SIE Exam Definitions Questions &
Answers 100% Correct!!
12b-1 fee - ANSWERan annual fee charged by a mutual fund for its marketing and distribution costs.
Also called a maintenance fee or distribution fee.
529 College Savings Plan - ANSWERA tax-free savings plan that offers families professionally managed
portfolios to help meet specified college expenses.
A shares - ANSWERa class of mutual fund shares that have a front-end sales charge, expressed as a
percentage of its net asset value.
ABLE account - ANSWERa tax-advantaged savings account for disabled people and their families,
allowing them to save up to $15,000 per year without losing eligibility for such public benefits as
SNAP and Medicaid.
Accredited Investor - ANSWERan investor that may participate in private placement offerings without
restrictions, usually a large institutional investor, wealthy individual, or an officer of the issuing firm.
Accredited Investor Questionnaire - ANSWERa form confirming to a private placement issuer that the
investor is accredited, to be maintained in the issuer's customer file.
Accumulation Phase - ANSWERthe period when an annuitant invests money in an annuity account.
Adjustable-rate Preferred Stock - ANSWERpreferred stock that ties returns and dividends to an
outside interest rate, most often a Treasury bill rate. Also known as floating-rate preferred stock.
Advance Refunding - ANSWERa refunding bond in which the old issue remains outstanding for a
period longer than 90 days after the refunding bond has been issued.
All-or-none (AON) Commitment - ANSWERa form of underwriting where the underwriter must sell all
the shares in the offering within a specified time or the offering is voided.
,Alternative Minimum Tax (AMT) bond - ANSWERa private activity bond that qualifies for tax-exempt
status but is subject to paying the alternative minimum tax. Also known as a qualified private activity
bond. Compare with public purpose bond and private activity bond (PAB).
American Depository Receipt (ADR) - ANSWERa certificate issued by the U.S. bank for the purpose of
trading a specified number of shares of a foreign corporation in the U.S. stock market.
American-style Option - ANSWERan option that can be exercised at any time prior to and including
the exercise date. Also called an American option.
An interest - ANSWERa descriptor used to indicate that a bond's purchase price will include its
quoted (clean) price plus any accrued interest since the last payment date.
Annuitant - ANSWERan individual entitled to receive benefits or payments from an annuity contract.
Annuities - ANSWERcontracts sold by an insurance company used to provide steady income to
individuals after retirement, often until death.
Advisor-sold Plan - ANSWERa 529 college savings plan offered through an authorized investment firm
that provides investment advice and more investment options, and comes with higher fees than a
direct-sold plan offered by the state.
Affiliate - ANSWERa person that directly or indirectly controls, is controlled by, or is under common
control with another person.
Agency Securities - ANSWERsecurities issued by government-sponsored agencies, such as Fannie
Mae and Freddie Mac, but not backed by the full faith and credit of the U.S. government.
Agency Transaction - ANSWERa transaction where a firm acts as broker, serving as an agent or go-
between for the buyer and the seller.
Annuitization Phase - ANSWERthe period when an annuitant starts to receive payments from an
annuity.
Anticipation Notes - ANSWERmunicipal notes that are issued in advance of, or in anticipation of, an
expected source of income.
,Arbitrage - ANSWERa riskless transaction in which an investor profits from buying and selling the
same product for different prices at the same time in different locations.
Ask Price - ANSWERalso known as just the "ask," the price at which a market maker is willing to sell a
security.
Asset-backed Security - ANSWERa debt security backed by a pool of financial assets, such as
automobile loans, credit card debt, or home equity loans.
Auction Rate Securities (ARS) - ANSWERlong-term investments whose interest rates or dividend
payments reset at frequent intervals by auctions, typically every 7, 14, 28, or 35 years.
Authorized Shares - ANSWERthe shares that a corporation is authorized to issue.
Automatic Stabilizers - ANSWERgovernment programs whose expenditures automatically fluctuate
counter to the economic cycle.
B Shares - ANSWERa class of mutual fund shares that have a deferred or back-end sales charge that
declines over time and a higher annual expense than A shares.
