SIE GREENLIGHT EXAM #2
QUESTIONS ANSWERS
A0portfolio0manager0has0recently0taken0his0client's0equity0holdings0out0of0technology0s
tocks0and0moved0them0into0manufacturing0stocks.0The0manager0has0historically0move
d0client0funds0from0one0industry0to0another0during0defined0periods.0What0is0this0type0o
f0strategy0called?
A)0Dollar0cost0averaging
B)0Sector0rotation
C)0Asset0rebalancing
D)0Portfolio0rebalancing0-0ans✔B)0Sector0rotation
A0broker-
dealer0executes0but0does0not0process0transactions.0If0the0firm0processing0the0transacti
ons0knows0the0identity0of0the0customers,0this0arrangement0is0known0as0a(n):
A)0Prime0broker
B)0Clearing0broker
C)0Omnibus0account
D)0Fully0disclosed0account0-0ans✔D)0Fully0disclosed0account
An0investor0has0purchased010,0000shares0of0a0mutual0fund0for0a0total0investment0of0$
860,000.0The0investor0has0also0received0$20,0000in0dividends0and0reinvested0these0fu
nds0back0into0the0fund.0What's0the0investor's0total0cost0basis0for0the0mutual0fund0shar
es?
A)0$860,000
B)0It0depends0on0the0market0price0when0the0investor0ultimately0redeems0the0shares.
C)0$20,000
D)0$880,0000-0ans✔D)0$880,000
Exchange-traded0notes0are0most0susceptible0to0which0risks?
A)0Regulatory0and0interest-rate0risk
,B)0Credit0and0market0risk
C)0Legislative0and0business0risk
D)0Currency0and0political0risk0-0ans✔B)0Credit0and0market0risk
An0investor,0age052,0with0funds0in0a0401(k)0plan,0is0leaving0her0employer0and0wants0t
o0transfer0the0funds0to0an0IRA0account0at0your0firm.0Which0of0the0following0statements
0is0TRUE?
A)0There0will0be0a010%0penalty
B)0There0will0be0a050%0penalty
C)0There0will0be0no0penalty
D)0There0will0be0no0penalty0but0the0amount0transferred0will0be0taxable0-
0ans✔C)0There0will0be0no0penalty
Three0basis0points0are0equal0to:
A)03%
B)03/10th0of01%
C)03/100th0of01%
D)03/1000th0of01%0-0ans✔C)03/100th0of01%
Deposits0of0cash0that0are0held0at0a0bank0are0insured0by0which0of0the0following?
A)0The0Federal0Deposit0Insurance0Corporation0(FDIC)
B)0The0Internal0Revenue0Service0(IRS)
C)0The0Securities0Investors0Protection0Corporation0(SIPC)
D)0The0Securities0Exchange0Commission0(SEC)0-
0ans✔A)0The0Federal0Deposit0Insurance0Corporation0(FDIC)
A0sales0breakpoint0of0a0mutual0fund0is:
A)0The0minimum0dollar0amount0of0a0purchase0of0a0mutual0fund0where0a0volume0disco
unt0is0given
B)0The0minimum0share0amount0of0a0purchase0of0a0mutual0fund0where0a0volume0disco
unt0is0given
C)0The0point0at0which0a0letter0of0intent0can0be0obtained
D)0The0point0at0which0a0letter0of0intent0can0be0backdated0-
0ans✔A)0The0minimum0dollar0amount0of0a0purchase0of0a0mutual0fund0where0a0volume
0discount0is0given
Which0of0the0following0statements0is0TRUE0concerning0filing0a0registration0application0
with0FINRA?
A)0It0is0acceptable0not0to0answer0certain0questions0due0to0privacy0concerns.
B)0It0is0a0violation0for0an0application0to0be0incomplete0or0misleading.
, C)0If0a0person0has0already0been0registered0and0changes0firms,0a0new0application0is0n
ot0required.
D)0All0registered0persons0are0required0to0update0their0application0every0two0years.0-
0ans✔B)0It0is0a0violation0for0an0application0to0be0incomplete0or0misleading.
The0time0at0which0an0employee0is0eligible0to0receive0at0least0some0of0the0retirement0b
enefits0that0have0been0contributed0to0the0plan0by0the0employer0is0referred0to0as:
A)0Eligibility
B)0Qualification
C)0Contributory
D)0Vested0-0ans✔D)0Vested
If0an0issuer's0convertible0bonds0are0converted0by0bondholders,0what0is0the0effect0on0t
he0issuer's0outstanding0common0stock?
A)0It0will0no0have0no0effect.
B)0It0will0decrease0the0number0of0outstanding0shares.
C)0It0will0provide0existing0shareholders0with0a0larger0dividend.
D)0It0will0increase0the0number0of0outstanding0shares.0-
0ans✔D)0It0will0increase0the0number0of0outstanding0shares.
Which0of0the0following0statements0is0TRUE0about0revenue0bonds?
A)0Interest0is0usually0paid0from0the0earnings0of0the0facility0for0which0the0bond0was0iss
ued
B)0Interest0is0subject0to0federal0taxes
C)0Revenue0bonds0are0considered0safer0than0general0obligation0bonds
D)0The0state0public0utility0commission0must0approve0each0interest0payment0-
0ans✔A)0Interest0is0usually0paid0from0the0earnings0of0the0facility0for0which0the0bond0w
as0issued
Which0of0the0following0is0the0rate0that's0charged0on0overnight0loans0between0commer
cial0banks?
