SIE FINRA Exam 734 Questions with Verified Answers
The Federal regulatory body that governs the securities industry is: - CORRECT
ANSWER The SEC
A fully disclosed BD: - CORRECT 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 -
CORRECT 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 - CORRECT 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? - CORRECT
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 -
CORRECT 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 - CORRECT 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 -
CORRECT 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: - CORRECT ANSWER $250,000
Determining monetary policy and taking actions to implement those policies is
the responsibility of - CORRECT 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? - CORRECT ANSWER Secondary Market
When securities are sold to the investing public in what are known as issuer
transactions, the transactions are being done in: - CORRECT ANSWER the primary
market
If an investment company bought stock directly from a bank, bypassing any
intermediary or broker, this trade took place in - CORRECT 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 - CORRECT 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: - CORRECT
ANSWER the secondary market
Assuming all other factors to remain constant, an increase in imports would most
likely cause GDP to - CORRECT ANSWER decrease
Which state of the business cycle is characterized by rising interest rates and
higher wages? - CORRECT ANSWER Expansion
,An economic environment with little or no economic growth, but where inflation
is present, is best described as - CORRECT 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 - CORRECT ANSWER Government Spending and Taxation
Which of the following is added to M2 to arrive at M3? - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT ANSWER S&P 500 Index
When a government actively manipulates the economy through tax and spending
policies, this is referred to as - CORRECT ANSWER Keynesian Economics
A major distinction of secondary offering is - CORRECT ANSWER proceeds are not
received by the issuer of the securities
How many primary offerings can a corporation issue? - CORRECT ANSWER 2
primary offerings
What federal law regulates the initial sale of securities to the public - CORRECT
ANSWER The Securities Act of 1933
A tombstone advertisement includes all of the following information EXCEPT
a. the offering price
b. the name of the issuer
c. the risks associated with the offering
d. the number of shares to be sold - CORRECT ANSWER the risks associated with
the offering
Mark the following as true or false:
A __ The final prospectus may be delivered via the internet before a sale
B. __ A shelf registration is good for 5 years
C. __ The access equals delivery rule is not applicable to the preliminary
prospectus
D. __ Additional public offerings (APOs) of listed securities do not require delivery
of a prospectus
The Federal regulatory body that governs the securities industry is: - CORRECT
ANSWER The SEC
A fully disclosed BD: - CORRECT 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 -
CORRECT 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 - CORRECT 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? - CORRECT
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 -
CORRECT 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 - CORRECT 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 -
CORRECT 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: - CORRECT ANSWER $250,000
Determining monetary policy and taking actions to implement those policies is
the responsibility of - CORRECT 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? - CORRECT ANSWER Secondary Market
When securities are sold to the investing public in what are known as issuer
transactions, the transactions are being done in: - CORRECT ANSWER the primary
market
If an investment company bought stock directly from a bank, bypassing any
intermediary or broker, this trade took place in - CORRECT 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 - CORRECT 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: - CORRECT
ANSWER the secondary market
Assuming all other factors to remain constant, an increase in imports would most
likely cause GDP to - CORRECT ANSWER decrease
Which state of the business cycle is characterized by rising interest rates and
higher wages? - CORRECT ANSWER Expansion
,An economic environment with little or no economic growth, but where inflation
is present, is best described as - CORRECT 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 - CORRECT ANSWER Government Spending and Taxation
Which of the following is added to M2 to arrive at M3? - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT ANSWER S&P 500 Index
When a government actively manipulates the economy through tax and spending
policies, this is referred to as - CORRECT ANSWER Keynesian Economics
A major distinction of secondary offering is - CORRECT ANSWER proceeds are not
received by the issuer of the securities
How many primary offerings can a corporation issue? - CORRECT ANSWER 2
primary offerings
What federal law regulates the initial sale of securities to the public - CORRECT
ANSWER The Securities Act of 1933
A tombstone advertisement includes all of the following information EXCEPT
a. the offering price
b. the name of the issuer
c. the risks associated with the offering
d. the number of shares to be sold - CORRECT ANSWER the risks associated with
the offering
Mark the following as true or false:
A __ The final prospectus may be delivered via the internet before a sale
B. __ A shelf registration is good for 5 years
C. __ The access equals delivery rule is not applicable to the preliminary
prospectus
D. __ Additional public offerings (APOs) of listed securities do not require delivery
of a prospectus
