SIE Final Exam Study Guide with Verified Solutions

SIE Final Exam Study Guide with Verified Solutions The cost basis for inherited securities is: - Answer️️ -The value of the securities on the date the original owner dies Liquidity risk - Answer️️ -the risk that the investor will not be able to sell an investment quickly and at a fair price Reinvestment risk - Answer️️ -is the risk of getting your investment back early and being unable to find an equally attractive new investment to put that money into Inflation Risk (Purchasing Power Risk) - Answer️️ -The risk that the return on an investment will not keep up with the rise in the cost of goods and services Interest rate risk - Answer️️ -the risk that a bond or other fixed-income investment will decline in price because rising interest rates make new issues of those investment more attractive than the ones on the secondary market Investor's cost basis (tax basis) - Answer️️ -Shares x Price per share x Commission % Hypothecation Agreement - Answer️️ -allows the broker-dealer to use the customer's securities as collateral on a loan Credit agreement - Answer️️ -details the terms and conditions for the credit that the broker-dealer is extending to the customer. This agreement will include how the firm will TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 2/19 calculate the interest charged on the credit and what interest rate the loan rate it will be tied to Loan consent agreement - Answer️️ -permits the broker-dealer to lend the customer's securities to other customers wishing to execute short sales Which of the following private placement offerings has no dollar cap and allows for public advertising? - Answer️️ -A Regulation D, Rule 506(c) offering Consider the following bond notation: "IBM 5 3/4 debentures of '10 callable @ 102 in '08." All are true of the following bond notation EXCEPT: - Answer️️ -The bond is callable in 2010 MSRB Rule G-20 places limits on gifts, gratuities, and non-cash compensation received in connection with the sale and distribution of municipal securities. In a primary offering, dealers cannot accept non-cash compensation except for: - Answer️️ -· Gifts that do not exceed $100 per person per year and are not preconditioned on achievement of a sales target · Occasional gifts of meals or tickets to theatrical or sporting events that are not too frequent or expensive · Payment in connection with attending meetings for the purpose of training or education, if the attendee has the prior approval of his employer and attendance is not preconditioned on achievement of a sales target, if the location is appropriate to the purpose of the meeting, and if the payment is not applied also to guests of the attendee TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 3/19 The compensation paid to a selling group member for selling shares of a new issuer is called the: - Answer️️ -Concession Cyclical stocks - Answer️️ -Stocks whose success is closely linked to the rise and fall of the general economy Non-cyclical stocks (defensive stocks) - Answer️️ -stocks whose value are less severely affected by the changes of the overall economy ( ex utilities, consumer staples) The following must be filed with FINRA within ten business days of first use: - Answer️️ -Retail communications related to investment companies Retail communications related to DPPs Retail communications concerning collateralized mortgage obligations The following must be filed with FINRA at least 10 business days prior to first use: - Answer️️ -Retail communications related to bond mutual funds that contain volatility ratings Retail communications containing performance rankings or comparisons to other investment companies that are not generally published Retail communications concerning securities futures and options Retail communications from new member firms Call Options (Out of the money) - Answer️️ -if the market price is less than the strike price. TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 4/19 Put Options (Out of the money) - Answer️️ -if the market price is more than the strike price At the money - Answer️️ -options where the strike price equals the market price Which of the following is the most critical element that distinguishes municipal bonds from other bonds, from an investor's perspective? - Answer️️ -Municipal bonds are exempt from federal taxation FINRA Rule 3240 restricts lending between registered representatives and their customers: - Answer️️ -Under this rule, in order for a registered representative to be able to take a loan from a customer, the member firm must have written procedures allowing lending agreements, and the member must pre-approve the loan in writing. Moreover, the relationship between the repr