SIE: Exam Study Guide Questions All
Answered Correctly Graded A+
Which of the following would be the interest rate charged for overnight, uncollateralized loans
negotiated between two money center banks?
A) Discount rate
B) Prime rate
C) Repo rate
D) Federal funds rate - Answer D) Federal funds rate
Explanation:
The federal funds rate is the rate commercial money center banks charge each other for an
overnight, unsecured loan. It is considered a barometer of the direction of short-term interest
rates such as commercial paper and Treasury bills, which often move up or down roughly in
parallel with the funds rate.
A supply-side approach to fiscal policy will use all of these tools except
A) decreasing tax rates on business entities.
B) personal income tax rebates.
C) providing tax credits to small business.
D) decreasing government regulatory costs. - Answer B) personal income tax rebates.
Explanation:
Supply-side fiscal policy seeks to create a better environment for business to thrive. The end
goal is a growing economy that creates jobs. Sometimes called trickle-down economics, the
emphasis is on the business side much more than the consumer side.
,All of the following are self-regulatory organizations (SROs) in the securities industry that are
accountable for creating industry rules, as well as supervising securities practices within an
assigned jurisdiction, except
A) the MSRB.
B) FINRA.
C) the CBOE.
D) the SEC. - Answer D) the SEC.
Explanation:
All SROs, including FINRA, the MSRB, and all listed exchanges, are accountable to the Securities
and Exchange Commission (SEC). The SEC is the securities industry's primary government body,
not an SRO.
The law that provides the legal framework for state registration of securities is
A) the Uniform Securities Act.
B) the Securities Act of 1933.
C) the Trust Indenture Act of 1939.
D) the Securities Exchange Act of 1934. - Answer A) the Uniform Securities Act.
Explanation:
The Uniform Securities Act provides a legal framework for the state registration of securities, as
well as the registration requirements applicable to broker-dealers, investment advisers,
investment adviser representatives, and registered representatives.
How long must record of a customer complaint be retained?
A) Six years after resolution
B) Indefinitely
,C) Four years after resolution
D) Four years after receipt - Answer C) Four years after resolution
Explanation:
Any record of written complaints must be kept for four years after resolution.
The economy appears to be moving into a strong expansion. Which of the following companies
will likely benefit the most from this expansion?
A) Dino Oil and Gas, Co.
B) Old Bess Steel, Inc.
C) Daisy Dairy Company
D) Hinckley Gold and Silver Corp. - Answer B) Old Bess Steel, Inc.
Explanation:
The steel plant is an example of a cyclical industry and will likely do well in the upcoming
expansion. Daisy and Dino are both producers of consumable goods and the defensive industry;
the gold miner is countercyclical.
Underwriters acting as principals and committing to purchase any unsold shares for the
syndicate account would best be described as being engaged in
A) a firm commitment.
B) an initial public offering (IPO).
C) a primary.
D) a best efforts. - Answer A) a firm commitment.
Explanation:
, In a firm commitment underwriters contract with the issuer to buy its securities, acting as
principals rather than agents. They are committing to purchase any unsold shares for the
syndicate account. In this type of underwriting, it is the underwriters who are at risk for any
shares they cannot sell to the public, not the issuer. The issuer knows that ultimately all of the
securities will be sold, and all of the capital needed will be raised.
Economic growth has slowed to a halt with little consumer demand, but prices for goods and
services are still rising. This is known as economic
A) stagflation.
B) deflation.
C) stagnation.
D) contraction. - Answer A) stagflation.
Explanation:
When prices for goods and services are rising (inflation) during times when the economy isn't
growing (stagnation), the economy is known to be in a period of stagflation.
The ATOP Company is planning to offer shares of both common and preferred stock to the
investing public in order to raise operating capital intended to be used for expansion. Which of
the following laws enacted by Congress would be the most relevant when issuing these equity
securities to the public?
A) The Investment Company Act of 1940
B) The Trust Indenture Act of 1939
C) The Securities Act of 1933
D) The Securities Investors Protection Act of 1970 - Answer C) The Securities Act of 1933
Explanation:
The Securities Act of 1933, is also known as the Paper Act, Prospectus Act, or New Issues Act.
This federal law requires that issuers who want to raise capital by making a public offering of
securities to the public, provide full and fair disclosure of all material facts about the company
and the securities being offered.
