SIE EXAM/Questions & Answers/A+Rated
What type of risk is unique to a specific industry, business enterprise, or
investment type?
(ANS- Nonsystematic risk
Under which of the following circumstances is an investor in a position to acquire
stock?
(ANS- Buy a call, sell a call (The holder of a call has the right to buy stock at the
strike price if exercised. The seller of a put is obligated to buy stock at the strike
price if exercised)
Options- a premium
(ANS- the cost of an option contract, expressed in dollars per share of the
underlying stock
Options- strike price
(ANS- The price at which the stock will be bought or sold if the contract is
exercised, expressed in dollars per share
A customer believes that ABC's price will go up but does not have the money to
buy 100 shares right now. How could the customer use options to profit from an
increase in the stock's price?
(ANS- buy calls, write puts (both are bullish)
A corporation's offer to current stockholders of the ability to purchase a
proportionate number of new shares at a specific price for a limited time is called a
(ANS- right (they usually expire in 30-45 days)
American depositary receipts (ADRs)
(ANS- issued by banks, represent a specific number of shares of a foreign
company, and trade and pay dividends in dollars
,Which of the following records must be maintained for 6 years?
(ANS- Customer ledgers (statements)
While underwriters can assist with preparation and filing, the accuracy and
adequacy of these documents is the responsibility of the
(ANS- Issuing corporation
What institutions serve as depository and clearing facilities?
(ANS- Depository Trust Company and National Securities Clearing Corporation
(most specifically) then carrying and clearing firms can act as these as well.
What is a transfer agent?
(ANS- (often a bank) for a corporation is responsible for ensuring that its securities
are issued in the correct owner's name, canceling old and issuing new certificates,
maintaining records of ownership, and handling problems relating to lost, stolen, or
destroyed certificates
What is the function of the clearing corporation?
(ANS- Acting as an intermediary in a trade, examples of these can be a commercial
bank, can be a broker-dealer but doesn't have to be
Who is considered a control person (security)
(ANS- those owned by directors, officers, or persons (which include corporations,
trusts, etc.) who own or control 10% or more of the issuer's equity securities (an
unaffiliated person would have to own 10% or more of the outstanding shares)
What are the two components of Return on Investment?
(ANS- Capital gains and income
To expand the overall economy, we want to
(ANS- buy securities via open-market operations, pushing interest rates down
To meet a Regulation T margin call, a customer would have how long?
(ANS- settlement plus 2 additional business days (or S + 2)
,What is A fully disclosed broker-dealer
(ANS- one that introduces its business to a carrying firm to clear transactions
The regulation enacted by the SEC to protect the privacy of customer information
is known as
(ANS- Regulation S-P
A market maker that does not honor its firm quote is said to be
(ANS- "backing away"
A deficit in the U.S. balance of payments can occur if
(ANS- interest rates in foreign countries are higher than U.S. domestic rates and
U.S. consumers are purchasing (importing) foreign goods
The general partner of a limited partnership has responsibility of
(ANS- Organizing and managing the partnership, assumes unlimited liability, and
is responsible for paying all partnership debts
To grow or expand the economy, U.S. fiscal policy should be to
(ANS- cut taxes (so consumers have more money to spend) and increase
government spending for programs and development (to create more jobs)
What is the federal funds rate
(ANS- the rate commercial money center banks charge each other for an overnight,
unsecured loan
The Federal Open Market Committee (FOMC)
(ANS- buy or sell Treasury securities in the open market. Purchases add money to
the economy, making the money available to lend more plentiful, and sales take
money out of the economy, making money available to lend less plentiful.
Reports of rising inventories generally occur during which period of the business
cycle?
(ANS- Contraction, due to a lack of consumer demand
, Who is exempt from registering with SIPC?
(ANS- Those who deal exclusively with US Government securities (i.e.-Treasury
bonds), exclusively municipality securities, and in redeemable investment
company securities
Retail investor
(ANS- An individual who makes investments such as the purchase of securities
for his or her account rather than for an organization
Market maker
(ANS- Any entity, individual or organization, willing to accept the risk of holding
a particular security in its own account to facilitate trading and provide liquidity in
that security
When the Federal Reserve Board wants to expand (loosen) the money supply, it
will
(ANS- buy Treasury securities from banks in the open market
SROs functioning under the SEC include...
(ANS- FINRA, MSRB and CBOE
Mild inflation can
(ANS- encourage growth and stimulate the economy
Discount rate
(ANS- The rate the FRB charges member banks
Prime rate
(ANS- The rate commercial banks (Wells Fargo) charges their most creditworthy
investors (Lincoln Financial). Prime rate decreases when banks sell securities
because there's money money in the market and don't need to charge as much.
