FINRA SIE Exam - Questions and Answers
The redemption value of an open-ended investment company's shares is based on the: - Correct
answer-Net assest value computed afdter the order is recieved
An associated person who is not a registered representative is permitted to engage in which of the
following activities? - Correct answer-Provide account opening forms to a new customer
A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered
a recession? - Correct answer-2 quarters
When is interest on Treasury notes paid? - Correct answer-Semiannually
Which of the following communications with the public is considered misleading? - Correct answer-
Literature providing 10-year performance information to support predictions of future performance
Which of the following stakeholders has first claim priority in a chapter 11 proceeding? - Correct answer-
Secured debt holders
The last transaction in xyz 5.50s 2030 was at 102. This bond is selling at: - Correct answer-A premium
All of the following risks apply to both foreign and domestic debt instruments except: - Correct answer-
Exchange
, If interest Rates fall the issuer will most likely call which bonds first?
High Dividend Rate preferred issues trading at a premium
What are some actions by a corporation will affect an individuals common shareholder's equity
Conversion of convertible preferred stocks or bond
Repurchase of common shares
Issuance of additional common shares
(Stock splits do not effect shareholders equity but it must be voted on because it effects Par Value)
Benefits to a Convertible stock compared to a regular debenture
Convertible stock will have a slightly lower yield than non-convertible however it will raise in value as
the market price of common stock rises
What traits do preferred stock and bonds have in common? How are they different?
Can be callable by issuer, both have periodic payments. Both are senior securities to common stock.
Neither have voting rights
Preferred is paid dividends on a percentage of face value much like the yield of a bond.
Preferred stock has no maturity date and can be held perpetually while bonds have a set maturity date.
Payments to preferred stock are not mandatory unless a declared dividend has been issued to common
stock
Payments to bond holders are mandatory
When are common dividends declared and paid?
Quarterly for both
A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms
being that for every 15 rights a shareholder may purchase one additional share.at $24 a share. Any
fractional rights may be rounded up to buy an additional share.
How many shares may the customer buy with these right?
A share holder can buy a maximum of 18 shares with these rights paying $432 for them.
The 17.06 shares may be rounded up to 18.
XXYZ ADR (American Depository Receipt) represents 10% of the value of an XXYZ ordinary share. The
ordinary shares trade on the London Stock Exchange, where the current price is 400 British Pounds
(BP). The current exchange rate for the British Pound against the US Dollar is $1.40. The ordinary
share pays an annualized dividend of 12 BP. The XXYZ ADR is listed on the NYSE. If a customer places
an order to buy $560,000 of the ADR on the customer will buy how many shares of the ADR?
10,000 Shares with $560.,000
Explanation
400 BP x $1.4 = 560
The redemption value of an open-ended investment company's shares is based on the: - Correct
answer-Net assest value computed afdter the order is recieved
An associated person who is not a registered representative is permitted to engage in which of the
following activities? - Correct answer-Provide account opening forms to a new customer
A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered
a recession? - Correct answer-2 quarters
When is interest on Treasury notes paid? - Correct answer-Semiannually
Which of the following communications with the public is considered misleading? - Correct answer-
Literature providing 10-year performance information to support predictions of future performance
Which of the following stakeholders has first claim priority in a chapter 11 proceeding? - Correct answer-
Secured debt holders
The last transaction in xyz 5.50s 2030 was at 102. This bond is selling at: - Correct answer-A premium
All of the following risks apply to both foreign and domestic debt instruments except: - Correct answer-
Exchange
, If interest Rates fall the issuer will most likely call which bonds first?
High Dividend Rate preferred issues trading at a premium
What are some actions by a corporation will affect an individuals common shareholder's equity
Conversion of convertible preferred stocks or bond
Repurchase of common shares
Issuance of additional common shares
(Stock splits do not effect shareholders equity but it must be voted on because it effects Par Value)
Benefits to a Convertible stock compared to a regular debenture
Convertible stock will have a slightly lower yield than non-convertible however it will raise in value as
the market price of common stock rises
What traits do preferred stock and bonds have in common? How are they different?
Can be callable by issuer, both have periodic payments. Both are senior securities to common stock.
Neither have voting rights
Preferred is paid dividends on a percentage of face value much like the yield of a bond.
Preferred stock has no maturity date and can be held perpetually while bonds have a set maturity date.
Payments to preferred stock are not mandatory unless a declared dividend has been issued to common
stock
Payments to bond holders are mandatory
When are common dividends declared and paid?
Quarterly for both
A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms
being that for every 15 rights a shareholder may purchase one additional share.at $24 a share. Any
fractional rights may be rounded up to buy an additional share.
How many shares may the customer buy with these right?
A share holder can buy a maximum of 18 shares with these rights paying $432 for them.
The 17.06 shares may be rounded up to 18.
XXYZ ADR (American Depository Receipt) represents 10% of the value of an XXYZ ordinary share. The
ordinary shares trade on the London Stock Exchange, where the current price is 400 British Pounds
(BP). The current exchange rate for the British Pound against the US Dollar is $1.40. The ordinary
share pays an annualized dividend of 12 BP. The XXYZ ADR is listed on the NYSE. If a customer places
an order to buy $560,000 of the ADR on the customer will buy how many shares of the ADR?
10,000 Shares with $560.,000
Explanation
400 BP x $1.4 = 560
