SIE EXAM: SIE:Questions & Answers: Updated A+ Score Guide Solution

Which of the following statements are TRUE regarding Joint Tenant with Rights of Survivorship Accounts? I. Any correspondence may be mailed to either party. II. Either party may place orders. III. The checks must be drawn to all parties of the account. IV. If one party dies, ownership passes to the survivor. [A] I and II [B] III and IV [C] I, II and IV [D] I, II, III and IV (Ans- D EXPLANATION All are true. Note, however, that when funds are withdrawn from the account the check or wire transfer must be made out to both parties. An investor is looking over several retirement plans for pros and cons. The investor wishes to invest funds that they are not required to withdraw at any given time, since they intend to continue working well into their 70's. Which of the following would be inappropriate for this investor? [A] A Roth IRA [B] A Traditional IRA [C] A defined-benefit plan [D] A deferred compensation plan that is not qualified (Ans- B EXPLANATION The question clearly indicates that the investor does not want to have to take mandatory distributions and will work into their 70's. The Traditional IRA requires distributions by April 1st of the year in which the individual reaches 70 ½ . This makes the Traditional IRA inappropriate. The president of XYZ Corporation owns restricted stock. Under security industry regulations, the restricted shares could be sold in all of the following transactions EXCEPT: [A] A 144 offering. [B] A private placement. [C] A registered offering. [D] An exchange offering. (Ans- D EXPLANATION The stock cannot be "sold" through an exchange offering because an exchange swaps a security with value for different security which also has value and does not constitute a "sale". When a new bond issue begins to trade in the market following the underwriting it is then trading in the: [A] Primary market [B] Secondary market [C] Third market [D] Fourth market (Ans- B Secondary Market is the normal day to day trading which occurs on the exchanges and in the OTC market. Primary Market = New Issues Third Market = List stocks traded O.T.C. Fourth Market = Institutions trading directly with other institutions A client of yours wants to put additional funds into his retirement account. He has an annual income of $400,000 and two children to support. He is considered a qualified plan participant. The best form of retirement account for this individual is: [A] A Coverdell Education Savings Account would be the client's best decision. [B] The best form of retirement plan would be a Roth IRA. [C] This client is best suited for a Rollover IRA. [D] This client would be best served by a Traditional IRA. (Ans- D EXPLANATION In this situation, since the individual wishes to put additional funds away for retirement, the best answer of those given would be the Traditional IRA. A - Coverdell - For educational expenses. B - Roth IRA - Income of $400,000 exceeds the maximum income limit for a Roth, and therefore they cannot contribute. C - Rollover IRA - The individual doesn't want to roll over his qualified plan, he wants to put additional funds into a retirement account. D - Traditional IRA - Allows an employed participant to make contributions of up to $6,000 annually (2019) (even if the participant has a qualified plan). If the client has a large income, they are still permitted to make a contribution of up to $6,000 (2019), but that amount will not be tax-deductible. In the Secondary Market, Dealers in Bankers Acceptances: [A] profit from the spread between the prices at which they buy and sell these drafts. [B] profit from the discount made by the bank. [C] profit from the sales load. [D] profit from the rediscount. (Ans- A EXPLANATION The spread on a Bankers Acceptance provides the profit to dealers handling transactions in Bankers Acceptances. An elderly person has an account with a member firm. The account has $50,000 average net equity. The RR has generated $15,000 in commissions so far from 45 trades. Which of the following should the RR's supervisor do? [A] Send the client an active trading letter and allow trading to continue. [B] Require that the trading activity be reduced immediately. [C] Review the account performance and contact the customer if the total account value has fallen. [D] No action is required as the customer has not filed a complaint. (Ans- B EXPLANATION The total trades and commissions are excessive for this account. The RR's supervisor must require that the RR execute fewer trades. All of the following are purposes of the 1933 Act, EXCEPT: [A] To require registration of securities with the SEC before distribution. [B] To disclose important information to prospective investors by means of a prospectus. [C] To authorize the SEC to determine which securities are offered to the public. [D] To prohibit fraud in the sale of securities in interstate commerce. (Ans- C EXPLANATION The SEC does not: Approve of issues Disapprove of issues Review merits Pass on accuracy of statements filed with it Pass on adequacy of statements filed with it