SIE EXAM GUIDE QUESTIONS AND
ANSWERS
Private REITs are all the following, except:
A
Registered with the SEC
B
Have no disclosure requirements
C
Only suitable for wealthy investors
D
Usually offered as private placements - ANSWER -A
Registered with the SEC
Which of the following statements is true regarding secondary offerings?
A
Sale proceeds go to the issuer
B
Shares are sold through an underwriter
C
Secondary offering transactions take place in the secondary market
D
They are considered a primary offering since the shares have already been issued -
ANSWER -C
Secondary offering transactions take place in the secondary market
Which of the following remarks regarding Class B shares is unacceptable?
A
"A purchase of Class B shares is invested in the same underlying portfolio as A shares
of the same fund"
B
"Class B shares do not qualify for breakpoints"
C
"Class B shares are considered a no-load if held beyond the surrender penalty date"
D
"Class B shares are subject to a contingent deferred sales charge" - ANSWER -C
"Class B shares are considered a no-load if held beyond the surrender penalty date"
What is a unique feature of a Roth IRA compared to a traditional IRA?
A
Tax-free distributions may be postponed beyond reaching the age of 72
B
,Catch up provisions allow people age 50 or older to make contributions greater than the
normal annual maximum
C
Earnings grow on a tax-deferred basis
D
Penalty free distributions may be taken before reaching the age of 59½ - ANSWER -A
Tax-free distributions may be postponed beyond reaching the age of 72
Which of the following statements is false regarding a Coverdell education savings
account?
A
Contributions may be made up to any beneficiary's 30th birthday
B
Investors can invest up to $2,000 per year
C
Nonqualified withdrawals may be subject to a 10% penalty on the earnings
D
Qualified withdrawals are income tax-free - ANSWER -A
Contributions may be made up to any beneficiary's 30th birthday
GNMA pass-through certificates pay out interest and principal:
A
Semiannually
B
Quarterly
C
Monthly
D
Annually - ANSWER -C
Monthly
What is cost basis?
A
The original purchase price plus any transaction costs
B
The transaction charges affiliated with the purchase of any security
C
The net after-tax purchase price per share of common stock
D
The amount of any gain or loss if a different transaction had occurred - ANSWER -A.
The original purchase price plus any transaction costs
Which of the following corporate securities carries the greatest risk to the investor?
A
,Commercial paper
B
Common stock
C
Preferred stock
D
Bonds - ANSWER -B. Common Stock
Which of the following is a characteristic of a frozen account?
A
The frozen status lasts for 90 days
B
Purchases may not be made in the account
C
Frozen account status covers all accounts at the firm
D
Only margin accounts can have a frozen status - ANSWER -A. The frozen status lasts
for 90 days
ABC insurance company has issued a variable annuity contract. The contract offers
numerous investment options, including subaccounts, which hold bonds, domestic
equities, and foreign securities. Which of the following risks does ABC incur when
issuing this contract?
A
Mortality and currency risk
B
Mortality and expense risk
C
Currency and expense risk
D
Inflation and interest-rate risk - ANSWER -B
Mortality and expense risk
Which of the following is required to be maintained for three years?
A
Currency Transaction Reports
B
Instant messages
C
Customer account records
D
Customer complaints - ANSWER -B
Instant messages
, When is the final due diligence meeting held?
A
Just prior to the end of the cooling-off period
B
At the start of the cooling-off period
C
After the IPO
D
Prior to submitting the registration statement to the SEC - ANSWER -A
Just prior to the end of the cooling-off period
Which of the following offerings is less risky for the issuer?
A
Mini-maxi
B
All-or-none
C
Firm commitment
D
Best-efforts - ANSWER -C
Firm commitment
The Federal Reserve Board is responsible for all the following functions, except:
A
Protecting bank account deposits in U.S. banks from bankruptcy
B
Maintaining the stability of the U.S. financial system
C
Supervising and regulating banking institutions
D
Regulating the short-term supply of money and credit in the U.S. - ANSWER -A
Protecting bank account deposits in U.S. banks from bankruptcy
Which of the following may be purchased using margin?
