FINRA SIE TESTBANK QUESTIONS WITH ALL CORRECT ANSWERS

FINRA SIE TESTBANK QUESTIONS WITH ALL CORRECT ANSWERS The Federal regulatory body that governs the securities industry is: - ANSWER The SEC A fully disclosed BD: - ANSWER is an inducing firm clearing its transactions through a carrying firm An intermediary between the buy and sell sides of a transaction is known as - ANSWER a clearing agent For the Depository Trust and Clearing Corporation (DTCC), all of the following are true EXCEPT: a. it is a member of the Federal Reserve System b. It acts as a retail bank servicing savings and checking accounts c. it serves for the purpose of providing custody of securities d. it is a worldwide clearing agent - ANSWER b. it acts as a retail bank servicing savings and checking accounts Your BD acts as a prime broker for an institutional account. In this arrangement, your BD is likely to be providing which of the following services? - ANSWER clearing and transaction settlement services for executing brokers An individual or institution willing to hold securities positions in its own proprietary account for the purpose of providing liquidity to the marketplace is - ANSWER a market maker An entity such as a corporation wishing to offer securities for sale to the public for the purpose of raising capital is - ANSWER an issuer A nonprofit organization requiring members to pay assessments into a general insurance fund used to meet customer claims in the event of a BD bankruptcy is - ANSWER the Securities Investors Protection Corporation (SIPC) The FDIC provides insurance guaranteeing the safety of a depositor's accounts in FDIC member banks for each deposit up to: - ANSWER $250,000 Determining monetary policy and taking actions to implement those policies is the responsibility of - ANSWER the Federal Reserve Board (FRB) The Magnolia Steel Corporation needs to build a refinery plant. It is estimated to cost $750 million to complete. What market can be used to raise the money needed to build the new plant? - ANSWER Secondary Market When securities are sold to the investing public in what are known as issuer transactions, the transactions are being done in: - ANSWER the primary market If an investment company bought stock directly from a bank, bypassing any intermediary or broker, this trade took place in - ANSWER the fourth market Which of the following statements regarding the third market is TRUE? a. it refers to trading of unlisted stocks directly between institutional investors b. the services of a broker acting as an agent or intermediary are not used c. It is composed of listed securities traded OTC d. it is composed only of unlisted securities - ANSWER c. It is composed of listed securities traded OTC An investor enters an order to purchase shares of XYZ stock. Another investor enters an order to sell XYZ stock. These two orders meet on the floor of a US Stock Exchange where they are executed. This transaction too place in: - ANSWER the secondary market Assuming all other factors to remain constant, an increase in imports would most likely cause GDP to - ANSWER decrease Which state of the business cycle is characterized by rising interest rates and higher wages? - ANSWER Expansion An economic environment with little or no economic growth, but where inflation is present, is best described as - ANSWER Stagflation It is generally agreed that the two primary policies impacting the U.S. economy are fiscal and monetary. Which of the following would be considered tools of fiscal policy? I. Government Spending II. Operations of the Federal Open Market Committee (FOMC) III. Changing the reserve requirements IV. Taxation - ANSWER Government Spending and Taxation Which of the following is added to M2 to arrive at M3? - ANSWER $100,000 and larger time deposits Which of the following actions of the Federal Reserve Board (FRB) would likely have the effect of causing interest rates to increase? I. The FOMC buying securities II. Raising the reserve requirements III. Raising the discount rate IV. Raising the prime rate - ANSWER Raising the reserve requirements & Raising the discount rate Economic data shows that the GDP has been declining steadily over the past two quarters. This would suggest - ANSWER a recession All of the following would be considered a defensive industry security EXCEPT: A. Tobacco stock B. Food chain stock C. Steel company stock D. Utility company stock - ANSWER steel company stock Which of the following would be a leading economic indicator? a. S&P 500 Index b. Industrial production c. Duration of unemployment d. GDP - ANSWER S&P 500 Index When a government actively manipulates the economy through tax and spending policies, this is referred to as - ANSWER Keynesian Economics A major distinction of secondary offering is - ANSWER proceeds are not received by the issuer of the securities How many primary offerings can a corporation issue? - ANSWER Unlimited