FINRA SIE Practice Test| 75 Questions| With Complete
Solutions
Upon Expiration, all in-the-money S&P 100 Index call options are settled by the
delivery of which of the following? - ANSWER Cash
Which of the following statements is true about treasury stock? - ANSWER It is
issued stock that has been subsequently reacquired by the corporation
In the event of a stock split, which of the following parties is required to maintain a
record of the shareholders eligible to receive the additional shares? - ANSWER
Transfer Agent
Which of the following actions is required of a broker-dealer's anti-money laundering
(AML) program? - ANSWER Designating an AML compliance officer
A registered representative (RR) wants to participate in a private securities
transaction. Which of the following actions must the RR take? - ANSWER Send
written notice to his supervisor outlining the activity and compensation structure
A customer BUYS a 1 ABC Jan 35 PUT for a premium of $3 and simultaneously
buys 100 shares of ABC stock for $35 per share. The customer will break even when
the stock is selling at what price per share at expiration? - ANSWER $38
The call provision of a bond stipulates which of the following factors? - ANSWER
Call date and call price
When is interest on Treasury notes paid? - ANSWER Semiannually
The owner of which of the following products is MOST exposed to inflationary risk? -
ANSWER Treasury bonds (because it's long-term)
A registered representative (RR) who wants to place a mutual fund advertisement
must obtain written approval from which of the following parties? - ANSWER A
registered principal of the RR's firm
A company announces a tender offer to its shareholders with the intent to buy a
maximum of 1 million shares of its outstanding stock at $10 per share and sets no
minimum number of shares to be purchased. An investor wants to participate in this
offer and tenders his 1,000 share position. At the close of the offer period, only
900,000 shares have been tendered. How many, if any, of the investor's shares will
the company purchase? - ANSWER 1,000 (1,000 x 100 = 100,000 shares; 1 million -
900k = 100k)
, Broker-dealer ABC seeks to underwrite a municipal securities offering by a local
town in which the mayor is currently seeking re-election. A municipal finance
professional who resides in the town and works for ABC contributed $200 to the
mayor's re-election campaign 13 months ago. If the employee wants to support the
campaign further without impacting the municipal securities business of the firm, he
is permitted to make an additional contribution of up to what amount? - ANSWER
$50 ($250 is the limit PER election)
Which of the following stakeholders has first claim priority in a Chapter 11
proceeding? - ANSWER Secured debt holders
[Order of liquidation at bankruptcy:
1. Unpaid wages
2. Taxes (IRS)
3. Secured claims (mortgages)
4. Secured liabilities (bonds)
5. Unsecured liabilities (debentures) and general creditors
6. Subordinated debt
7. Preferred Stockholders
8. Common stockholders]
An investors owns 100 shares of XYZ common stock at the current market price of
$50 per share. If XYZ conducts a 1-for-2 REVERSE stock split, the investor's post-
split stock position will be: - ANSWER 50 shares at $100 per share
The primary purpose of a syndicate desk in the context of an equity offering is to: -
ANSWER build an order book and allocate the stock
Which of the following investments are generally traded according to their average
life rather than their stated maturity dates? - ANSWER Asset-backed securities
UTMA (Minor) accounts are opened under the tax ID of the: - ANSWER minor
Stability in the value of debt portfolio is greatest when: - ANSWER maturities of the
debt securities are short
Which of the following statements is true about all U.S. government agency issues? -
ANSWER They are exempt from registration under the Securities Act of 1933
Which of the following products is adversely impacted if the issuer's credit rating is
downgraded? - ANSWER Exchange-traded notes (ETNs)
Company ABC announces a 20% stock dividend for its common shareholders. If a
customer holds 1,000 shares at $50.00, what is the new price and number of shares
following the payment of the stock dividend? - ANSWER 1,200 shares at $41.67
(20% increase in number of stock BUT market cap remains the same)
A married couple who earned income that exceeded $300,000 in each of the prior
two years ad reasonably expects the same for the current year is: - ANSWER an
