SIE Practice final (Kaplan) Questions
With 100% Correct/Verified Solutions.
An investor has a bond maturing during a time when interest rates are falling. It is likely that the
investor, wanting to keep the funds invested, would be most concerned with - Answer
reinvestment risk
Which of the following would be most susceptible to currency risk?
A. Common stock of a small cap company in the United States
b. Common stock of a large, well established company in England
c. Treasury bonds
d. Municipal bonds - Answer b
Preferred shares have - Answer characteristics of both equity and debt securities
By virtue of a stocks listing for trading on a U.S. stock exchange, which of the following risks is
reduced or even recognized as eliminated? - Answer liquidity risk
A bank trustee holds the titles to assets a corporation has purchased and utilizes in its day-to-
day business. The corporation issues debt securities backed by these assets. These securities are
- Answer equipment trust certificates
An investor interested in quarterly income should invest in - Answer utility company stock
Interest on a 7% corporate bond would be paid to the investor as - Answer Two semiannual
checks for $35 each
Interest on corporate bonds is paid twice per year, or semiannually. The interest rate reported,
however, is an annual rate. Thus a 7% bond would pay 7% of par ($1,000), or $70, per year as
two semiannual checks for $35 each
Which of the following can encourage economic growth because gradually increasing prices
tend to stimulate business investment? - Answer mild inflation
the measure of the inflation rate is - Answer the consumer price index
,If a customer sold calls to open, which of the following transactions would be allowed if the
options agreement was not returned signed within 15 days? - Answer buy calls to close
The coupon rate on a debt security represents - Answer the interest rate the issuer has agreed
to pay the investor
Someone who purchases shares of a corporation's common stock has - Answer limited liability
and voting rights
The options disclosure document (ODD) must be provided - Answer at or before the time of
account approval
If a registered representative allows a customer to unknowingly buy investment company shares
in an amount just under a dollar bracket that would qualify for a reduced sales charge, or
encourages such a purchase, this is known as - Answer a breakpoint sale violation
The ratings on the debt instruments of a foreign country with outstanding loans from a number
of other countries worldwide have been downgraded. The impact felt due to the risk of possible
default is known as - Answer sovereign risk
While it can be noted that sovereign risk is a type of political risk, the risk of default by a country
on its debt instruments is specifically recognized as sovereign risk.
All of the following statements are true except
A) a closed-end company may issue preferred stock.
b) a bond mutual fund may not issue bonds.
c) a bond mutual fund may issue bonds.
D) a closed-end company may issue bonds - Answer c
T-bonds and T-notes - Answer are both priced as a percentage of par
A stock's market value is directly determined by which of the following? - Answer supply and
demand
An investor purchases a bond in the secondary market at $950. Assuming $1,000 par value, this
bond is trading at - Answer a discount
,A registered representative wants to place advertisements in his daughters youth athletic
league quarterly sponsorship booklet. He wants to convey in the weekly bulletin at his church
that he specializes in retirement planning and 529 plans. Which of the following statements
regarding these advertisements is true?
a) no approval is required because both the youth athletic league and the church would be
recognized as bona fide non-profits.
b) The piece will be regulated as correspondence because it is only being forwarded to two
organizations.
c) The advertisement is considered institutional communications and therefore no principal pre-
approval is required.
d) Pre-approval by a principal of the broker-dealer is required. - Answer d
A corporation has a shareholders' meeting coming up wherein several controversial proposals
will be made. A number of persons will be actively soliciting proxies, and the corporation plans
to send out up-to-date material on the proposals to shareholders to permit them to make
informed decisions. Which of the following must review this material before it is sent out?
a) the regional exchange where the stock is traded
b) The Securities and Exchange Commission (SEC)
c) None; review not required
d) The Financial Industry Regulatory Authority (FINRA) - Answer b
Limited partnerships sold through private placements involve - Answer a small group of
investors, each contributing a large sum
Limited partnerships sold through private placements generally consist of a small group of
accredited investors, each contributing a large sum to the partnership.
A mutual fund can offer all of the following to investors except
a) the ability to do transfers by telephone or online.
b) physical custody of the fund's portfolio cash and securities.
c) check-writing privileges for redemptions.
d) acting as custodian for retirement accounts - Answer b
As interest rates rise, prices of preferred stock will - Answer fall
, All of the following would be acceptable methods for the customer opting out of allowing the
broker-dealer to share their nonpublic personal information except
a) calling a toll-free number.
b) writing a letter.
c) opting out electronically
d) checking a box - Answer b
a breakpoint sale is - Answer the sale of investment company shares in dollar amounts just
below the point at which the sales charge is reduced on quantity transactions to incur the
higher sales charge.
What are the two basic types of return on an investment? - Answer capital gains and income
Which of the following is true of closed end funds but not of open end funds?
a) pay dividends when declared by the board of directors
b) Can invest in a variety of securities
c) Can sell shares of common stock d) Have a fixed number of shares - Answer d
A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following
executions would the customer accept?
a) 21.25
b) 22.90
c) 23.50
d) 22.50 - Answer c
Which of the following choices would a registered representative be able to make for a
customer in a nondiscretionary account?
I. The time of execution of the trade II. Which security to buy
III. How much of the security to buy IV. At what price to execute the trade
a) I and IV
b) II and III
With 100% Correct/Verified Solutions.
