SIE Exam: Questions & Answers: Complete Solution: Latest Updated A+ Score Guide

Which of the following is not an argument for portfolio diversification? A Not all securities decrease in value in an adverse market B There is a potential for winners to offset losers in the portfolio C There are securities in the portfolio with varying grades of risk D There will be less market risk (Ans- D There will be less market risk The amount of money a client has available for investing based on the client's earnings in a year would be based on: A Earned income B Discretionary income C Portfolio income DTaxable income (Ans- B Discretionary income Why is it generally not advisable to engage in short-term trading of mutual funds? A Low potential for marketability of such funds B Regulation M penalties C Loss of Regulation T advantages D Impact of recurring sales charges and fund expenses (Ans- D Impact of recurring sales charges and fund expenses A client puts $1,000 a month into a variable annuity. The client is considering decreasing their monthly investments to a quarterly basis. At present, the client has $275,000 in the annuity and wants to start withdrawing the money upon retirement. What is the term used to describe the current holdings? AAnnuity units B Accumulation units C Annuity shares D Accumulation shares (Ans- B Accumulation units LMN Corporation issued 9% bonds that mature in 10 years and are currently trading at 92. What is the current yield? A 9.00% B 10.70% C 10.20% D 9.80% (Ans- D 9.80%The current yield is the annual interest payment divided by the current market value of the bond. A 9% bond pays $90 of interest each year. The quote of 92 indicates a price of $920. $90 divided by $920 supplies a current yield of 9.8%.