SIE EXAM CARIL WITH QUESTIONS AND ANSWERS 100%
CORRECT LATEST UPDATE
What does a bond certificate represent? - ANSWER The borrower's obligation to repay
the amount it borrowed plus interest
What happens in repo (reverse repurchase) agreement - ANSWER a dealer agrees to
buy securities from an investor and sell them back later at a higher price.
Pre-emptive right of existing shareholders will be best described as - ANSWER The right
to buy shares in a quantity that would keep up a shareholder's relative degree of
ownership in the company in case the firm issues more stock.
When does settlement occur for options trading? - ANSWER The next business day, the
day following the trade date, T + 1 (i.e.-If someone bought a call on Tuesday December
5, the settlement for that trade would occur on Wednesday December 6.)
capital market vs money market instruments - ANSWER capital market: intermediate to
long-term, equity or debt securities with maturities of one year or greater
money market: short-term, extremely liquid, high yielding debt securities, to
corporations, banks, broker-dealers, government municipalities, US government,
maturities of 1 year or less, higher degree of safety, no interest payments (purchase at
discount and mature at face value)
Types of money market instruments - ANSWER Certificates of deposit (CDs), Bankers'
Acceptances (BAs), Commercial paper, US Treasury bills, Repurchase Agreements
(REPOs), and Federal Funds
What are ad valorem taxes? - ANSWER real estate taxes issued by local municipalities
towns, cities, or counties -- never states
Capital risk The potential for an investor to face partial or total loss of their capital - i.e.,
,the money that they have invested - due to circumstances unrelated to an issuer's
financial soundness.
What is a depletion allowance? - ANSWER A tax deduction that reimburses an oil and
gas program for the declining resource base after the resource is extracted from the
ground and sold
Limited partnerships are made up of. - ANSWER a small amount of money contributed by
a large number of investors
Options accounts, though originally opened by the BOM are ultimately subject to the
approval of the. - ANSWER Reigistered options principal (ROP) in a promptly manner
What does it mean if the current yield is greater than the coupon? - ANSWER The bond
was purchased at a discount
When a bond is being sold and current interest rates are lower than coupon, what does
this mean? - ANSWER The bond was sold at a premium
How are ETFs priced? - ANSWER by supply and demand where transactions prices may
be higher or lower than the fund's NAV
What is market timing? - ANSWER Short-term purchases and sales of a mutual fund to
take advantage of price fluctuation
What is the most common form of DPPs? ANSWER Limited partnerships (LPs): business
entities allowing for the economic consequences of the business to flow through to the
individual investors, i.e. partners.
Which of the following is the one option contract with unlimited loss potential? ANSWER
A short call. It is bearish and wants to see the price of the stock rise.
,What is represented by federal funds? - ANSWER the amount the bank exceeds the
required deposits to be on reserve at FRB
What are the steps to open a new options account? - ANSWER Obtain customer
essential facts, branch manager approval, initial order, then signed options agreement
Anticipation notes-what are they? - ANSWER Short-term municipal obligations that
provide funds for a municipality that expects alternate longer-term financing-i.e.-TANs,
RANs, TRANs, BANs, CLNs, GANs
3 types of investment companies according to the Investment Act of 1940-what are
they? - ANSWER Face-amount certificates, unit investment trusts, and management
companies [both open- and closed-end]
The declaration, record and payment dates are determined by ___________, while the
ex-dividend date is established by _________. - ANSWER DRP are established by the
BOD, while E is established by FINRA or the exchange
Exception reports are filed when. - ANSWER There is suspicious activity in a customer
account or there is improper use of a customers' securities or funds
What is capping? - ANSWER A type of market manipulation, done by writers of call
option contracts whereby they place sell orders in a security to prevent the security
from rising above the strike price so the calls will not be in-the-money and subsequently
exercised
What is backing away? - ANSWER Failing to fill a firm quote on a security
What is a contemporaneous trader? - ANSWER One who trades at the same time as
another trading when that other person has, and may be trading on, inside information;
may sue the other for up to 5 years after the violation has occurred
What are the three stages of money laundering? - ANSWER Placement, layering, then
, integration
Regulation T-ANSWER set by the FRB, the initial margin requirement is 50% of sale
proceeds to be deposited in the customer's margin account
Standard corporate actions - ANSWER cash and stock dividends, even and uneven
stock splits - both forward and reverse - and the issuance of warrants and rights
Nonstandard/unique corporate action- ANSWER mergers and acquisitions, takeovers,
spinoffs, tender offers and buy-back or repurchases of stock
What is required to sell short? - ANSWER The shares must be borrowed, or located to
borrow.
What is nonpublic information under Regulation S-P? - ANSWER A customer's Social
Security number, account balances, and transaction history. Also included as nonpublic
information is any information obtained from an internet cookie. A home address is not
nonpublic information
What dollar amount of suspected suspicious activity is also threshold and grounds to file
a SAR relative to a CTR? - ANS At least $5,000 in funds or assets. The amount over
$10,000 in funds or assets triggers a CTR
What is a tender offer? - ANS When a firm offers to buy outstanding securities for cash
or for cash plus other securities from its stockholders or bondholders
What is a buy-back? - ANSWER Sometimes known as a repurchase, this is when a firm
purchases its outstanding securities on the open market rather than directly appealing
to its investors.
