Smart SIE Mastery Exam 1 UPDATED
Questions and CORRECT Answers
Securities that are the means by which foreign issues are traded in the United States are termed: -
CORRECT ANSWER - ADRs
Which statement is TRUE about hedge funds? - CORRECT ANSWER - Hedge funds are
illiquid investments that use aggressive investment strategies to maximize returns, and thus have
high risk levels
Treasury Notes are issued by the U.S. Government in which form? - CORRECT
ANSWER - Book Entry
American Depositary Receipts would trade on all of the following exchanges EXCEPT the: -
CORRECT ANSWER - London Stock Exchange
Which statement is FALSE regarding Treasury Stock? - CORRECT ANSWER - Treasury
Stock has voting rights
A customer places the following instructions with his registered representative:
"Buy 100 shares of ABC if the market rises to $45, but don't buy the stock for more than $50."
What is the appropriate order to be placed? - CORRECT ANSWER - Buy ABC @ 45 Stop
50 Limit
The orders that are higher in price than the current market are: - CORRECT ANSWER -
Open Sell Limits and Open Buy Stops
, Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead
of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no
later than: - CORRECT ANSWER - Settlement Date
Which of the following money market instruments is rated on a "P" scale? - CORRECT
ANSWER - Commercial Paper
Mutual fund shares are: - CORRECT ANSWER - Redeemable and Managed
Which statement is TRUE about mutual fund "Class A" shares? - CORRECT ANSWER -
Class A shares impose no, or a very low, 12b-1 fee
Which rating applies to short term municipal issues? - CORRECT ANSWER - MIG 1
The "after hours" market is characterized by: - CORRECT ANSWER - Wide Spreads and
Low Trading Volume
All of the following debt securities may be issued by corporations EXCEPT: - CORRECT
ANSWER - Moral obligation bonds
All of the following statements are correct when comparing bonds and preferred stock EXCEPT?
- CORRECT ANSWER - Payments to bondholders are subject to approval of the Board of
Directors
Which statement is TRUE about variable annuities? - CORRECT ANSWER - Variable
annuities are participating unit investment trusts
Which statement about Treasury STRIPS is FALSE? - CORRECT ANSWER - Treasury
STRIPS are not susceptible to purchasing power risk
Questions and CORRECT Answers
Securities that are the means by which foreign issues are traded in the United States are termed: -
CORRECT ANSWER - ADRs
Which statement is TRUE about hedge funds? - CORRECT ANSWER - Hedge funds are
illiquid investments that use aggressive investment strategies to maximize returns, and thus have
high risk levels
Treasury Notes are issued by the U.S. Government in which form? - CORRECT
ANSWER - Book Entry
American Depositary Receipts would trade on all of the following exchanges EXCEPT the: -
CORRECT ANSWER - London Stock Exchange
Which statement is FALSE regarding Treasury Stock? - CORRECT ANSWER - Treasury
Stock has voting rights
A customer places the following instructions with his registered representative:
"Buy 100 shares of ABC if the market rises to $45, but don't buy the stock for more than $50."
What is the appropriate order to be placed? - CORRECT ANSWER - Buy ABC @ 45 Stop
50 Limit
The orders that are higher in price than the current market are: - CORRECT ANSWER -
Open Sell Limits and Open Buy Stops
, Under IRS rules, if a customer selling shares of stock wishes to use specific identification instead
of FIFO for cost basis reporting, the broker-dealer effecting the trade must be notified of this no
later than: - CORRECT ANSWER - Settlement Date
Which of the following money market instruments is rated on a "P" scale? - CORRECT
ANSWER - Commercial Paper
Mutual fund shares are: - CORRECT ANSWER - Redeemable and Managed
Which statement is TRUE about mutual fund "Class A" shares? - CORRECT ANSWER -
Class A shares impose no, or a very low, 12b-1 fee
Which rating applies to short term municipal issues? - CORRECT ANSWER - MIG 1
The "after hours" market is characterized by: - CORRECT ANSWER - Wide Spreads and
Low Trading Volume
All of the following debt securities may be issued by corporations EXCEPT: - CORRECT
ANSWER - Moral obligation bonds
All of the following statements are correct when comparing bonds and preferred stock EXCEPT?
- CORRECT ANSWER - Payments to bondholders are subject to approval of the Board of
Directors
Which statement is TRUE about variable annuities? - CORRECT ANSWER - Variable
annuities are participating unit investment trusts
Which statement about Treasury STRIPS is FALSE? - CORRECT ANSWER - Treasury
STRIPS are not susceptible to purchasing power risk