Back-end Load - ANSWERa sales charge that customers are charged after they redeem the shares.
Also called back-end sales charges.
Backing Away - ANSWERthe failure of a broker-dealer to honor a firm quote.
Balance of Payments - ANSWERan accounting of a country's international transactions, such as
exports and imports and capital inflows and outflows.
Balloon Maturity - ANSWERa serial bond in which one maturity, usually the last one, contains a
disproportionately large amount of the principal.
Assignment - ANSWERa transfer of ownership in a security or other property that gives a recipient
the rights held by the previous owner.
Associated Person - ANSWERan individual engaged in the investment banking or securities business
who is registered with FINRA.
, At The Money - ANSWERa phrase indicating an options position whose exercise today would result in
neither a gain nor a loss.
Auction Market - ANSWERa securities exchange for trading securities at a physical location where
buyers make bids and sellers make offers facilitated by a single market maker.
Bank Secrecy Act of 1970 (BSA) - ANSWERan act of congress that requires financial institutions in the
United States to assist U.S. government agencies in detecting and preventing money laundering.
Bankers' Acceptance (BA) - ANSWERa short-term credit instrument issued by a business for the
purchase or sale of goods, drawn on and guaranteed by a bank.
Basis Point - ANSWERone hundredth of a percentage point, the smallest increment of change in a
bond's yield.
Bearer Bond - ANSWERa bond certificate with attached coupons that is owned by whoever holds it,
rather than by a registered owner.
Bearish - ANSWERa belief that the value of a particular security or the market in general will decline.
Bearish Strategy - ANSWERa trading strategy that is employed when an investor believes the price of
a security will decline.
Beneficial Interest - ANSWERthe contractual right to receive an interest in the benefits of an asset
that is owned by another party.
Beneficial Owner - ANSWERone who has the benefits of owning a stock but whose title is held for
reasons of safety or convenience "in street name" by that person's broker.
Beneficiary - ANSWERa person designated to receive the assets of a life insurance policy or trust
upon the account owner's death or the maturity of the contract.
Answers 100% Correct!!
12b-1 fee - ANSWERan annual fee charged by a mutual fund for its marketing and distribution costs.
Also called a maintenance fee or distribution fee.
529 College Savings Plan - ANSWERA tax-free savings plan that offers families professionally managed
portfolios to help meet specified college expenses.
A shares - ANSWERa class of mutual fund shares that have a front-end sales charge, expressed as a
percentage of its net asset value.
ABLE account - ANSWERa tax-advantaged savings account for disabled people and their families,
allowing them to save up to $15,000 per year without losing eligibility for such public benefits as
SNAP and Medicaid.
Accredited Investor - ANSWERan investor that may participate in private placement offerings without
restrictions, usually a large institutional investor, wealthy individual, or an officer of the issuing firm.
Accredited Investor Questionnaire - ANSWERa form confirming to a private placement issuer that the
investor is accredited, to be maintained in the issuer's customer file.
Accumulation Phase - ANSWERthe period when an annuitant invests money in an annuity account.
Adjustable-rate Preferred Stock - ANSWERpreferred stock that ties returns and dividends to an
outside interest rate, most often a Treasury bill rate. Also known as floating-rate preferred stock.
Advance Refunding - ANSWERa refunding bond in which the old issue remains outstanding for a
period longer than 90 days after the refunding bond has been issued.
All-or-none (AON) Commitment - ANSWERa form of underwriting where the underwriter must sell all
the shares in the offering within a specified time or the offering is voided.
,Alternative Minimum Tax (AMT) bond - ANSWERa private activity bond that qualifies for tax-exempt
status but is subject to paying the alternative minimum tax. Also known as a qualified private activity
bond. Compare with public purpose bond and private activity bond (PAB).
American Depository Receipt (ADR) - ANSWERa certificate issued by the U.S. bank for the purpose of
trading a specified number of shares of a foreign corporation in the U.S. stock market.
American-style Option - ANSWERan option that can be exercised at any time prior to and including
the exercise date. Also called an American option.
