SIE Practice Exam - Questions

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SIE Practice Exam - Questions1.When a broker-dealer acts on an agency basis tohelp a customer complete trades, the firmnormally is compensated throughA.B.C.D.2.A.B.C.D.4.BD.6.primarily connected to the strength of theunderlying security.based on the credit worthiness of the issuer,typically the investment bank that structuresthe note.usually very strong, since they are commonlysold by broker-dealers who must meetminimum capital standards.always difficult to determine owing to thelack of disclosure required when sellingthese products to the public.When opening a margin account, the agreementthat customers sign to pledge their securities ascollateral for a loan from the broker-dealer is ly.The credit quality of an exchange-traded note ismargin agreement.hypothecation agreement.re-hypothecation agreement.loan agreement.When comparing rights and warrants, which ofthe following statements is TRUE?A.commissions.mark-ups.asset-based fees.transaction surcharges.Investment company financial statements aresent to shareholdersA.B.C.D.3.5.A registered representative located in Californiamakes a 7:30pm cold call to a potential customerin New Jersey. This isA.B.C.D.7.Warrants have shorter expiration periodsthan rightsThe exercise price of a right is generallybelow the price of the stock when the rightis issued; the exercise price of the warrant isgenerally above the price of the stock whenit is issued.Rights are often added to bond issues assweeteners; warrants are offered to existingshareholders to permit them to maintaintheir proportionate interest in the companywhen additional shares are issuedWarrants protect shareholders againstdilution, rights do notpermitted as long as the potential customeris not on the do-not-call-list.permitted as long as the registered rep hadprior verbal consent from the potentialcustomer.permitted because the call occurredbetween the hours of 8am and 9pm.prohibited because cold calls can only bemade between 8am and 9pm in thepotential customer's time zone.Investors whose bonds have been called asinterest rates have fallen are now facingA.B.C.D.credit risk.inflation risk.reinvestment rate risk.capital risk. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.121

8.Helen opened a Roth IRA last year and wants toknow what part of this year’s contributions shecan deduct. The answer isA.B.C.D.9.she can deduct 100%.it depends on her income.it depends on her age.she can’t deduct any amount.C.D.may be withdrawn with no tax implications.are taxed as ordinary income if the contractis non-qualified.are taxed as capital gains if the contract isnon-qualified.may be reinvested without any current taxliability.Dollar limits on 529 plan contributions perbeneficiary are set byA.B.C.D.A customer requests in writing that his accountstatements be held by the firm while he spendsthe winter in Florida. In response to thecustomer's request, the firm is permitted tohonor the requestA.B.C.D.During the accumulation phase of a variableannuity, dividends, interest, and capital gainsA.B.10.12.13.Which of the following is not an example of arestricted person under FINRA rules?A.B.C.D.14.the federal government.the Municipal Securities Rulemaking Board.various states.the College Board.A.B.With regard to the price of closed-end fundshares held by investors which of the followingstatements is TRUE?A.B.C.D.The price is set by formula each business dayShares may be sold at a discount or premiumto their NAVShares are sold at the price calculated at theclose of business on that dayShares are sold at a discount when thesecurities in the fund have increased in valuerelative to their NAVD.15.The spouse of a restricted personThe uncle of a restricted personThe brother-in-law of a restricted personThe child of a restricted personThe order of liquidation in a limited partnershipisC.11.for the time period specified by thecustomer.for a maximum of one month.for a maximum of two months.for a maximum of three months.general partner, limited partner, unsecuredbondholder, secured bondholder.secured bondholder, general partner,unsecured bondholder, limited partner.secured bondholder, unsecuredbondholder, limited partner, generalpartner.general partner, secured bondholder,limited partner, unsecured bondholder.All of the following sectors are consideredcyclical EXCEPTA.B.C.D.healthcare.hotel.steel.furniture. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.122

