SIE - TEST QUESTIONS, MULTIPLE
CHOICE WITH EXPLANATIONS EXAMS
WITH CORRECT ANSWERS GRADED A+
/PRACTICE TEST
NYSE-listed stock transactions generally take place on the floor of
the NYSE. However, when they occur off the floor, this is referred to
as a: - ANSWER-Third-market transaction
Explanation:
Brokerage firms often transact in exchange-listed securities
directly with their institutional customers, without the involvement
of a formal exchange. This is known as a third-market transaction
and is often done for trading efficiency, better execution, and/or
better price, though the transaction is still reported to the NYSE
ticker tape as promptly as if it had taken place on the floor.
When investment securities are referred to as exempt, this
generally refers to exemption from what? - ANSWER-SEC
registration
Explanation:
Securities such as U.S. Government bonds and bonds issued by
states, counties, and cities, otherwise called municipal bonds, do
not have to be registered with the Securities & Exchange
Commission (SEC). They are thus referred to as exempt securities.
Hedge funds and mutual funds are two examples of which type of
investor? - ANSWER-Institutional investors
,Explanation:
institutional investors are large investors that are considered
sophisticated enough to make their own investment decisions. They
can only be legal entities, such as real estate investment trusts,
venture capital funds, insurance companies, credit unions, banks,
pension funds, hedge funds, and mutual funds.
Investor A holds 100 shares of Company XYZ in his personal
brokerage account. He decides to sell these shares for a profit. This
transaction will take place on the: - ANSWER-Secondary market
Explanation:
The secondary market is what most people know as the "stock
market." It facilitates transactions in existing securities that are
not sold directly by the issuer. Investors purchase these securities
from other investors through accounts held by brokerage firms like
Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with - ANSWER-The
fact that the government cannot guarantee the accuracy of the
information in a prospectus
Explanation:
The SEC reviews the information in a registration statement, it
does not approve or disapprove of the information, nor does it
guarantee the accuracy of the information disclosures. Therefore
no sales agent can say to a prospect that these are 'government
approved' securities.
SIPC, the securities investor protection corporation is:
,A. An insurance entity which protects investors investments again
market losses up to $500,000
B. An insurance entity which protects investors who are sold
worthless securities
C. A Congressional guarantee against losses in the securities
markets
D. None of the above - ANSWER-D. None of the above
Explanation:
SIPC was set up to protect customer ACCOUNTS in the event of a
broker-dealer bankruptcy, not protect investments against loss. Be
careful of the wording in this question. Cash & securities in
customer accounts are 'insured' up to $500,000 in the event the
B/D goes bankrupt and the cash and securities can't be located and
properly returned to the customer.
In most cases, Federal Securities Laws:
A. Supersede State securities laws
B. Are subordinate to State securities laws
C. Are given the same weight as State securities laws
D. None of the above - ANSWER-A. Supersede State securities laws
Explanation:
Federal securities laws typically supersede State laws.
Which of the following are not considered money market securities?
A. T-bills
, B. Commercial Paper
C. Reverse Repos
D. ADRs - ANSWER-D. ADRs
Explanation:
Since the 'money market' includes short term debt instruments
only, and since ADRs represent ownership (equity) in foreign
stocks, ADRs are not debt.
When a corporation goes public, it is issuing:
A. Common stock
B. Preferred stock
C. Convertible bonds
D. Any of the above - ANSWER-A. Common stock
Explanation:
Going public means sharing equity ownership (common stock) with
public investors, for the first time (Initial public offering, IPO).
The term 'issuer' most often refers to:
A. A corporation seeking to raise additional capital for expansion or
modernization purposes
B. A business which prints up securities certificates such as bonds
and stocks
C. A business which has satisfied the listing requirements of one or
more approved stock exchanges
CHOICE WITH EXPLANATIONS EXAMS
WITH CORRECT ANSWERS GRADED A+
/PRACTICE TEST
NYSE-listed stock transactions generally take place on the floor of
the NYSE. However, when they occur off the floor, this is referred to
as a: - ANSWER-Third-market transaction
Explanation:
Brokerage firms often transact in exchange-listed securities
directly with their institutional customers, without the involvement
of a formal exchange. This is known as a third-market transaction
and is often done for trading efficiency, better execution, and/or
better price, though the transaction is still reported to the NYSE
ticker tape as promptly as if it had taken place on the floor.
When investment securities are referred to as exempt, this
generally refers to exemption from what? - ANSWER-SEC
registration
Explanation:
Securities such as U.S. Government bonds and bonds issued by
states, counties, and cities, otherwise called municipal bonds, do
not have to be registered with the Securities & Exchange
Commission (SEC). They are thus referred to as exempt securities.
Hedge funds and mutual funds are two examples of which type of
investor? - ANSWER-Institutional investors
,Explanation:
institutional investors are large investors that are considered
sophisticated enough to make their own investment decisions. They
can only be legal entities, such as real estate investment trusts,
venture capital funds, insurance companies, credit unions, banks,
pension funds, hedge funds, and mutual funds.
Investor A holds 100 shares of Company XYZ in his personal
brokerage account. He decides to sell these shares for a profit. This
transaction will take place on the: - ANSWER-Secondary market
Explanation:
The secondary market is what most people know as the "stock
market." It facilitates transactions in existing securities that are
not sold directly by the issuer. Investors purchase these securities
from other investors through accounts held by brokerage firms like
Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with - ANSWER-The
fact that the government cannot guarantee the accuracy of the
information in a prospectus
Explanation:
The SEC reviews the information in a registration statement, it
does not approve or disapprove of the information, nor does it
guarantee the accuracy of the information disclosures. Therefore
no sales agent can say to a prospect that these are 'government
approved' securities.
SIPC, the securities investor protection corporation is:
,A. An insurance entity which protects investors investments again
market losses up to $500,000
B. An insurance entity which protects investors who are sold
worthless securities
C. A Congressional guarantee against losses in the securities
markets
D. None of the above - ANSWER-D. None of the above
Explanation:
SIPC was set up to protect customer ACCOUNTS in the event of a
broker-dealer bankruptcy, not protect investments against loss. Be
careful of the wording in this question. Cash & securities in
customer accounts are 'insured' up to $500,000 in the event the
B/D goes bankrupt and the cash and securities can't be located and
properly returned to the customer.
In most cases, Federal Securities Laws:
A. Supersede State securities laws
B. Are subordinate to State securities laws
C. Are given the same weight as State securities laws
D. None of the above - ANSWER-A. Supersede State securities laws
Explanation:
Federal securities laws typically supersede State laws.
Which of the following are not considered money market securities?
A. T-bills
, B. Commercial Paper
C. Reverse Repos
D. ADRs - ANSWER-D. ADRs
Explanation:
Since the 'money market' includes short term debt instruments
only, and since ADRs represent ownership (equity) in foreign
stocks, ADRs are not debt.
When a corporation goes public, it is issuing:
A. Common stock
B. Preferred stock
C. Convertible bonds
D. Any of the above - ANSWER-A. Common stock
Explanation:
Going public means sharing equity ownership (common stock) with
public investors, for the first time (Initial public offering, IPO).
The term 'issuer' most often refers to:
A. A corporation seeking to raise additional capital for expansion or
modernization purposes
B. A business which prints up securities certificates such as bonds
and stocks
C. A business which has satisfied the listing requirements of one or
more approved stock exchanges
