SIE Practice Exam (FINRA) Study Questions and Answers Top Rated 2024 Graded A

Primary vs. Secondary Distribution A primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involved the sale of already issued and outstanding shares. In the OTC market, the term "spread" refers to the diff. between: Bid and asked prices offered and asked prices indicated and firm prices opening and closing prices Bid and asked prices Margin account requirements: Initial transaction: 50% or min. of $2,000 Maintenance Margin: 25% (long) or buying margin account Maintenance Margin: 30% (short) or selling margin account. The primary purpose of a syndicate desk in the context of an equity offering is to: 1. determine the list of selling shareholders 2. build an order book and allocate the stock. 3. Solicit interest from investors in the stock offering. 4. chaperone company mgmt. during the road show. build an order book and allocate the stock Company ABC announces a 20$ stock div. for its common shareholders. If a customer holds 1,000 shares at $50, what is the new price and number of shares following the payment of the stock div.? 1. 800 shares at $62,50 2. 1,000 shares at 41.67 3. 1,200 shares at 41.67 4. 1,200 shares at $50.00 1,200 shares at $41.67 Which of the following represents the effect of a stock split? A. the price/share of common stock increases B. the price/share of common stock decreases C. Each stockholder's proportionate ownership decreases D. Each stockholder's proportionate ownership increases The price/share of common stock decreases Which of the following investment risks is the greatest in a variable life insurance policy? Credit Risk Market Risk Inflation Risk Interest Rate Risk Market Risk Which of the following statements is TRUE regarding the concept of an annuity contract? A. Payouts of an investment in a nonqualified annuity are all income tax-free. B. The kind of annuity selected partly determines the payment amounts to the annuitant. C. In the case of life annuity contracts, the age and sex of the annuitant do not affect the payment acmounts. D. The amounts of the periodic payments to the annuitant are determined by the performance of the insurance company's investment returns. The kind of annuity selected partly determines the payment amounts to the annuitant. Which of the following products is adversely impacted if the issuer's credit rating is downgraded? A. mutual funds B. Unit investment trusts (UITs) C. Exchange-traded funds (ETFs) D. Exchange-traded notes (ETNs) Exchange Traded Notes (ETNs) All of the following risks apply to both foreign and domestic debt instruments except: Political Exchange Repayment Interest Rate Exchange A customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? $3 $32 $35 $38 $38 Strike + Premium Which of the following security types provides investors with a stated maturity date, a floating int. rate, and an option to put the security back to a financial intermediary on a daily or weekly basis? Equity put option Perpetual preferred stock Variable rate demand note Tax-deferred variable annuity Variable rate demand note 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: A. 50 shares at $25/share B. 50 shares at $100/share C. 200 shares at $25/share D. 200 shares at $100/share 50 shares at $100/share Which of the following outcomes are possible for the writer of a covered call option? A. profit limited and loss limited B. Profit limited and loss unlimited C. Profit unlimited and loss limited D. profit unlimited and loss limited profit limited and loss limited What is the cost basis of an inherited mutual fund? A. The net asset value (NAV) of the shares when the owner dies B. The NAV 30 days after the owner's death C. The same cost basis as the deceased D. The same cost basis as the deceased + cap gains distribution The net asset value (NAV) of the shares when the owner dies