
237
Can the FINRA and NYSE imprison member who violate the rules and regulations
No
238
What is the North American Securities Administrators Association (NASAA)
its made us 67 regulators and devoted to investor protection
239
Firms must have meeting every?
annual meetings
240
When are registered persons require to take a computer-based training session covering FINRA regulations by when
December 3 of each year
241
If You leave your firm for whatever reason, the members firm must file a what form and within who many days
U5 and 30 days
242
When must the principal of the account need to approve the trade
same day not before or after the trade
243
The Federal Reserve Board states that the payment date for a corporate securities is how many business days after the trade date
4
244
Because it takes stock transactions settle in two business days the customers are entitled to the dividend if they purchase the securities at lease ______ days prior to the record date
3. The day of execution is day 1. so i the record date is Tuesday March 9th then the member has to by the stock on Friday March 5
245
Cayleb has a cash account with 150K in securities and 300K in cash and a margin with 50K in equity. Additionally Cayleb has a joint cash account with Connor with 250K in securities and 300K in cash. If there broker-dealer goes bankrupt what is his coverage under SIPC.
950K .
246
What is not needed on a stock order ticket
the customers signature
247
Which is not a self-regulatory organization
The SEC
248
Cayleb has an account at Raymond James. He has not traded any securities for over three years. How often must we sent a account statement to him
Every quarter and 6 months for mutual funds
249
The ex-dividend date is _______ business days before the record date
One
250
What is a violation that includes a form of market manipulation
Pump and dump
251
Which of the following are subject to FINRA 5% markup policy
Principle transactions, Agency transactions, Riskless transactions, Proceeds transactions
252
Which of the following is an indication of money laundering when a customer opens an account
Concern with US government reporting requirements, reluctance to reveal information about business activities and questionable ID
253
