FIDELITY - SIE PRACTICE EXAM
QUESTIONS & CORRECT COMPLETE
ANSWERS
How much of net capital losses can be deducted per tax year? CORRECT ANSWER - $3000
What does a municipal bond counsel examine and provide? CORRECT ANSWER - Examines new
municipal issues for legal or tax problems; renders (provides) opinion on validity, legality and
tax-exempt status
Inflation CORRECT ANSWER - Increase in asset prices and market interest rates
Disinflation/Deflation CORRECT ANSWER - Decrease in inflation rate
What does ETF stand for? CORRECT ANSWER - Exchange traded funds; the trade on stock
exchanges
What are debentures? CORRECT ANSWER - Unsecured bonds
If a resident from an issuing State purchases municipal bonds, the interest income is exempt
from which taxes? What if the person purchasing is non-resident? CORRECT ANSWER - Resident
is exempt from Federal, State, and Local; non-resident is exempt from Federal
In order to recommend variable annuity to a customer, the representative must inform the
customer about: CORRECT ANSWER - Surrender period and charge (fee), tax penalty, mortality
and expense fees, and charges or expenses for enhanced riders
, What is a 529 College Savings Account? CORRECT ANSWER - Investment plan owned and
controlled by an individual, used for a beneficiary to pay college expenses
What can a person controlling a 529 Plan do and what income should they have? CORRECT
ANSWER - 1. Transfer funds or roll over the plan to another qualified beneficiary with no tax
2. Return funds to themselves but are subject to being taxed and a 10% penalty
There is no income limit when opening this.
What does FINRA stand for? CORRECT ANSWER - Financial Industry Regulatory Authority; a
government-authorized, non-profit organization that oversees US broker-dealers.
Under FINRA rules, what is necessary to open a corporate account? CORRECT ANSWER - New
account form filled out, copy of corporate charter must be obtained, and an authorizing
resolution must be completed
A put option writer has the __________ to _________ shares of underlying securities when the
option is exercised, while the call option writer has the _____________ to ________ them.
A. right; sell, obligation; buy
B. obligation; buy, obligation; sell
C. obligation; sell, obligation; buy
D. right; buy, right; sell CORRECT ANSWER - B. obligation; buy, obligation; sell
Currency Exchange Rate Risk is: CORRECT ANSWER - The risk of an investment made at a
foreign security losing its value due to your country's currency strengthening (rising in value)
against foreign currency.
FINRA 5% Mark-Up Policy states that: CORRECT ANSWER - Secondary market transactions can
have a mark up that is either more or less than 5%.
QUESTIONS & CORRECT COMPLETE
ANSWERS
How much of net capital losses can be deducted per tax year? CORRECT ANSWER - $3000
What does a municipal bond counsel examine and provide? CORRECT ANSWER - Examines new
municipal issues for legal or tax problems; renders (provides) opinion on validity, legality and
tax-exempt status
Inflation CORRECT ANSWER - Increase in asset prices and market interest rates
Disinflation/Deflation CORRECT ANSWER - Decrease in inflation rate
What does ETF stand for? CORRECT ANSWER - Exchange traded funds; the trade on stock
exchanges
What are debentures? CORRECT ANSWER - Unsecured bonds
If a resident from an issuing State purchases municipal bonds, the interest income is exempt
from which taxes? What if the person purchasing is non-resident? CORRECT ANSWER - Resident
is exempt from Federal, State, and Local; non-resident is exempt from Federal
In order to recommend variable annuity to a customer, the representative must inform the
customer about: CORRECT ANSWER - Surrender period and charge (fee), tax penalty, mortality
and expense fees, and charges or expenses for enhanced riders
, What is a 529 College Savings Account? CORRECT ANSWER - Investment plan owned and
controlled by an individual, used for a beneficiary to pay college expenses
What can a person controlling a 529 Plan do and what income should they have? CORRECT
ANSWER - 1. Transfer funds or roll over the plan to another qualified beneficiary with no tax
2. Return funds to themselves but are subject to being taxed and a 10% penalty
There is no income limit when opening this.
What does FINRA stand for? CORRECT ANSWER - Financial Industry Regulatory Authority; a
government-authorized, non-profit organization that oversees US broker-dealers.
Under FINRA rules, what is necessary to open a corporate account? CORRECT ANSWER - New
account form filled out, copy of corporate charter must be obtained, and an authorizing
resolution must be completed
A put option writer has the __________ to _________ shares of underlying securities when the
option is exercised, while the call option writer has the _____________ to ________ them.
A. right; sell, obligation; buy
B. obligation; buy, obligation; sell
C. obligation; sell, obligation; buy
D. right; buy, right; sell CORRECT ANSWER - B. obligation; buy, obligation; sell
Currency Exchange Rate Risk is: CORRECT ANSWER - The risk of an investment made at a
foreign security losing its value due to your country's currency strengthening (rising in value)
against foreign currency.
FINRA 5% Mark-Up Policy states that: CORRECT ANSWER - Secondary market transactions can
have a mark up that is either more or less than 5%.
