SIE NEW EXAM QUESTIONS AND ACCURATE ANSWERS (A+)
Capital market vs money market instruments - ANSWER capital market: intermediate to
long-term, equity or debt securities with maturities of one year or more
money market: short-term, highly liquid, high-yielding debt securities, to corporations,
banks, broker-dealers, government municipalities, US government, maturities of 1 year
or less, higher degree of safety, no interest payments (purchase at discount and mature
at face value)
Types of money market instruments - ANSWER Certificates of deposit (CDs), Bankers'
Acceptances (BAs), Commercial paper, US Treasury bills, Repurchase Agreements
(REPOs), and Federal Funds
What are ad valorem taxes? - ANSWER real estate taxes issued by local municipalities
(towns, cities, or counties -- never states)
Q: What is capital risk? A: The possibility of an investor losing part or all of his/her
money-that is the invested capital-on account of events unrelated to the issuer's
financial health, viz.-least likely when they invest in securities issued by a government,
but very likely when they invest in derivative products like options or businesses like
DPPs.
What are depletion allowances? - ANSWER Tax deductions that compensate an oil and
gas program for the depletion of the resource supply once the resource is extracted
from the ground and sold
Limited partnerships are made up of. - ANSWER a great number of investors
contributing a small amount
While options accounts are all initially approved by the BOM, they must ultimately be
approved by the. - ANSWER Reigistered options principal (ROP) in a promptly manner
,When the current yield is higher than the coupon, what does this mean? - ANSWER The
bond was purchased at a discount
When a bond is being sold and current interest rates are lower than coupon what does
that mean? - ANSWER The bond was sold at a premium
How are ETFs priced? - ANSWER by supply and demand where transactions prices may
be higher or lower than the fund's NAV
What is market timing? - ANSWER Short-term purchases and sales of a mutual fund to
take advantage of price fluctuation
What is the most common form of DPPs? - ANSWER LPs: business entities allowing for
the economic consequences of the business to flow through to the individual investors -
called partners.
Which of the following is the one option contract with unlimited loss potential? -
ANSWER A short call, it is bearish and wants to see the price of the stock rise
What are federal funds? - ANSWER excess amount that a bank has on deposit with the
FRB above what is required to be held in reserve
What are the steps to open a new options account? - ANSWER Obtain customer
essential facts, manager approval, initial order, signed options agreement
What are anticipation notes? - ANSWER Short-term municipal obligations that provide
financing for a municipality that anticipates alternative longer-term financing, i.e.-TANs,
RANs, TRANs, BANs, CLNs, GANs
What are the 3 types of investment companies under the Investment Act of 1940? -
ANSWER Face-amount certificates, unit investment trusts, and management companies
both openand closed-end
,Declaration, record and payment dates set by ___________ while the ex-dividend date is
set by _________ - ANSWER DRP are set by the BOD, while E is set by FINRA or the
exchange
Exception reports are filed when. - ANSWER There is suspicious activity in a customer
account or when there is improper use of a customers' securities or funds
What is capping? - ANSWER A form of market manipulation, often used by those who
have written (Short) call option contracts, in which they enter sell orders in a stock for
the purpose of keeping the stock from rising above the strike price, so that the calls
wont be in-the-money and therefore exercised
What is backing away? - ANSWER The failure to honor a firm quote on a security
What is a contemporaneous trader? - ANSWER One who trades at the same time as
another person who has and may be acting on inside information; can sue the other
person up to 5 years after violation has accrued
What are the three steps of money laundering? - ANSWER Placement, layering, then
integration
Regulation T - ANSWER set by the FRB, the initial margin requirement is 50% of sale
proceeds to be deposited in the customer's margin account
Standard corporate actions - ANSWER cash and stock dividends, even and uneven
stock splits (both forward and reverse) and the issuance of warrants and rights
Nonstandard/unique corporate actions - ANSWER mergers and acquisitions, takeovers,
spinoffs, tender offers and buy-back or repurchases of stock
What must happen to sell short? - ANSWER The shares must be borrowed, or located to
, borrow.
What does Regulation S-P consider to be nonpublic information? - ANSWER a
customer's Social Security number, account balances, transaction history, and any
information gathered through an internet cookie (a home address is not considered to
be nonpublic information)
What threshold amount of funds or assets is the suspicious activity that is triggered and
constitutes a filing requirement for an SAR, as compared with a CTR? ANSWER At least
$5,000 in funds or assets. A CTR applies to amounts of greater than $10,000 in funds or
assets.
What is a tender offer? ANSWER When a company offers to buy outstanding securities
for cash or for cash plus other securities from its stockholders or bondholders
What is a buy-back? - ANSWER Sometimes referred to as a repurchase, is when a
company buys its own outstanding securities in the open market rather than appealing
directly to its investors.
What information is contained on the trade confirmation sent to the investor at or on the
settlement date? - ANSWER The commission charged on the agency transaction and the
CUSIP number
What would require a loan consent form? - ANSWER A customer has given permission to
securities in an investment account to be used for the purpose of other customers who
want to borrow them for the purpose of selling those securities short
What is a municipal financial professional (MFP)? - ANSWER an employee of a FINRA
member engaged in municipal security representative activities such as underwriting
and trading
What does the NAC National Adjudicatory Council do? - ANSWER sets the rules,
regulations, and membership qualification requirements for registration with the SEC.