Answered Correctly Graded A+
Which of the following would be the interest rate charged for overnight, uncollateralized loans
negotiated between two money center banks?
A) Discount rate
B) Prime rate
C) Repo rate
D) Federal funds rate - Answer D) Federal funds rate
Explanation:
The federal funds rate is the rate commercial money center banks charge each other for an
overnight, unsecured loan. It is considered a barometer of the direction of short-term interest
rates such as commercial paper and Treasury bills, which often move up or down roughly in
parallel with the funds rate.
A supply-side approach to fiscal policy will use all of these tools except
A) decreasing tax rates on business entities.
B) personal income tax rebates.
C) providing tax credits to small business.
D) decreasing government regulatory costs. - Answer B) personal income tax rebates.
Explanation:
Supply-side fiscal policy seeks to create a better environment for business to thrive. The end
goal is a growing economy that creates jobs. Sometimes called trickle-down economics, the
emphasis is on the business side much more than the consumer side.
,All of the following are self-regulatory organizations (SROs) in the securities industry that are
accountable for creating industry rules, as well as supervising securities practices within an
assigned jurisdiction, except
A) the MSRB.
B) FINRA.
C) the CBOE.
D) the SEC. - Answer D) the SEC.
Explanation:
All SROs, including FINRA, the MSRB, and all listed exchanges, are accountable to the Securities
and Exchange Commission (SEC). The SEC is the securities industry's primary government body,
not an SRO.
The law that provides the legal framework for state registration of securities is
A) the Uniform Securities Act.
B) the Securities Act of 1933.
C) the Trust Indenture Act of 1939.
D) the Securities Exchange Act of 1934. - Answer A) the Uniform Securities Act.
Explanation:
The Uniform Securities Act provides a legal framework for the state registration of securities, as
well as the registration requirements applicable to broker-dealers, investment advisers,
investment adviser representatives, and registered representatives.
How long must record of a customer complaint be retained?
A) Six years after resolution
B) Indefinitely
,C) Four years after resolution
D) Four years after receipt - Answer C) Four years after resolution
Explanation:
Any record of written complaints must be kept for four years after resolution.
The economy appears to be moving into a strong expansion. Which of the following companies
will likely benefit the most from this expansion?
A) Dino Oil and Gas, Co.
B) Old Bess Steel, Inc.
C) Daisy Dairy Company
D) Hinckley Gold and Silver Corp. - Answer B) Old Bess Steel, Inc.
Explanation:
The steel plant is an example of a cyclical industry and will likely do well in the upcoming
expansion. Daisy and Dino are both producers of consumable goods and the defensive industry;
the gold miner is countercyclical.
Underwriters acting as principals and committing to purchase any unsold shares for the
syndicate account would best be described as being engaged in
A) a firm commitment.
B) an initial public offering (IPO).
C) a primary.
D) a best efforts. - Answer A) a firm commitment.
Explanation:
, In a firm commitment underwriters contract with the issuer to buy its securities, acting as
principals rather than agents. They are committing to purchase any unsold shares for the
syndicate account. In this type of underwriting, it is the underwriters who are at risk for any
shares they cannot sell to the public, not the issuer. The issuer knows that ultimately all of the
securities will be sold, and all of the capital needed will be raised.
Economic growth has slowed to a halt with little consumer demand, but prices for goods and
services are still rising. This is known as economic
A) stagflation.
B) deflation.
C) stagnation.
D) contraction. - Answer A) stagflation.
Explanation:
When prices for goods and services are rising (inflation) during times when the economy isn't
growing (stagnation), the economy is known to be in a period of stagflation.
The ATOP Company is planning to offer shares of both common and preferred stock to the
investing public in order to raise operating capital intended to be used for expansion. Which of
the following laws enacted by Congress would be the most relevant when issuing these equity
securities to the public?
A) The Investment Company Act of 1940
B) The Trust Indenture Act of 1939
C) The Securities Act of 1933
D) The Securities Investors Protection Act of 1970 - Answer C) The Securities Act of 1933
Explanation:
The Securities Act of 1933, is also known as the Paper Act, Prospectus Act, or New Issues Act.
This federal law requires that issuers who want to raise capital by making a public offering of
securities to the public, provide full and fair disclosure of all material facts about the company
and the securities being offered.