A
Stock IPO
B
Unit investment trust
C
Open-end fund
D
Closed-end fund - ANSWER -D
Closed-end fund
ANSWERS
Private REITs are all the following, except:
A
Registered with the SEC
B
Have no disclosure requirements
C
Only suitable for wealthy investors
D
Usually offered as private placements - ANSWER -A
Registered with the SEC
Which of the following statements is true regarding secondary offerings?
A
Sale proceeds go to the issuer
B
Shares are sold through an underwriter
C
Secondary offering transactions take place in the secondary market
D
They are considered a primary offering since the shares have already been issued -
ANSWER -C
Secondary offering transactions take place in the secondary market
Which of the following remarks regarding Class B shares is unacceptable?
A
"A purchase of Class B shares is invested in the same underlying portfolio as A shares
of the same fund"
B
"Class B shares do not qualify for breakpoints"
C
"Class B shares are considered a no-load if held beyond the surrender penalty date"
D
"Class B shares are subject to a contingent deferred sales charge" - ANSWER -C
"Class B shares are considered a no-load if held beyond the surrender penalty date"
What is a unique feature of a Roth IRA compared to a traditional IRA?
A
Tax-free distributions may be postponed beyond reaching the age of 72
B
,Catch up provisions allow people age 50 or older to make contributions greater than the
normal annual maximum
C
Earnings grow on a tax-deferred basis
D
Penalty free distributions may be taken before reaching the age of 59½ - ANSWER -A
Tax-free distributions may be postponed beyond reaching the age of 72
Which of the following statements is false regarding a Coverdell education savings
account?
A
Contributions may be made up to any beneficiary's 30th birthday
B
Investors can invest up to $2,000 per year
C
Nonqualified withdrawals may be subject to a 10% penalty on the earnings
D
Qualified withdrawals are income tax-free - ANSWER -A
Contributions may be made up to any beneficiary's 30th birthday
GNMA pass-through certificates pay out interest and principal:
A
Semiannually
B
Quarterly
C
Monthly
D
Annually - ANSWER -C
Monthly
What is cost basis?
A
The original purchase price plus any transaction costs
B
The transaction charges affiliated with the purchase of any security
C
The net after-tax purchase price per share of common stock
D
The amount of any gain or loss if a different transaction had occurred - ANSWER -A.
The original purchase price plus any transaction costs
Which of the following corporate securities carries the greatest risk to the investor?
A
,Commercial paper
B
Common stock
C
Preferred stock
D
Bonds - ANSWER -B. Common Stock
Which of the following is a characteristic of a frozen account?
A
The frozen status lasts for 90 days
B
Purchases may not be made in the account
C
Frozen account status covers all accounts at the firm
D
Only margin accounts can have a frozen status - ANSWER -A. The frozen status lasts
for 90 days
ABC insurance company has issued a variable annuity contract. The contract offers
numerous investment options, including subaccounts, which hold bonds, domestic
equities, and foreign securities. Which of the following risks does ABC incur when
issuing this contract?
A
Mortality and currency risk
B
Mortality and expense risk
C
Currency and expense risk
D
Inflation and interest-rate risk - ANSWER -B
Mortality and expense risk
Which of the following is required to be maintained for three years?
A
Currency Transaction Reports
B
Instant messages
C
Customer account records
D
Customer complaints - ANSWER -B
Instant messages
, When is the final due diligence meeting held?
A
Just prior to the end of the cooling-off period
B
At the start of the cooling-off period
C
After the IPO
D
Prior to submitting the registration statement to the SEC - ANSWER -A
Just prior to the end of the cooling-off period
Which of the following offerings is less risky for the issuer?
A
Mini-maxi
B
All-or-none
C
Firm commitment
D
Best-efforts - ANSWER -C
Firm commitment
The Federal Reserve Board is responsible for all the following functions, except:
A
Protecting bank account deposits in U.S. banks from bankruptcy
B
Maintaining the stability of the U.S. financial system
C
Supervising and regulating banking institutions
D
Regulating the short-term supply of money and credit in the U.S. - ANSWER -A
Protecting bank account deposits in U.S. banks from bankruptcy
Which of the following may be purchased using margin?
A
Stock IPO
B
Unit investment trust
C
Open-end fund
D
Closed-end fund - ANSWER -D
Closed-end fund