16.Which of the following interest rates isestablished by the Federal Reserve Board?A.B.C.D.19.Prime rateFed Funds rateMoney Market rateDiscount rateNoreen and her husband Jeff, residents of NewYork City, have just had their first child Ali. Theyare interested in opening a 529 Plan for Ali inorder to save for her future college education. Asa registered representative, it would be mostappropriate to tell themA.17.Pursuant to Regulation S-P, a broker-dealer mustprovide a privacy notice to a customerA.B.C.D.18.at the time a solicitation is made topurchase a security.when a confirmation of a trade is sent.when a statement of account is sent.prior to engaging in any securities businesswith that customer.Which of the following events would subject anindividual to a statutory disqualification?A.B.C.D.B.A felony conviction 11 years agoAn indictment for a securities related felony3 years agoA conviction for a non-securities relatedmisdemeanor six months agoA conviction for a securities relatedmisdemeanor 9 years agoC.D.20.Which of the following regulators enforce theMSRB rules for securities firms?A.B.C.D.21.to invest in a New York state 529 as theremay be certain tax advantages at the federallevel.to invest in a New York state 529 as theremay be certain tax advantages at the statelevel.to invest in a 529 Plan outside of NewYork state as there may be certain taxadvantages at the federal level.it does not matter which state they open upa 529 Plan in as the distributions will betreated the same regardless.FINRAFederal ReserveComptroller of the CurrencyFDICA primary difference between Ginnie Mae andFannie Mae/Freddie Mac is that Ginnie MaeA.B.C.D.only finances commercial mortgages,whereas the others finance homemortgages.mortgages are only available forgovernment subsidized housing, while theothers are available for all real estatepurchases.is a publicly held company while the othersare privately held.is a government agency that has the explicitbacking of the US government, while theothers do not. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.123

22.Trader R hears news from an underwriter that hisfirm will be buying a large block of XYZ Costock. If R buys shares of the stock before thenews is made public, he is engaged inA.B.C.D.23.A.B.C.D.27. 750. 1,000. 1,000. 2,000.An investor sells short 100 shares of XYZ stockat 61 and buys 1 XYZ 65 call for 1.50 When themarket price of ABC is 62. What is theinvestor’s breakeven on the combined ECWhen opening a minor’s account, the socialsecurity number to be used is that of theA.B.C.D.29.I onlyII onlyIII onlyI, II and IIIWhich of the following organizations guaranteesthe performance of standardized optionscontracts?A.B.C.D.If a customer wishes to open a short marginaccount and sell short 100 shares of stock at 15per share, the customer must depositA.B.C.D.25.Voting rightsDividends if declared by the Board ofDirectorsIII. Priority over debentures in a corporateliquidationbid-rigging.insider trading.rumoring.front-running.Classical economic theory.Monetarist economic theory.Open market operations.Keynesian economic theory.Preferred stock includes which of the followingfeatures?I.II.The theory that says the economy is bestcontrolled through taxation and governmentspending is known asA.B.C.D.24.26.parent.minor.custodian.registered rep.A municipal finance professional atJoeBrokerDealer made a contribution of 500 tocandidate in a local election that resulted in a banon underwriting activity. A month later theMFP joined a new municipal securities firm,JaneBrokerDealer. The remainder of the twoyear ban will apply toA.B.C.D.neither JoeBrokerDealer orJaneBrokerDealer.both JoeBrokerDealer andJaneBrokerDealer.JoeBrokerDealer only.JaneBrokerDealer only. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.124

30.In order to receive a dividend, a shareholdermust own stock as of theA.B.C.D.31.B.C.D.32.interest earned is added to any capital gain,and this result is then divided by the initialpurchase price.interest earned is subtracted from any capitalgain, and this result is then divided by theinitial purchase price.interest earned is divided by the redemptionvalue of the bond.interest earned is subtracted from theredemption value of the bond.commingling.freeriding.front-running.selling away.All the following are exempt from theregistration requirements of the Securities Act of1933 exceptA.B.C.D.A rated municipal bonds.AAA rated corporate bonds.US Treasury bonds.domestic bank securities.A communication made available to 20institutional clients and 20 retail clients isclassified asA.B.C.D.35.36.double-barreled bonds.industrial revenue bonds.special assessment bonds.moral obligation bonds.The threshold to qualify for a sales chargediscount on a mutual fund is 75,000. Aninvestor places an order for 72,500 of this fundand is not informed by the registered rep that hewould be entitled to a sales charge discount if heinvests an additional 2,500. This is an exampleof aA.B.C.D.37.retail communication.correspondence.institutional communication.a blog post.Bonds that are issued by state and localgovernments but benefit a private corporate areA.B.C.D.A representative's personal account has beenidentified for review because of account activityin which securities were bought and quickly sold,often on the following day. This may be evidenceof the prohibited practice calledA.B.C.D.33.declaration date.ex-dividend date.record date.payable date.When calculating total return on a bond,A.34.breakpoint.letter of intent.breakpoint sale.value investor.Accrued interest is calculated from theA.B.C.D.dated date and continues to the settlementdate.last coupon date and continues to the dayprior to the settlement date.last coupon date and continues through thesettlement date.dated date to the next coupon date. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.125

