COMPREHENSIVE SIE PRACTICE EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
Which of the following represents the effect of a stock split? - ANSWER -The price per
share of common stock decreases
Stability in the value of a debt portfolio is greatest when: - ANSWER -maturities of the
debt securities are short.
Which of the following actions is required of a broker-dealer's anti-money laundering
(AML) program? - ANSWER -Designating an AML compliance officer
Which of the following actions violates FINRA rules regarding selling away? - ANSWER
-Engaging in private securities transactions without written prior consent of the
employing BD
Company ABC announces a 20% stock dividend for its common shareholders. If a
customer holds 1,000 shares at $50.00, what is the new price and number of shares
following the payment of the stock dividend? - ANSWER -1,200 shares at $41.67
Roth 401(k) and Roth individual retirement account (IRA) plans share which of the
following features? - ANSWER -Qualified distributions are excluded from federal income
tax
An associated person who is not a registered representative is permitted to engage in
which of the following activities? - ANSWER -Provide account opening forms to a new
customer
The last transaction in XYZ 5.50s 2030 was at 102. This bond is selling at: - ANSWER -
a premium
A registered representative (RR) who wants to place a mutual fund advertisement must
obtain written approval from which of the following parties? - ANSWER -A registered
principal of the RR's firm
Under normal circumstances, a customer's letter of intent on a mutual fund purchase is
valid for what maximum period of time? - ANSWER -13 months
To offer its shareholders a privilege to obtain its shares at a fixed price, which of the
following products does a corporation issue? - ANSWER -Rights
,The call provision of a bond stipulates which of the following factors? - ANSWER -Call
date and call price
A decline in the gross domestic product (GDP) must last for at least how many quarters
to be considered a recession? - ANSWER -2 quarters
Regular way settlement on Treasury bonds is: - ANSWER -next business day
Which of the following statements is true regarding a customer account held as tenants
in common? - ANSWER -The ownership of the decedent's assets is governed by their
will or state law.
The primary purpose of a syndicate desk in the context of an equity offering is to: -
ANSWER -build an order book and allocate the stock
Which of the following responses describes an advantage of index funds? - ANSWER -
Lower management fees due to passive management of the fund
Which of the following comparisons best describes the essential difference between a
primary distribution and a secondary distribution? - ANSWER -A primary distribution
involves a sale of newly issued shares by the issuer while a secondary distribution
involves the sale of already issued and outstanding shares.
The computation of dollar prices and accrued interest on municipal bonds is normally on
what calendar basis? - ANSWER -30/360
Direct participation programs (DPPs) provide: - ANSWER -exposure to non-correlated
assets
Call protection is most valuable to a bond owner when bond prices are generally: -
ANSWER -rising
Which of the following statements is true about treasury stock? - ANSWER -It is issued
stock that has been subsequently reacquired by the corporation
Which of the following investment risks is the greatest risk in a variable life insurance
policy? - ANSWER -Market risk
In the event of a stock split, which of the following parties is required to maintain a
record of the shareholders eligible to receive the additional shares? - ANSWER -
Transfer agent
UTMA accounts are opened under the tax ID of the: - ANSWER -minor
Under industry regulations, an initial purchase of $3,000 of common stock in a margin
account requires a cash deposit of: - ANSWER -$2,000
, At issue, which of the following debt securities mature in one year or less? - ANSWER -
Money market instruments
Which of the following considerations should a registered representative explain to a
customer when recommending a 529 savings plan? - ANSWER -The potential
deductibility of contributions from state taxes
A transaction in which a writer covers a position by purchasing an option is called: -
ANSWER -a closing purchase
Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in
which the mayor is currently seeking re-election. A municipal finance professional who
resides in the town and works for ABC contributed $200 to the mayor's re-election
campaign 13 months ago. If the employee wants to support the campaign further
without impacting the municipal securities business of the firm, he is permitted to make
an additional contribution of up to what amount? - ANSWER -$50
In which of the following situations is an employee of a public company permitted to
trade upon information without violating insider trading laws? - ANSWER -An
independent securities analyst explains to the employee why the earnings for the
company next quarter could be markedly poorer than expected.
Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? -
ANSWER -Secured debt holders
An investor owns 100 shares of XYZ common stock at the current market price of $50
per share. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock
position will be: - ANSWER -50 shares at $100 per share
A registered representative is reviewing the following portfolio:
• 30% ABC Energy Company
• 30% XYZ Health Care Company
• 30% Exchange-traded fund (tracks the S&P 500)
• 10% Money market funds
Which of the following risks is inherent in this portfolio? - ANSWER -Nonsystematic
Which of the following communications with the public is considered misleading? -
ANSWER -Literature providing 10-year performance information to support predictions
of future performance
A savings account at a bank is guaranteed by which of the following entities? -
ANSWER -FDIC
QUESTIONS WITH COMPLETE
SOLUTIONS
Which of the following represents the effect of a stock split? - ANSWER -The price per
share of common stock decreases
Stability in the value of a debt portfolio is greatest when: - ANSWER -maturities of the
debt securities are short.
