SIE EXAMS WITH CORRECT ANSWERS
GRADED A+ /PRACTICE TEST
1. Are municipal bond funds suitable for retirement accounts? -
ANSWER-No, because their tax-exempt status is irrelevant in
tax-deferred accounts
2. Can mutual funds charge both a front-end and back-end load?
- ANSWER-No, they typically charge one or the other, not both
3. Can REITs pass losses through to investors like a DPP? -
ANSWER-No, only income is passed through
4. Do UITs trade on the secondary market? - ANSWER-No, they
are redeemable securities
5. How are capital gain distributions from a mutual fund taxed? -
ANSWER-As capital gains, depending on the holding period of
the fund's assets
6. How are REITs typically taxed? - ANSWER-They must distribute
at least 90% of income to avoid corporate tax
7. How does an ETF differ from a mutual fund? - ANSWER-ETFs
trade on exchanges throughout the day, while mutual funds
are traded at NAV once daily
8. How does expansionary monetary policy affect
unemployment? - ANSWER-It generally lowers unemployment
by stimulating economic growth
,9. How does the Fed influence the federal funds rate? - ANSWER-
Through open market operations and setting a target rate
10. How is a mutual fund's NAV per share calculated? -
ANSWER-By dividing total assets minus liabilities by the
number of shares outstanding
11. How often is NAV calculated for a mutual fund? -
ANSWER-Once per business day, typically at market close
12. How often is NAV calculated for mutual funds? -
ANSWER-At the end of each trading day
13. What are coincident economic indicators? - ANSWER-
Statistics that reflect the current state of the economy, like
GDP and employment levels
14. What are corporate bonds? - ANSWER-Bonds issued by
corporations to raise capital
15. What are junk bonds? - ANSWER-High-yield, high-risk
bonds with low credit ratings
16. What are lagging economic indicators? - ANSWER-
Statistics that follow economic trends, like unemployment
rates and corporate profits
17. What are leading economic indicators? - ANSWER-
Statistics that signal future economic activity, such as stock
prices and new orders
, 18. What are municipal bonds? - ANSWER-Bonds issued by
states, cities, or local governments
19. What are open market operations? - ANSWER-The Fed's
buying or selling of government securities to control the
money supply
20. What are the Fed's three primary tools of monetary
policy? - ANSWER-Open market operations, discount rate, and
reserve requirements
21. What are the two primary tools of fiscal policy? -
ANSWER-Government spending and taxes
22. What are Treasury bonds? - ANSWER-U.S. government
bonds with a maturity of more than 10 years
23. What does "easy money" policy entail? - ANSWER-
Increasing the money supply and lowering interest rates to
encourage borrowing and spending
24. What does a "tight money" policy entail? - ANSWER-
Reducing the money supply and raising interest rates to
control inflation
25. What does a high expense ratio indicate about a mutual
fund? - ANSWER-It has higher operating expenses
26. What does a trade deficit indicate? - ANSWER-A country
imports more than it exports
GRADED A+ /PRACTICE TEST
1. Are municipal bond funds suitable for retirement accounts? -
ANSWER-No, because their tax-exempt status is irrelevant in
tax-deferred accounts
2. Can mutual funds charge both a front-end and back-end load?
- ANSWER-No, they typically charge one or the other, not both
3. Can REITs pass losses through to investors like a DPP? -
ANSWER-No, only income is passed through
4. Do UITs trade on the secondary market? - ANSWER-No, they
are redeemable securities
5. How are capital gain distributions from a mutual fund taxed? -
ANSWER-As capital gains, depending on the holding period of
the fund's assets
6. How are REITs typically taxed? - ANSWER-They must distribute
at least 90% of income to avoid corporate tax
7. How does an ETF differ from a mutual fund? - ANSWER-ETFs
trade on exchanges throughout the day, while mutual funds
are traded at NAV once daily
8. How does expansionary monetary policy affect
unemployment? - ANSWER-It generally lowers unemployment
by stimulating economic growth
,9. How does the Fed influence the federal funds rate? - ANSWER-
Through open market operations and setting a target rate
10. How is a mutual fund's NAV per share calculated? -
ANSWER-By dividing total assets minus liabilities by the
number of shares outstanding
11. How often is NAV calculated for a mutual fund? -
ANSWER-Once per business day, typically at market close
12. How often is NAV calculated for mutual funds? -
ANSWER-At the end of each trading day
13. What are coincident economic indicators? - ANSWER-
Statistics that reflect the current state of the economy, like
GDP and employment levels
14. What are corporate bonds? - ANSWER-Bonds issued by
corporations to raise capital
15. What are junk bonds? - ANSWER-High-yield, high-risk
bonds with low credit ratings
16. What are lagging economic indicators? - ANSWER-
Statistics that follow economic trends, like unemployment
rates and corporate profits
17. What are leading economic indicators? - ANSWER-
Statistics that signal future economic activity, such as stock
prices and new orders
, 18. What are municipal bonds? - ANSWER-Bonds issued by
states, cities, or local governments
19. What are open market operations? - ANSWER-The Fed's
buying or selling of government securities to control the
money supply
20. What are the Fed's three primary tools of monetary
policy? - ANSWER-Open market operations, discount rate, and
reserve requirements
21. What are the two primary tools of fiscal policy? -
ANSWER-Government spending and taxes
22. What are Treasury bonds? - ANSWER-U.S. government
bonds with a maturity of more than 10 years
23. What does "easy money" policy entail? - ANSWER-
Increasing the money supply and lowering interest rates to
encourage borrowing and spending
24. What does a "tight money" policy entail? - ANSWER-
Reducing the money supply and raising interest rates to
control inflation
25. What does a high expense ratio indicate about a mutual
fund? - ANSWER-It has higher operating expenses
26. What does a trade deficit indicate? - ANSWER-A country
imports more than it exports