An interest - ANSWERa descriptor used to indicate that a bond's purchase price will include its
quoted (clean) price plus any accrued interest since the last payment date.
Annuitant - ANSWERan individual entitled to receive benefits or payments from an annuity contract.
Annuities - ANSWERcontracts sold by an insurance company used to provide steady income to
individuals after retirement, often until death.
Advisor-sold Plan - ANSWERa 529 college savings plan offered through an authorized investment firm
that provides investment advice and more investment options, and comes with higher fees than a
direct-sold plan offered by the state.
Affiliate - ANSWERa person that directly or indirectly controls, is controlled by, or is under common
control with another person.
Agency Securities - ANSWERsecurities issued by government-sponsored agencies, such as Fannie
Mae and Freddie Mac, but not backed by the full faith and credit of the U.S. government.
Agency Transaction - ANSWERa transaction where a firm acts as broker, serving as an agent or go-
between for the buyer and the seller.
Annuitization Phase - ANSWERthe period when an annuitant starts to receive payments from an
annuity.
Anticipation Notes - ANSWERmunicipal notes that are issued in advance of, or in anticipation of, an
expected source of income.
,Arbitrage - ANSWERa riskless transaction in which an investor profits from buying and selling the
same product for different prices at the same time in different locations.
Ask Price - ANSWERalso known as just the "ask," the price at which a market maker is willing to sell a
security.
Asset-backed Security - ANSWERa debt security backed by a pool of financial assets, such as
automobile loans, credit card debt, or home equity loans.
Auction Rate Securities (ARS) - ANSWERlong-term investments whose interest rates or dividend
payments reset at frequent intervals by auctions, typically every 7, 14, 28, or 35 years.
Authorized Shares - ANSWERthe shares that a corporation is authorized to issue.
Automatic Stabilizers - ANSWERgovernment programs whose expenditures automatically fluctuate
counter to the economic cycle.
B Shares - ANSWERa class of mutual fund shares that have a deferred or back-end sales charge that
declines over time and a higher annual expense than A shares.
Back-end Load - ANSWERa sales charge that customers are charged after they redeem the shares.
Also called back-end sales charges.
Backing Away - ANSWERthe failure of a broker-dealer to honor a firm quote.
Balance of Payments - ANSWERan accounting of a country's international transactions, such as
exports and imports and capital inflows and outflows.
Balloon Maturity - ANSWERa serial bond in which one maturity, usually the last one, contains a
disproportionately large amount of the principal.
Assignment - ANSWERa transfer of ownership in a security or other property that gives a recipient
the rights held by the previous owner.
Associated Person - ANSWERan individual engaged in the investment banking or securities business
who is registered with FINRA.
, At The Money - ANSWERa phrase indicating an options position whose exercise today would result in
neither a gain nor a loss.
Auction Market - ANSWERa securities exchange for trading securities at a physical location where
buyers make bids and sellers make offers facilitated by a single market maker.
Bank Secrecy Act of 1970 (BSA) - ANSWERan act of congress that requires financial institutions in the
United States to assist U.S. government agencies in detecting and preventing money laundering.
Bankers' Acceptance (BA) - ANSWERa short-term credit instrument issued by a business for the
purchase or sale of goods, drawn on and guaranteed by a bank.
Basis Point - ANSWERone hundredth of a percentage point, the smallest increment of change in a
bond's yield.
Bearer Bond - ANSWERa bond certificate with attached coupons that is owned by whoever holds it,
rather than by a registered owner.
Bearish - ANSWERa belief that the value of a particular security or the market in general will decline.
Bearish Strategy - ANSWERa trading strategy that is employed when an investor believes the price of
a security will decline.
Beneficial Interest - ANSWERthe contractual right to receive an interest in the benefits of an asset
that is owned by another party.
Beneficial Owner - ANSWERone who has the benefits of owning a stock but whose title is held for
reasons of safety or convenience "in street name" by that person's broker.
Beneficiary - ANSWERa person designated to receive the assets of a life insurance policy or trust
upon the account owner's death or the maturity of the contract.
