SIE - TEST QUESTIONS, MULTIPLE CHOICE WITH
EXPLANATIONS EXAMS WITH CORRECT -
SOLUTIONS GRADED A+
Investor A holds 100 shares of Company XYZ in his personal brokerage account. He decides
to sell these shares for a profit. This transaction will take place on the: - -ANS☑️☑️--
Secondary market
Explanation:
The secondary market is what most people know as the "stock market." It facilitates
transactions in existing securities that are not sold directly by the issuer. Investors
purchase these securities from other investors through accounts held by brokerage firms
like Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with - -ANS☑️☑️--The fact that the
government cannot guarantee the accuracy of the information in a prospectus
Explanation:
The SEC reviews the information in a registration statement, it does not approve or
disapprove of the information, nor does it guarantee the accuracy of the information
disclosures. Therefore no sales agent can say to a prospect that these are 'government
approved' securities.
SIPC, the securities investor protection corporation is:
A. An insurance entity which protects investors investments again market losses up to
$500,000
B. An insurance entity which protects investors who are sold worthless securities
,C. A Congressional guarantee against losses in the securities markets
D. None of the above - -ANS☑️☑️--D. None of the above
Explanation:
SIPC was set up to protect customer ACCOUNTS in the event of a broker-dealer
bankruptcy, not protect investments against loss. Be careful of the wording in this
question. Cash & securities in customer accounts are 'insured' up to $500,000 in the event
the B/D goes bankrupt and the cash and securities can't be located and properly returned
to the customer.
In most cases, Federal Securities Laws:
A. Supersede State securities laws
B. Are subordinate to State securities laws
C. Are given the same weight as State securities laws
D. None of the above - -ANS☑️☑️--A. Supersede State securities laws
Explanation:
Federal securities laws typically supersede State laws.
NYSE-listed stock transactions generally take place on the floor of the NYSE. However,
when they occur off the floor, this is referred to as a: - -ANS☑️☑️--Third-market
transaction
Explanation:
Brokerage firms often transact in exchange-listed securities directly with their institutional
customers, without the involvement of a formal exchange. This is known as a third-market
transaction and is often done for trading efficiency, better execution, and/or better price,
,though the transaction is still reported to the NYSE ticker tape as promptly as if it had
taken place on the floor.
When investment securities are referred to as exempt, this generally refers to exemption
from what? - -ANS☑️☑️--SEC registration
Explanation:
Securities such as U.S. Government bonds and bonds issued by states, counties, and cities,
otherwise called municipal bonds, do not have to be registered with the Securities &
Exchange Commission (SEC). They are thus referred to as exempt securities.
Hedge funds and mutual funds are two examples of which type of investor? - -ANS☑️☑️--
Institutional investors
Explanation:
institutional investors are large investors that are considered sophisticated enough to
make their own investment decisions. They can only be legal entities, such as real estate
investment trusts, venture capital funds, insurance companies, credit unions, banks,
pension funds, hedge funds, and mutual funds.
Which of the following are not considered money market securities?
A. T-bills
B. Commercial Paper
C. Reverse Repos
D. ADRs - -ANS☑️☑️--D. ADRs
Explanation:
, Since the 'money market' includes short term debt instruments only, and since ADRs
represent ownership (equity) in foreign stocks, ADRs are not debt.
When a corporation goes public, it is issuing:
A. Common stock
B. Preferred stock
C. Convertible bonds
D. Any of the above - -ANS☑️☑️--A. Common stock
Explanation:
Going public means sharing equity ownership (common stock) with public investors, for
the first time (Initial public offering, IPO).
The term 'issuer' most often refers to:
A. A corporation seeking to raise additional capital for expansion or modernization
purposes
B. A business which prints up securities certificates such as bonds and stocks
C. A business which has satisfied the listing requirements of one or more approved stock
exchanges
D. A business, a municipality, or a federal governmental entity which is seeking to raise
capital from the sale of securities. - -ANS☑️☑️--D. A business, a municipality, or a federal
governmental entity which is seeking to raise capital from the sale of securities.
Explanation:
Whether one considers -ANS☑️☑️-s A, B, or C partially accurate, the last -ANS☑️☑️-, D
is the most complete therefore best -ANS☑️☑️-.