Which of the following actions is required of a broker-dealer's anti-money laundering
(AML) program? - ANSWER -Designating an AML compliance officer
Which of the following actions violates FINRA rules regarding selling away? - ANSWER
-Engaging in private securities transactions without written prior consent of the
employing BD
Company ABC announces a 20% stock dividend for its common shareholders. If a
customer holds 1,000 shares at $50.00, what is the new price and number of shares
following the payment of the stock dividend? - ANSWER -1,200 shares at $41.67
Roth 401(k) and Roth individual retirement account (IRA) plans share which of the
following features? - ANSWER -Qualified distributions are excluded from federal income
tax
An associated person who is not a registered representative is permitted to engage in
which of the following activities? - ANSWER -Provide account opening forms to a new
customer
The last transaction in XYZ 5.50s 2030 was at 102. This bond is selling at: - ANSWER -
a premium
A registered representative (RR) who wants to place a mutual fund advertisement must
obtain written approval from which of the following parties? - ANSWER -A registered
principal of the RR's firm
Under normal circumstances, a customer's letter of intent on a mutual fund purchase is
valid for what maximum period of time? - ANSWER -13 months
To offer its shareholders a privilege to obtain its shares at a fixed price, which of the
following products does a corporation issue? - ANSWER -Rights
,The call provision of a bond stipulates which of the following factors? - ANSWER -Call
date and call price
A decline in the gross domestic product (GDP) must last for at least how many quarters
to be considered a recession? - ANSWER -2 quarters
Regular way settlement on Treasury bonds is: - ANSWER -next business day
Which of the following statements is true regarding a customer account held as tenants
in common? - ANSWER -The ownership of the decedent's assets is governed by their
will or state law.
The primary purpose of a syndicate desk in the context of an equity offering is to: -
ANSWER -build an order book and allocate the stock
Which of the following responses describes an advantage of index funds? - ANSWER -
Lower management fees due to passive management of the fund
Which of the following comparisons best describes the essential difference between a
primary distribution and a secondary distribution? - ANSWER -A primary distribution
involves a sale of newly issued shares by the issuer while a secondary distribution
involves the sale of already issued and outstanding shares.
The computation of dollar prices and accrued interest on municipal bonds is normally on
what calendar basis? - ANSWER -30/360
Direct participation programs (DPPs) provide: - ANSWER -exposure to non-correlated
assets
Call protection is most valuable to a bond owner when bond prices are generally: -
ANSWER -rising
Which of the following statements is true about treasury stock? - ANSWER -It is issued
stock that has been subsequently reacquired by the corporation
Which of the following investment risks is the greatest risk in a variable life insurance
policy? - ANSWER -Market risk
In the event of a stock split, which of the following parties is required to maintain a
record of the shareholders eligible to receive the additional shares? - ANSWER -
Transfer agent
UTMA accounts are opened under the tax ID of the: - ANSWER -minor
Under industry regulations, an initial purchase of $3,000 of common stock in a margin
account requires a cash deposit of: - ANSWER -$2,000
, At issue, which of the following debt securities mature in one year or less? - ANSWER -
Money market instruments
Which of the following considerations should a registered representative explain to a
customer when recommending a 529 savings plan? - ANSWER -The potential
deductibility of contributions from state taxes
A transaction in which a writer covers a position by purchasing an option is called: -
ANSWER -a closing purchase
Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in
which the mayor is currently seeking re-election. A municipal finance professional who
resides in the town and works for ABC contributed $200 to the mayor's re-election
campaign 13 months ago. If the employee wants to support the campaign further
without impacting the municipal securities business of the firm, he is permitted to make
an additional contribution of up to what amount? - ANSWER -$50
In which of the following situations is an employee of a public company permitted to
trade upon information without violating insider trading laws? - ANSWER -An
independent securities analyst explains to the employee why the earnings for the
company next quarter could be markedly poorer than expected.
Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? -
ANSWER -Secured debt holders
An investor owns 100 shares of XYZ common stock at the current market price of $50
per share. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock
position will be: - ANSWER -50 shares at $100 per share
A registered representative is reviewing the following portfolio:
• 30% ABC Energy Company
• 30% XYZ Health Care Company
• 30% Exchange-traded fund (tracks the S&P 500)
• 10% Money market funds
Which of the following risks is inherent in this portfolio? - ANSWER -Nonsystematic
Which of the following communications with the public is considered misleading? -
ANSWER -Literature providing 10-year performance information to support predictions
of future performance
A savings account at a bank is guaranteed by which of the following entities? -
ANSWER -FDIC