Capital market vs money market instruments - ANSWER capital market: intermediate to
long-term, equity or debt securities with maturities of one year or more
money market: short-term, highly liquid, high-yielding debt securities, to corporations,
banks, broker-dealers, government municipalities, US government, maturities of 1 year
or less, higher degree of safety, no interest payments (purchase at discount and mature
at face value)
Types of money market instruments - ANSWER Certificates of deposit (CDs), Bankers'
Acceptances (BAs), Commercial paper, US Treasury bills, Repurchase Agreements
(REPOs), and Federal Funds
What are ad valorem taxes? - ANSWER real estate taxes issued by local municipalities
(towns, cities, or counties -- never states)
Q: What is capital risk? A: The possibility of an investor losing part or all of his/her
money-that is the invested capital-on account of events unrelated to the issuer's
financial health, viz.-least likely when they invest in securities issued by a government,
but very likely when they invest in derivative products like options or businesses like
DPPs.
What are depletion allowances? - ANSWER Tax deductions that compensate an oil and
gas program for the depletion of the resource supply once the resource is extracted
from the ground and sold
Limited partnerships are made up of. - ANSWER a great number of investors
contributing a small amount
While options accounts are all initially approved by the BOM, they must ultimately be
approved by the. - ANSWER Reigistered options principal (ROP) in a promptly manner
,When the current yield is higher than the coupon, what does this mean? - ANSWER The
bond was purchased at a discount
When a bond is being sold and current interest rates are lower than coupon what does
that mean? - ANSWER The bond was sold at a premium
How are ETFs priced? - ANSWER by supply and demand where transactions prices may
be higher or lower than the fund's NAV
What is market timing? - ANSWER Short-term purchases and sales of a mutual fund to
take advantage of price fluctuation
What is the most common form of DPPs? - ANSWER LPs: business entities allowing for
the economic consequences of the business to flow through to the individual investors -
called partners.
Which of the following is the one option contract with unlimited loss potential? -
ANSWER A short call, it is bearish and wants to see the price of the stock rise
What are federal funds? - ANSWER excess amount that a bank has on deposit with the
FRB above what is required to be held in reserve
What are the steps to open a new options account? - ANSWER Obtain customer
essential facts, manager approval, initial order, signed options agreement
What are anticipation notes? - ANSWER Short-term municipal obligations that provide
financing for a municipality that anticipates alternative longer-term financing, i.e.-TANs,
RANs, TRANs, BANs, CLNs, GANs
What are the 3 types of investment companies under the Investment Act of 1940? -
ANSWER Face-amount certificates, unit investment trusts, and management companies
both openand closed-end
,Declaration, record and payment dates set by ___________ while the ex-dividend date is
set by _________ - ANSWER DRP are set by the BOD, while E is set by FINRA or the
exchange
Exception reports are filed when. - ANSWER There is suspicious activity in a customer
account or when there is improper use of a customers' securities or funds
What is capping? - ANSWER A form of market manipulation, often used by those who
have written (Short) call option contracts, in which they enter sell orders in a stock for
the purpose of keeping the stock from rising above the strike price, so that the calls
wont be in-the-money and therefore exercised
What is backing away? - ANSWER The failure to honor a firm quote on a security
What is a contemporaneous trader? - ANSWER One who trades at the same time as
another person who has and may be acting on inside information; can sue the other
person up to 5 years after violation has accrued
What are the three steps of money laundering? - ANSWER Placement, layering, then
integration
Regulation T - ANSWER set by the FRB, the initial margin requirement is 50% of sale
proceeds to be deposited in the customer's margin account
Standard corporate actions - ANSWER cash and stock dividends, even and uneven
stock splits (both forward and reverse) and the issuance of warrants and rights
Nonstandard/unique corporate actions - ANSWER mergers and acquisitions, takeovers,
spinoffs, tender offers and buy-back or repurchases of stock
What must happen to sell short? - ANSWER The shares must be borrowed, or located to
, borrow.
What does Regulation S-P consider to be nonpublic information? - ANSWER a
customer's Social Security number, account balances, transaction history, and any
information gathered through an internet cookie (a home address is not considered to
be nonpublic information)
What threshold amount of funds or assets is the suspicious activity that is triggered and
constitutes a filing requirement for an SAR, as compared with a CTR? ANSWER At least
$5,000 in funds or assets. A CTR applies to amounts of greater than $10,000 in funds or
assets.
What is a tender offer? ANSWER When a company offers to buy outstanding securities
for cash or for cash plus other securities from its stockholders or bondholders
What is a buy-back? - ANSWER Sometimes referred to as a repurchase, is when a
company buys its own outstanding securities in the open market rather than appealing
directly to its investors.
What information is contained on the trade confirmation sent to the investor at or on the
settlement date? - ANSWER The commission charged on the agency transaction and the
CUSIP number
What would require a loan consent form? - ANSWER A customer has given permission to
securities in an investment account to be used for the purpose of other customers who
want to borrow them for the purpose of selling those securities short
What is a municipal financial professional (MFP)? - ANSWER an employee of a FINRA
member engaged in municipal security representative activities such as underwriting
and trading
What does the NAC National Adjudicatory Council do? - ANSWER sets the rules,
regulations, and membership qualification requirements for registration with the SEC.