An investor has a bond maturing during a time when interest rates are falling. It is likely that the
investor, wanting to keep the funds invested, would be most concerned with - Answer
reinvestment risk
Which of the following would be most susceptible to currency risk?
A. Common stock of a small cap company in the United States
b. Common stock of a large, well established company in England
c. Treasury bonds
d. Municipal bonds - Answer b
Preferred shares have - Answer characteristics of both equity and debt securities
By virtue of a stocks listing for trading on a U.S. stock exchange, which of the following risks is
reduced or even recognized as eliminated? - Answer liquidity risk
A bank trustee holds the titles to assets a corporation has purchased and utilizes in its day-to-
day business. The corporation issues debt securities backed by these assets. These securities are
- Answer equipment trust certificates
An investor interested in quarterly income should invest in - Answer utility company stock
Interest on a 7% corporate bond would be paid to the investor as - Answer Two semiannual
checks for $35 each
Interest on corporate bonds is paid twice per year, or semiannually. The interest rate reported,
however, is an annual rate. Thus a 7% bond would pay 7% of par ($1,000), or $70, per year as
two semiannual checks for $35 each
Which of the following can encourage economic growth because gradually increasing prices
tend to stimulate business investment? - Answer mild inflation
the measure of the inflation rate is - Answer the consumer price index
,If a customer sold calls to open, which of the following transactions would be allowed if the
options agreement was not returned signed within 15 days? - Answer buy calls to close
The coupon rate on a debt security represents - Answer the interest rate the issuer has agreed
to pay the investor
Someone who purchases shares of a corporation's common stock has - Answer limited liability
and voting rights
The options disclosure document (ODD) must be provided - Answer at or before the time of
account approval
If a registered representative allows a customer to unknowingly buy investment company shares
in an amount just under a dollar bracket that would qualify for a reduced sales charge, or
encourages such a purchase, this is known as - Answer a breakpoint sale violation
The ratings on the debt instruments of a foreign country with outstanding loans from a number
of other countries worldwide have been downgraded. The impact felt due to the risk of possible
default is known as - Answer sovereign risk
While it can be noted that sovereign risk is a type of political risk, the risk of default by a country
on its debt instruments is specifically recognized as sovereign risk.
All of the following statements are true except
A) a closed-end company may issue preferred stock.
b) a bond mutual fund may not issue bonds.
c) a bond mutual fund may issue bonds.
D) a closed-end company may issue bonds - Answer c
T-bonds and T-notes - Answer are both priced as a percentage of par
A stock's market value is directly determined by which of the following? - Answer supply and
demand
An investor purchases a bond in the secondary market at $950. Assuming $1,000 par value, this
bond is trading at - Answer a discount
,A registered representative wants to place advertisements in his daughters youth athletic
league quarterly sponsorship booklet. He wants to convey in the weekly bulletin at his church
that he specializes in retirement planning and 529 plans. Which of the following statements
regarding these advertisements is true?
a) no approval is required because both the youth athletic league and the church would be
recognized as bona fide non-profits.
b) The piece will be regulated as correspondence because it is only being forwarded to two
organizations.
c) The advertisement is considered institutional communications and therefore no principal pre-
approval is required.
d) Pre-approval by a principal of the broker-dealer is required. - Answer d
A corporation has a shareholders' meeting coming up wherein several controversial proposals
will be made. A number of persons will be actively soliciting proxies, and the corporation plans
to send out up-to-date material on the proposals to shareholders to permit them to make
informed decisions. Which of the following must review this material before it is sent out?
a) the regional exchange where the stock is traded
b) The Securities and Exchange Commission (SEC)
c) None; review not required
d) The Financial Industry Regulatory Authority (FINRA) - Answer b
Limited partnerships sold through private placements involve - Answer a small group of
investors, each contributing a large sum
Limited partnerships sold through private placements generally consist of a small group of
accredited investors, each contributing a large sum to the partnership.
A mutual fund can offer all of the following to investors except
a) the ability to do transfers by telephone or online.
b) physical custody of the fund's portfolio cash and securities.
c) check-writing privileges for redemptions.
d) acting as custodian for retirement accounts - Answer b
As interest rates rise, prices of preferred stock will - Answer fall
, All of the following would be acceptable methods for the customer opting out of allowing the
broker-dealer to share their nonpublic personal information except
a) calling a toll-free number.
b) writing a letter.
c) opting out electronically
d) checking a box - Answer b
a breakpoint sale is - Answer the sale of investment company shares in dollar amounts just
below the point at which the sales charge is reduced on quantity transactions to incur the
higher sales charge.
What are the two basic types of return on an investment? - Answer capital gains and income
Which of the following is true of closed end funds but not of open end funds?
a) pay dividends when declared by the board of directors
b) Can invest in a variety of securities
c) Can sell shares of common stock d) Have a fixed number of shares - Answer d
A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following
executions would the customer accept?
a) 21.25
b) 22.90
c) 23.50
d) 22.50 - Answer c
Which of the following choices would a registered representative be able to make for a
customer in a nondiscretionary account?
I. The time of execution of the trade II. Which security to buy
III. How much of the security to buy IV. At what price to execute the trade
a) I and IV
b) II and III