Raise the rate when they buy securities.
What type of risk is unique to a specific industry, business enterprise, or
investment type?
(ANS- Nonsystematic risk
Under which of the following circumstances is an investor in a position to acquire
stock?
(ANS- Buy a call, sell a call (The holder of a call has the right to buy stock at the
strike price if exercised. The seller of a put is obligated to buy stock at the strike
price if exercised)
Options- a premium
(ANS- the cost of an option contract, expressed in dollars per share of the
underlying stock
Options- strike price
(ANS- The price at which the stock will be bought or sold if the contract is
exercised, expressed in dollars per share
A customer believes that ABC's price will go up but does not have the money to
buy 100 shares right now. How could the customer use options to profit from an
increase in the stock's price?
(ANS- buy calls, write puts (both are bullish)
A corporation's offer to current stockholders of the ability to purchase a
proportionate number of new shares at a specific price for a limited time is called a
(ANS- right (they usually expire in 30-45 days)
American depositary receipts (ADRs)
(ANS- issued by banks, represent a specific number of shares of a foreign
company, and trade and pay dividends in dollars
,Which of the following records must be maintained for 6 years?
(ANS- Customer ledgers (statements)
While underwriters can assist with preparation and filing, the accuracy and
adequacy of these documents is the responsibility of the
(ANS- Issuing corporation
What institutions serve as depository and clearing facilities?
(ANS- Depository Trust Company and National Securities Clearing Corporation
(most specifically) then carrying and clearing firms can act as these as well.
What is a transfer agent?
(ANS- (often a bank) for a corporation is responsible for ensuring that its securities
are issued in the correct owner's name, canceling old and issuing new certificates,
maintaining records of ownership, and handling problems relating to lost, stolen, or
destroyed certificates
What is the function of the clearing corporation?
(ANS- Acting as an intermediary in a trade, examples of these can be a commercial
bank, can be a broker-dealer but doesn't have to be
Who is considered a control person (security)
(ANS- those owned by directors, officers, or persons (which include corporations,
trusts, etc.) who own or control 10% or more of the issuer's equity securities (an
unaffiliated person would have to own 10% or more of the outstanding shares)
What are the two components of Return on Investment?
(ANS- Capital gains and income
To expand the overall economy, we want to
(ANS- buy securities via open-market operations, pushing interest rates down
To meet a Regulation T margin call, a customer would have how long?
(ANS- settlement plus 2 additional business days (or S + 2)
,What is A fully disclosed broker-dealer
(ANS- one that introduces its business to a carrying firm to clear transactions
The regulation enacted by the SEC to protect the privacy of customer information
is known as
(ANS- Regulation S-P
A market maker that does not honor its firm quote is said to be
(ANS- "backing away"
A deficit in the U.S. balance of payments can occur if
(ANS- interest rates in foreign countries are higher than U.S. domestic rates and
U.S. consumers are purchasing (importing) foreign goods
The general partner of a limited partnership has responsibility of
(ANS- Organizing and managing the partnership, assumes unlimited liability, and
is responsible for paying all partnership debts
To grow or expand the economy, U.S. fiscal policy should be to
(ANS- cut taxes (so consumers have more money to spend) and increase
government spending for programs and development (to create more jobs)
What is the federal funds rate
(ANS- the rate commercial money center banks charge each other for an overnight,
unsecured loan
The Federal Open Market Committee (FOMC)
(ANS- buy or sell Treasury securities in the open market. Purchases add money to
the economy, making the money available to lend more plentiful, and sales take
money out of the economy, making money available to lend less plentiful.
Reports of rising inventories generally occur during which period of the business
cycle?
(ANS- Contraction, due to a lack of consumer demand
, Who is exempt from registering with SIPC?
(ANS- Those who deal exclusively with US Government securities (i.e.-Treasury
bonds), exclusively municipality securities, and in redeemable investment
company securities
Retail investor
(ANS- An individual who makes investments such as the purchase of securities
for his or her account rather than for an organization
Market maker
(ANS- Any entity, individual or organization, willing to accept the risk of holding
a particular security in its own account to facilitate trading and provide liquidity in
that security
When the Federal Reserve Board wants to expand (loosen) the money supply, it
will
(ANS- buy Treasury securities from banks in the open market
SROs functioning under the SEC include...
(ANS- FINRA, MSRB and CBOE
Mild inflation can
(ANS- encourage growth and stimulate the economy
Discount rate
(ANS- The rate the FRB charges member banks
Prime rate
(ANS- The rate commercial banks (Wells Fargo) charges their most creditworthy
investors (Lincoln Financial). Prime rate decreases when banks sell securities
because there's money money in the market and don't need to charge as much.
Raise the rate when they buy securities.