38.An upward sloping yield curve indicatesA.B.C.D.39.C.D.Corporate bondsMunicipalAsset-backedMoney marketFor existing customer accounts, how often dobroker-dealers required to send a written noticeto the customer for verification of accountinformation?A.B.C.D.B.45.AnnuallyEvery two yearsEvery 3 yearsEvery 5 yearsJoe must notify MidWest that he isborrowing money from family membersJoe must notify MidWest that he isengaging in outside business activityJoe must notify MidWest that he isengaging in an outside business activity andmust await permission from his firm beforemoving forwardThis type of outside business activity isprohibited by FINRA rulesA corporate bond that is currently trading at 95pays a semi-annual coupon of 25. What is thecurrent yield?A.B.C.D.46.Total value will decline by 10%Total value will decline by 90%Total value will increase by 10 timesTotal value will not changeJoe is a registered rep currently employed byMidWest Broker-Dealer, a St. Louis based firm.Joe likes to leave downtown and drive throughthe rural fields of the Midwest on the weekends.He so enjoys the open plains that he chats withhis 12 closest family members to borrow 200,000 and open his very own farm. Which ofthe following is true regarding this aborationCommercial paper, bankers’ acceptances and largetime deposits are part of what segment of thefixed income market?A.B.C.D.42.44.Which of the following terms describes a brokerdealer's practice of interjecting another brokerdealer into the middle of a trade, resulting in anincrease in commission at the customer'sexpense?A.B.C.D.41.their potential lack of liquidity.their high surrender charges.their low potential for return.their potential for exposure to adverse taxconsequences.A company "reverse splits" its stock on a 1-for10 basis. If an investor holds 800 shares beforethe event, what will be the impact of the split, ifany, on the total value of the investors' shares?A.B.C.D.Penny stocks present added risk to customersbecause ofA.B.C.D.40.that bond prices are increasing.that yields are falling.that long-term interest rates are higher thatshort-term interest rates.the Federal Reserve Board is pursuing atight monetary policy.43.0.0250.02630.050.0526Which of the bonds listed below would have thegreatest price volatility?A.B.C.D.A variable rate bondA short-term investment grade bondA long-term zero-coupon bondA Treasury note Knopman Marks Financial Training – SIE Practice Exam – 2018 V.126

47.Investors purchase common stock primarily forA.B.C.D.48.53.a SAR.a CMIR.a CTR.nothing at this time, but this suspiciousactivity should be monitored.C.D.54.Substantially allAt least 90%At least 75%At least 51%A.B.C.D.accredited investors.qualified institutional buyers.qualified asset managers.sophisticated wealthy individuals.56.Low tax rates on capital gainsInvestment tax creditsTax-exempt interestAvoidance of Alternative Minimum TaxWhich of the following options positionsobligates an investor to purchase stock?A.B.C.D.As part of Rule 144A, the SEC created anothercategory of financially sophisticated investorsknown asits nominal yield is higher than its YTM.its current yield is lower than its nominalyield.its YTM is higher than its current yield.its nominal yield and its YTM are the same.What tax benefit do municipal bonds offer toindividual U.S. investors?A.B.C.D.55.Tenancy in commonJoint Tenancy with Rights of SurvivorshipPartnershipTenancy by the EntiretyWhen the market price of a bond is lower thanits par value,A.B.To avoid double taxation on dividends paid toshareholders, REITs must invest what portion oftheir total assets in real estate?A.B.C.D.51.negotiated market.auction market.transfer market.double-auction market.A husband and wife wish to open a brokerageaccount in which the husband will own 60% andthe wife 40%. At either owner's death, theowner's portion will be liquidated and distributedto his/her beneficiary. What type of accountshould they open?A.B.C.D.A customer deposits 2,000 of cash into abrokerage account in the morning and 10,000 incash into the same account that afternoon. Thefirm is required to fileA.B.C.D.50.the income stream it generates.its appreciation potential.its relative safety.its resistance to business risk.The Nasdaq market is a(n)A.B.C.D.49.52.Long callLong putShort callShort putAll of the following are features of ETFsEXCEPTA.B.C.D.typically lower fees than closed-endcompany shares.redeemed by the issuer.often track an index or other benchmark.initially capitalized through a public IPO. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.127