accredited investor
Solutions
Upon Expiration, all in-the-money S&P 100 Index call options are settled by the
delivery of which of the following? - ANSWER Cash
Which of the following statements is true about treasury stock? - ANSWER It is
issued stock that has been subsequently reacquired by the corporation
In the event of a stock split, which of the following parties is required to maintain a
record of the shareholders eligible to receive the additional shares? - ANSWER
Transfer Agent
Which of the following actions is required of a broker-dealer's anti-money laundering
(AML) program? - ANSWER Designating an AML compliance officer
A registered representative (RR) wants to participate in a private securities
transaction. Which of the following actions must the RR take? - ANSWER Send
written notice to his supervisor outlining the activity and compensation structure
A customer BUYS a 1 ABC Jan 35 PUT for a premium of $3 and simultaneously
buys 100 shares of ABC stock for $35 per share. The customer will break even when
the stock is selling at what price per share at expiration? - ANSWER $38
The call provision of a bond stipulates which of the following factors? - ANSWER
Call date and call price
When is interest on Treasury notes paid? - ANSWER Semiannually
The owner of which of the following products is MOST exposed to inflationary risk? -
ANSWER Treasury bonds (because it's long-term)
A registered representative (RR) who wants to place a mutual fund advertisement
must obtain written approval from which of the following parties? - ANSWER A
registered principal of the RR's firm
A company announces a tender offer to its shareholders with the intent to buy a
maximum of 1 million shares of its outstanding stock at $10 per share and sets no
minimum number of shares to be purchased. An investor wants to participate in this
offer and tenders his 1,000 share position. At the close of the offer period, only
900,000 shares have been tendered. How many, if any, of the investor's shares will
the company purchase? - ANSWER 1,000 (1,000 x 100 = 100,000 shares; 1 million -
900k = 100k)
, Broker-dealer ABC seeks to underwrite a municipal securities offering by a local
town in which the mayor is currently seeking re-election. A municipal finance
professional who resides in the town and works for ABC contributed $200 to the
mayor's re-election campaign 13 months ago. If the employee wants to support the
campaign further without impacting the municipal securities business of the firm, he
is permitted to make an additional contribution of up to what amount? - ANSWER
$50 ($250 is the limit PER election)
Which of the following stakeholders has first claim priority in a Chapter 11
proceeding? - ANSWER Secured debt holders
[Order of liquidation at bankruptcy:
1. Unpaid wages
2. Taxes (IRS)
3. Secured claims (mortgages)
4. Secured liabilities (bonds)
5. Unsecured liabilities (debentures) and general creditors
6. Subordinated debt
7. Preferred Stockholders
8. Common stockholders]
An investors owns 100 shares of XYZ common stock at the current market price of
$50 per share. If XYZ conducts a 1-for-2 REVERSE stock split, the investor's post-
split stock position will be: - ANSWER 50 shares at $100 per share
The primary purpose of a syndicate desk in the context of an equity offering is to: -
ANSWER build an order book and allocate the stock
Which of the following investments are generally traded according to their average
life rather than their stated maturity dates? - ANSWER Asset-backed securities
UTMA (Minor) accounts are opened under the tax ID of the: - ANSWER minor
Stability in the value of debt portfolio is greatest when: - ANSWER maturities of the
debt securities are short
Which of the following statements is true about all U.S. government agency issues? -
ANSWER They are exempt from registration under the Securities Act of 1933
Which of the following products is adversely impacted if the issuer's credit rating is
downgraded? - ANSWER Exchange-traded notes (ETNs)
Company ABC announces a 20% stock dividend for its common shareholders. If a
customer holds 1,000 shares at $50.00, what is the new price and number of shares
following the payment of the stock dividend? - ANSWER 1,200 shares at $41.67
(20% increase in number of stock BUT market cap remains the same)
A married couple who earned income that exceeded $300,000 in each of the prior
two years ad reasonably expects the same for the current year is: - ANSWER an
accredited investor