What information is included on the trade confirmation sent to the investor at or on the
settlement date? - ANSWER The commission charged on the agency transaction and the
CUSIP number
CORRECT LATEST UPDATE
What does a bond certificate represent? - ANSWER The borrower's obligation to repay
the amount it borrowed plus interest
What happens in repo (reverse repurchase) agreement - ANSWER a dealer agrees to
buy securities from an investor and sell them back later at a higher price.
Pre-emptive right of existing shareholders will be best described as - ANSWER The right
to buy shares in a quantity that would keep up a shareholder's relative degree of
ownership in the company in case the firm issues more stock.
When does settlement occur for options trading? - ANSWER The next business day, the
day following the trade date, T + 1 (i.e.-If someone bought a call on Tuesday December
5, the settlement for that trade would occur on Wednesday December 6.)
capital market vs money market instruments - ANSWER capital market: intermediate to
long-term, equity or debt securities with maturities of one year or greater
money market: short-term, extremely liquid, high yielding debt securities, to
corporations, banks, broker-dealers, government municipalities, US government,
maturities of 1 year or less, higher degree of safety, no interest payments (purchase at
discount and mature at face value)
Types of money market instruments - ANSWER Certificates of deposit (CDs), Bankers'
Acceptances (BAs), Commercial paper, US Treasury bills, Repurchase Agreements
(REPOs), and Federal Funds
What are ad valorem taxes? - ANSWER real estate taxes issued by local municipalities
towns, cities, or counties -- never states
Capital risk The potential for an investor to face partial or total loss of their capital - i.e.,
,the money that they have invested - due to circumstances unrelated to an issuer's
financial soundness.
What is a depletion allowance? - ANSWER A tax deduction that reimburses an oil and
gas program for the declining resource base after the resource is extracted from the
ground and sold
Limited partnerships are made up of. - ANSWER a small amount of money contributed by
a large number of investors
Options accounts, though originally opened by the BOM are ultimately subject to the
approval of the. - ANSWER Reigistered options principal (ROP) in a promptly manner
What does it mean if the current yield is greater than the coupon? - ANSWER The bond
was purchased at a discount
When a bond is being sold and current interest rates are lower than coupon, what does
this mean? - ANSWER The bond was sold at a premium
How are ETFs priced? - ANSWER by supply and demand where transactions prices may
be higher or lower than the fund's NAV
What is market timing? - ANSWER Short-term purchases and sales of a mutual fund to
take advantage of price fluctuation
What is the most common form of DPPs? ANSWER Limited partnerships (LPs): business
entities allowing for the economic consequences of the business to flow through to the
individual investors, i.e. partners.
Which of the following is the one option contract with unlimited loss potential? ANSWER
A short call. It is bearish and wants to see the price of the stock rise.
,What is represented by federal funds? - ANSWER the amount the bank exceeds the
required deposits to be on reserve at FRB
What are the steps to open a new options account? - ANSWER Obtain customer
essential facts, branch manager approval, initial order, then signed options agreement
Anticipation notes-what are they? - ANSWER Short-term municipal obligations that
provide funds for a municipality that expects alternate longer-term financing-i.e.-TANs,
RANs, TRANs, BANs, CLNs, GANs
3 types of investment companies according to the Investment Act of 1940-what are
they? - ANSWER Face-amount certificates, unit investment trusts, and management
companies [both open- and closed-end]
The declaration, record and payment dates are determined by ___________, while the
ex-dividend date is established by _________. - ANSWER DRP are established by the
BOD, while E is established by FINRA or the exchange
Exception reports are filed when. - ANSWER There is suspicious activity in a customer
account or there is improper use of a customers' securities or funds
What is capping? - ANSWER A type of market manipulation, done by writers of call
option contracts whereby they place sell orders in a security to prevent the security
from rising above the strike price so the calls will not be in-the-money and subsequently
exercised
What is backing away? - ANSWER Failing to fill a firm quote on a security
What is a contemporaneous trader? - ANSWER One who trades at the same time as
another trading when that other person has, and may be trading on, inside information;
may sue the other for up to 5 years after the violation has occurred
What are the three stages of money laundering? - ANSWER Placement, layering, then
, integration
Regulation T-ANSWER set by the FRB, the initial margin requirement is 50% of sale
proceeds to be deposited in the customer's margin account
Standard corporate actions - ANSWER cash and stock dividends, even and uneven
stock splits - both forward and reverse - and the issuance of warrants and rights
Nonstandard/unique corporate action- ANSWER mergers and acquisitions, takeovers,
spinoffs, tender offers and buy-back or repurchases of stock
What is required to sell short? - ANSWER The shares must be borrowed, or located to
borrow.
What is nonpublic information under Regulation S-P? - ANSWER A customer's Social
Security number, account balances, and transaction history. Also included as nonpublic
information is any information obtained from an internet cookie. A home address is not
nonpublic information
What dollar amount of suspected suspicious activity is also threshold and grounds to file
a SAR relative to a CTR? - ANS At least $5,000 in funds or assets. The amount over
$10,000 in funds or assets triggers a CTR
What is a tender offer? - ANS When a firm offers to buy outstanding securities for cash
or for cash plus other securities from its stockholders or bondholders
What is a buy-back? - ANSWER Sometimes known as a repurchase, this is when a firm
purchases its outstanding securities on the open market rather than directly appealing
to its investors.
What information is included on the trade confirmation sent to the investor at or on the
settlement date? - ANSWER The commission charged on the agency transaction and the
CUSIP number