EXPLANATIONS EXAMS WITH CORRECT -
SOLUTIONS GRADED A+
Investor A holds 100 shares of Company XYZ in his personal brokerage account. He decides
to sell these shares for a profit. This transaction will take place on the: - -ANS☑️☑️--
Secondary market
Explanation:
The secondary market is what most people know as the "stock market." It facilitates
transactions in existing securities that are not sold directly by the issuer. Investors
purchase these securities from other investors through accounts held by brokerage firms
like Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with - -ANS☑️☑️--The fact that the
government cannot guarantee the accuracy of the information in a prospectus
Explanation:
The SEC reviews the information in a registration statement, it does not approve or
disapprove of the information, nor does it guarantee the accuracy of the information
disclosures. Therefore no sales agent can say to a prospect that these are 'government
approved' securities.
SIPC, the securities investor protection corporation is:
A. An insurance entity which protects investors investments again market losses up to
$500,000
B. An insurance entity which protects investors who are sold worthless securities
,C. A Congressional guarantee against losses in the securities markets
D. None of the above - -ANS☑️☑️--D. None of the above
Explanation:
SIPC was set up to protect customer ACCOUNTS in the event of a broker-dealer
bankruptcy, not protect investments against loss. Be careful of the wording in this
question. Cash & securities in customer accounts are 'insured' up to $500,000 in the event
the B/D goes bankrupt and the cash and securities can't be located and properly returned
to the customer.
In most cases, Federal Securities Laws:
A. Supersede State securities laws
B. Are subordinate to State securities laws
C. Are given the same weight as State securities laws
D. None of the above - -ANS☑️☑️--A. Supersede State securities laws
Explanation:
Federal securities laws typically supersede State laws.
NYSE-listed stock transactions generally take place on the floor of the NYSE. However,
when they occur off the floor, this is referred to as a: - -ANS☑️☑️--Third-market
transaction
Explanation:
Brokerage firms often transact in exchange-listed securities directly with their institutional
customers, without the involvement of a formal exchange. This is known as a third-market
transaction and is often done for trading efficiency, better execution, and/or better price,
,though the transaction is still reported to the NYSE ticker tape as promptly as if it had
taken place on the floor.
When investment securities are referred to as exempt, this generally refers to exemption
from what? - -ANS☑️☑️--SEC registration
Explanation:
Securities such as U.S. Government bonds and bonds issued by states, counties, and cities,
otherwise called municipal bonds, do not have to be registered with the Securities &
Exchange Commission (SEC). They are thus referred to as exempt securities.
Hedge funds and mutual funds are two examples of which type of investor? - -ANS☑️☑️--
Institutional investors
Explanation:
institutional investors are large investors that are considered sophisticated enough to
make their own investment decisions. They can only be legal entities, such as real estate
investment trusts, venture capital funds, insurance companies, credit unions, banks,
pension funds, hedge funds, and mutual funds.
Which of the following are not considered money market securities?
A. T-bills
B. Commercial Paper
C. Reverse Repos
D. ADRs - -ANS☑️☑️--D. ADRs
Explanation:
, Since the 'money market' includes short term debt instruments only, and since ADRs
represent ownership (equity) in foreign stocks, ADRs are not debt.
When a corporation goes public, it is issuing:
A. Common stock
B. Preferred stock
C. Convertible bonds
D. Any of the above - -ANS☑️☑️--A. Common stock
Explanation:
Going public means sharing equity ownership (common stock) with public investors, for
the first time (Initial public offering, IPO).
The term 'issuer' most often refers to:
A. A corporation seeking to raise additional capital for expansion or modernization
purposes
B. A business which prints up securities certificates such as bonds and stocks
C. A business which has satisfied the listing requirements of one or more approved stock
exchanges
D. A business, a municipality, or a federal governmental entity which is seeking to raise
capital from the sale of securities. - -ANS☑️☑️--D. A business, a municipality, or a federal
governmental entity which is seeking to raise capital from the sale of securities.
Explanation:
Whether one considers -ANS☑️☑️-s A, B, or C partially accurate, the last -ANS☑️☑️-, D
is the most complete therefore best -ANS☑️☑️-.
