SIE PRACTICE EXAM QUESTIONS AND
ANSWERS
Who is responsible for maintaining fair and orderly markets for an assigned set of listed
firms? They operate both manually and electronically to facilitate price discovery during
market opens, closes, and during periods of trading imbalances and instability. -
ANSWER -Designated Market Makers
If real GDP declined the last 3 quarters, how many more consecutive quarters of decline
would be needed to be classified as an economic depression? - ANSWER -3 quarters
What is a correct reason to purchase a particular investment for a client's portfolio? -
ANSWER -Blue chip common stocks because they provide a hedge against inflation
An unconditional promise to pay a sum of money to a payee, either at a fixed or
determinable future time, under specific terms is called a - ANSWER -Promissory note
A trade surplus results from - ANSWER -a country exporting more than it imports
William, age 56, recently retired from Epsilon Inc., and would like to take a distribution
from a retirement plan to pay for medical expenses. What plan would allow William to
take a penalty free withdrawal? - ANSWER -401(k) from Epsilon Inc
Match the state of the business cycle with the description that follows for questions 19-
22
A. Trough
B. Expansion
C. Contraction
D. Peak
_______ Recession - ANSWER -contraction
_________ Utilization at its lowest level - ANSWER -Trough
_______ Recovery - ANSWER -Expansion
________ GDP at its highest point - ANSWER -Peak
All are characteristics of a REIT EXCEPT - ANSWER -it is a publicly traded open-end
investment company
(it is closed-end)
, What can an investor sign which allows him or her to receive breakpoint discounts
based upon a commitment to buy a specified number of mutual fund shares over a
period of time, usually 13 months - ANSWER -Letter of intent
What is a type of exchange rate system in which a country ties its currency to a basket
of other currencies or to another measure of value, such as gold? - ANSWER -Fixed
exchange rate system
What will result if money distributed from a 529 plan is not used to pay for qualifying
education expenses? - ANSWER -The gain is taxed as ordinary income, and a 10%
penalty is applied
An investor who believes that an economic recession is imminent should purchase
which type of stock? - ANSWER -Defensive stock because they tend to outperform
during economic downturns
What is true regarding dividends paid by growth stocks and value stocks? - ANSWER -
Because they are growing and expanding, growth stocks typically do not pay large
dividends
What is a type of broker that acts as a liaison between an investor and a clearing
corporation by helping to ensure that trades are settled appropriately and transactions
are successfully completed? - ANSWER -Clearing broker
What form must broker-dealers, investment advisers, or issuers of securities fill out in
order to terminate the registration of an individual in the appropriate jurisdiction? It is
also known as the Uniform Termination Notice for Securities Industry Registration. -
ANSWER -U5
Which corporate voting procedures entitles a shareholder to one vote per share, and
votes must be divided evenly among the candidates being voted on? - ANSWER -
Statutory voting
What market refers to the trading of exchange-listed securities in the over-the-counter
market? These trades allow institutional investors to trade blocks of securities directly,
rather than through an exchange, providing liquidity and anonymity to buyers. -
ANSWER -Third market
An investor sells a naked call on Omikron for a $250 premium. What is true regarding
the investors position? - ANSWER -The investor's potential loss is unlimited
Which act created the SEC and empowered it with broad authority over all aspects of
the securities industry? - ANSWER -Securities Exchange Act of 1934
ANSWERS
Who is responsible for maintaining fair and orderly markets for an assigned set of listed
firms? They operate both manually and electronically to facilitate price discovery during
market opens, closes, and during periods of trading imbalances and instability. -
ANSWER -Designated Market Makers
If real GDP declined the last 3 quarters, how many more consecutive quarters of decline
would be needed to be classified as an economic depression? - ANSWER -3 quarters
What is a correct reason to purchase a particular investment for a client's portfolio? -
ANSWER -Blue chip common stocks because they provide a hedge against inflation
An unconditional promise to pay a sum of money to a payee, either at a fixed or
determinable future time, under specific terms is called a - ANSWER -Promissory note
A trade surplus results from - ANSWER -a country exporting more than it imports
William, age 56, recently retired from Epsilon Inc., and would like to take a distribution
from a retirement plan to pay for medical expenses. What plan would allow William to
take a penalty free withdrawal? - ANSWER -401(k) from Epsilon Inc
Match the state of the business cycle with the description that follows for questions 19-
22
A. Trough
B. Expansion
C. Contraction
D. Peak
_______ Recession - ANSWER -contraction
_________ Utilization at its lowest level - ANSWER -Trough
_______ Recovery - ANSWER -Expansion
________ GDP at its highest point - ANSWER -Peak
All are characteristics of a REIT EXCEPT - ANSWER -it is a publicly traded open-end
investment company
(it is closed-end)
, What can an investor sign which allows him or her to receive breakpoint discounts
based upon a commitment to buy a specified number of mutual fund shares over a
period of time, usually 13 months - ANSWER -Letter of intent
What is a type of exchange rate system in which a country ties its currency to a basket
of other currencies or to another measure of value, such as gold? - ANSWER -Fixed
exchange rate system
What will result if money distributed from a 529 plan is not used to pay for qualifying
education expenses? - ANSWER -The gain is taxed as ordinary income, and a 10%
penalty is applied
An investor who believes that an economic recession is imminent should purchase
which type of stock? - ANSWER -Defensive stock because they tend to outperform
during economic downturns
What is true regarding dividends paid by growth stocks and value stocks? - ANSWER -
Because they are growing and expanding, growth stocks typically do not pay large
dividends
What is a type of broker that acts as a liaison between an investor and a clearing
corporation by helping to ensure that trades are settled appropriately and transactions
are successfully completed? - ANSWER -Clearing broker
What form must broker-dealers, investment advisers, or issuers of securities fill out in
order to terminate the registration of an individual in the appropriate jurisdiction? It is
also known as the Uniform Termination Notice for Securities Industry Registration. -
ANSWER -U5
Which corporate voting procedures entitles a shareholder to one vote per share, and
votes must be divided evenly among the candidates being voted on? - ANSWER -
Statutory voting
What market refers to the trading of exchange-listed securities in the over-the-counter
market? These trades allow institutional investors to trade blocks of securities directly,
rather than through an exchange, providing liquidity and anonymity to buyers. -
ANSWER -Third market
An investor sells a naked call on Omikron for a $250 premium. What is true regarding
the investors position? - ANSWER -The investor's potential loss is unlimited
Which act created the SEC and empowered it with broad authority over all aspects of
the securities industry? - ANSWER -Securities Exchange Act of 1934