57.XYZ Inc. declares a 0.30 dividend payable onMonday, August 15, to all shareholders of recordas of Monday, August 8. When is the ex-dividenddate for a regular way trade in the stock?A.B.C.D.58.59.In a 401(k) with a Roth account option, how areemployer matching contributions allocated?B.C.D.62.A.B.C.D.C.D.63.The annual contribution deadline isdifferentAnnual contribution limits are higher inTraditional IRAsRoth IRAs are not available to everyonewith earned income, but Traditional IRAsare.A 10% penalty for withdrawals before age59 ½ exists only in a Traditional IRA, not aRoth IRAthe SEC approves of the new issue.the SEC has verified the issuer'sinformation.the SEC has cleared the issuance for publicsale.the SEC recommends the issuer's securitiesfor purchase.A customer must sign and return the optionsaccount agreementA.B.C.D.64.indenture.collateral trust bond.debenture.private activity bond.The SEC has declared a new public offeringeffective. This indicates thatA.B.To either the regular 401(k) or Roth account,at the employee's optionTo either the regular 401(k) or Rothaccount, at the employer’s optionTo the regular 401(k) onlyTo the Roth account onlyWhich of the following is a key differencebetween a Traditional IRA and a Roth IRA?An unsecured bond is also known as a(n)A.B.C.D.An investor has 100 shares of XYZ stock at 90per share. After a 3-for-1 split, the investor canexpect to ownA. 100 shares at 30 per share.B. 100 shares at 90 per share.C. 300 shares at 30 per share.D. 300 shares at 90 per share.A.60.Tuesday, August 2Wednesday, August 3Thursday, August 4Friday, August 561.at or prior to the approval of the account.at or prior to placing the initial trade in theaccount.within 15 calendar days of placing theinitial trade.within 15 calendar days of accountapproval.The Securities Investor Protection Corporation(SIPC) protects customers fromA.B.C.D.market loss.issuer bankruptcy.broker-dealer financial failure.identity theft compromising customeraccounts or the broker-dealer. Knopman Marks Financial Training – SIE Practice Exam – 2018 V.128

65.Henry and Jennifer, a married couple, have a networth of 800,000, excluding home equity. Theirincome has been about 250,000 for several years.Are they eligible to participate in a privateplacement of securities as accredited investors?A.B.C.D.66.B.C.D.70.71.Ordinary income onlyPassive income onlyBoth ordinary income and passive incomeCapital gains from the sale of appreciatedinvestments onlyWhich of the following statements is TRUEregarding the value of variable contract annuityunits?A.B.C.D.It is determined by a formula specified inthe annuity contractIt is linked to the performance of theinsurance company’s general accountIt is fixed at the time of the contract’sannuitizationIt fluctuates based on the performance ofseparate account assetsMarketLimitGood-til-cancelledTrailing stopThe money supply will tighten based on which ofthese techniques of monetary policy?A.B.C.D.73.credit risk.principal risk.inflation risk.economic risk.What type of order should Martin enter if hisobjective is to buy 500 shares of Cisco stock assoon as possible at the best price available?A.B.C.D.72.listed securities trade in their primary listingvenue.OTC securities trade on a stock exchange.listed securities trade in the OTC market.OTC securities trade in a foreign market.Investors that purchase high quality fixed incomeinvestments for retirement income are mostconcerned withA.B.C.D.Passive losses generated by a limited partnershipmay be used to reduce which of the following?A.B.C.D.68.hedge fund.treasury bond.bank CD.money market fund.The “third market” is a marketplace whereA.An 80 -year-old individual would be least likely topurchase aA.B.C.D.67.Yes, because they meet the income testYes, because they meet the net worth testYes, because they meet both testsNo, because they meet neither test69.The Federal Reserve purchases governmentsecurities from primary dealersThe Federal Reserve reduces the reserverequirementThe Federal Reserve increases the discountrateThe U.S. Government decreasesgovernment spendingWhen must the brokerage firm deliver acustomer confirmation to the customer?A.B.C.D.At or before completion of each transactionWhen an order is placedUpon the customer’s requestWithin three days of trade date Knopman Marks Financial Training – SIE Practice Exam – 2018 V.129

74.The regulatory element of continuing educationmust be completed on theA.B.C.D.75.first anniversary of initial registration, andevery two years thereafter.second anniversary of initial registration,and every two years thereafter.second anniversary of initial registration,and every third year thereafter.third anniversary of initial registration, andevery second year thereafter.An individual contacts her financialrepresentative to sell her mutual fund shares.The price she will receive isA.B.C

SIE Practice Exam - Questions 1. When a broker-dealer acts on an agency basis to help a customer complete trades, the firm . at 61 and buys 1 XYZ 65 call for 1.50 When the . SIE Practice Exam – 2018 V.12 6 38. An upward sloping yield curve indicates

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