SIE PRACTICE TEST KNOPMAN
MARKS QUESTIONS & VERIFIED
CORRECT ANSWERS
When a broker-dealer acts on an agency basis to help a customer complete trades, the firm
normally is compensated through CORRECT ANSWER - Commissions
Investment company financial statements are sent to shareholders CORRECT ANSWER -
Semiannually
The credit quality of an exchange-traded note is CORRECT ANSWER - based on the credit
worthiness of the issuer, typically the investment bank that structures the note
When opening a margin account, the agreement that customers sign to pledge their securities
as collateral for a loan from the broker-dealer is the CORRECT ANSWER - hypothecation
agreement
When comparing rights and warrants, which of the following statements is TRUE? CORRECT
ANSWER - The exercise price of a right is generally below the price of the stock when the right is
issued; the exercise price of the warrant is generally above the price of the stock when it is
issued
A registered representative located in California makes a 7:30pm cold call to a potential
customer in New Jersey. This is CORRECT ANSWER - prohibited because cold calls can only be
made between 8am and 9pm in the potential customer's time zone
Investors whose bonds have been called as interest rates have fallen are now facing CORRECT
ANSWER - reinvestment rate risk
, Helen opened a Roth IRA last year and wants to know what part of this year's contributions she
can deduct. The answer is CORRECT ANSWER - she can't deduct any amount
During the accumulation phase of a variable annuity, dividends, interest, and capital gains
CORRECT ANSWER - may be reinvested without any current tax liability
Dollar limits on 529 plan contributions per beneficiary are set by CORRECT ANSWER - various
states
With regard to the price of closed-end fund shares held by investors which of the following
statements is TRUE? CORRECT ANSWER - Shares may be sold at a discount or premium to their
NAV
A customer requests in writing that his account statements be held by the firm while he spends
the winter in Florida. In response to the customer's request, the firm is permitted to honor the
request CORRECT ANSWER - for a maximum of three months
Which of the following is not an example of a restricted person under FINRA rules? CORRECT
ANSWER - The uncle of a restricted person
The order of liquidation in a limited partnership is CORRECT ANSWER - secured bondholder,
unsecured bondholder, limited partner, general partner
All of the following sectors are considered cyclical EXCEPT CORRECT ANSWER - healthcare
Which of the following interest rates is established by the Federal Reserve Board? CORRECT
ANSWER - Discount rate
MARKS QUESTIONS & VERIFIED
CORRECT ANSWERS
When a broker-dealer acts on an agency basis to help a customer complete trades, the firm
normally is compensated through CORRECT ANSWER - Commissions
Investment company financial statements are sent to shareholders CORRECT ANSWER -
Semiannually
The credit quality of an exchange-traded note is CORRECT ANSWER - based on the credit
worthiness of the issuer, typically the investment bank that structures the note
When opening a margin account, the agreement that customers sign to pledge their securities
as collateral for a loan from the broker-dealer is the CORRECT ANSWER - hypothecation
agreement
When comparing rights and warrants, which of the following statements is TRUE? CORRECT
ANSWER - The exercise price of a right is generally below the price of the stock when the right is
issued; the exercise price of the warrant is generally above the price of the stock when it is
issued
A registered representative located in California makes a 7:30pm cold call to a potential
customer in New Jersey. This is CORRECT ANSWER - prohibited because cold calls can only be
made between 8am and 9pm in the potential customer's time zone
Investors whose bonds have been called as interest rates have fallen are now facing CORRECT
ANSWER - reinvestment rate risk
, Helen opened a Roth IRA last year and wants to know what part of this year's contributions she
can deduct. The answer is CORRECT ANSWER - she can't deduct any amount
During the accumulation phase of a variable annuity, dividends, interest, and capital gains
CORRECT ANSWER - may be reinvested without any current tax liability
Dollar limits on 529 plan contributions per beneficiary are set by CORRECT ANSWER - various
states
With regard to the price of closed-end fund shares held by investors which of the following
statements is TRUE? CORRECT ANSWER - Shares may be sold at a discount or premium to their
NAV
A customer requests in writing that his account statements be held by the firm while he spends
the winter in Florida. In response to the customer's request, the firm is permitted to honor the
request CORRECT ANSWER - for a maximum of three months
Which of the following is not an example of a restricted person under FINRA rules? CORRECT
ANSWER - The uncle of a restricted person
The order of liquidation in a limited partnership is CORRECT ANSWER - secured bondholder,
unsecured bondholder, limited partner, general partner
All of the following sectors are considered cyclical EXCEPT CORRECT ANSWER - healthcare
Which of the following interest rates is established by the Federal Reserve Board? CORRECT
ANSWER - Discount rate