A)0Prime0rate
B)0Discount0rate
C)0Federal0funds0rate
D)0Call0rate0-0ans✔C)0Federal0funds0rate
A0customer0contacts0her0registered0representative0to0buy0an0OTC0stock.0Rather0than0
buying0it0directly0from0a0market0maker,0the0broker-dealer0contacts0another0broker-
dealer,0who0buys0it0from0a0market0maker0creating0two0levels0of0transaction0fees.0This0
is0known0as:
A)0Free-riding0and0withholding
QUESTIONS ANSWERS
A0portfolio0manager0has0recently0taken0his0client's0equity0holdings0out0of0technology0s
tocks0and0moved0them0into0manufacturing0stocks.0The0manager0has0historically0move
d0client0funds0from0one0industry0to0another0during0defined0periods.0What0is0this0type0o
f0strategy0called?
A)0Dollar0cost0averaging
B)0Sector0rotation
C)0Asset0rebalancing
D)0Portfolio0rebalancing0-0ans✔B)0Sector0rotation
A0broker-
dealer0executes0but0does0not0process0transactions.0If0the0firm0processing0the0transacti
ons0knows0the0identity0of0the0customers,0this0arrangement0is0known0as0a(n):
A)0Prime0broker
B)0Clearing0broker
C)0Omnibus0account
D)0Fully0disclosed0account0-0ans✔D)0Fully0disclosed0account
An0investor0has0purchased010,0000shares0of0a0mutual0fund0for0a0total0investment0of0$
860,000.0The0investor0has0also0received0$20,0000in0dividends0and0reinvested0these0fu
nds0back0into0the0fund.0What's0the0investor's0total0cost0basis0for0the0mutual0fund0shar
es?
A)0$860,000
B)0It0depends0on0the0market0price0when0the0investor0ultimately0redeems0the0shares.
C)0$20,000
D)0$880,0000-0ans✔D)0$880,000
Exchange-traded0notes0are0most0susceptible0to0which0risks?
A)0Regulatory0and0interest-rate0risk
,B)0Credit0and0market0risk
C)0Legislative0and0business0risk
D)0Currency0and0political0risk0-0ans✔B)0Credit0and0market0risk
An0investor,0age052,0with0funds0in0a0401(k)0plan,0is0leaving0her0employer0and0wants0t
o0transfer0the0funds0to0an0IRA0account0at0your0firm.0Which0of0the0following0statements
0is0TRUE?
A)0There0will0be0a010%0penalty
B)0There0will0be0a050%0penalty
C)0There0will0be0no0penalty
D)0There0will0be0no0penalty0but0the0amount0transferred0will0be0taxable0-
0ans✔C)0There0will0be0no0penalty
Three0basis0points0are0equal0to:
A)03%
B)03/10th0of01%
C)03/100th0of01%
D)03/1000th0of01%0-0ans✔C)03/100th0of01%
Deposits0of0cash0that0are0held0at0a0bank0are0insured0by0which0of0the0following?
A)0The0Federal0Deposit0Insurance0Corporation0(FDIC)
B)0The0Internal0Revenue0Service0(IRS)
C)0The0Securities0Investors0Protection0Corporation0(SIPC)
D)0The0Securities0Exchange0Commission0(SEC)0-
0ans✔A)0The0Federal0Deposit0Insurance0Corporation0(FDIC)
A0sales0breakpoint0of0a0mutual0fund0is:
A)0The0minimum0dollar0amount0of0a0purchase0of0a0mutual0fund0where0a0volume0disco
unt0is0given
B)0The0minimum0share0amount0of0a0purchase0of0a0mutual0fund0where0a0volume0disco
unt0is0given
C)0The0point0at0which0a0letter0of0intent0can0be0obtained
D)0The0point0at0which0a0letter0of0intent0can0be0backdated0-
0ans✔A)0The0minimum0dollar0amount0of0a0purchase0of0a0mutual0fund0where0a0volume
0discount0is0given
Which0of0the0following0statements0is0TRUE0concerning0filing0a0registration0application0
with0FINRA?
A)0It0is0acceptable0not0to0answer0certain0questions0due0to0privacy0concerns.
B)0It0is0a0violation0for0an0application0to0be0incomplete0or0misleading.
, C)0If0a0person0has0already0been0registered0and0changes0firms,0a0new0application0is0n
ot0required.
D)0All0registered0persons0are0required0to0update0their0application0every0two0years.0-
0ans✔B)0It0is0a0violation0for0an0application0to0be0incomplete0or0misleading.
The0time0at0which0an0employee0is0eligible0to0receive0at0least0some0of0the0retirement0b
enefits0that0have0been0contributed0to0the0plan0by0the0employer0is0referred0to0as:
A)0Eligibility
B)0Qualification
C)0Contributory
D)0Vested0-0ans✔D)0Vested
If0an0issuer's0convertible0bonds0are0converted0by0bondholders,0what0is0the0effect0on0t
he0issuer's0outstanding0common0stock?
A)0It0will0no0have0no0effect.
B)0It0will0decrease0the0number0of0outstanding0shares.
C)0It0will0provide0existing0shareholders0with0a0larger0dividend.
D)0It0will0increase0the0number0of0outstanding0shares.0-
0ans✔D)0It0will0increase0the0number0of0outstanding0shares.
Which0of0the0following0statements0is0TRUE0about0revenue0bonds?
A)0Interest0is0usually0paid0from0the0earnings0of0the0facility0for0which0the0bond0was0iss
ued
B)0Interest0is0subject0to0federal0taxes
C)0Revenue0bonds0are0considered0safer0than0general0obligation0bonds
D)0The0state0public0utility0commission0must0approve0each0interest0payment0-
0ans✔A)0Interest0is0usually0paid0from0the0earnings0of0the0facility0for0which0the0bond0w
as0issued
Which0of0the0following0is0the0rate0that's0charged0on0overnight0loans0between0commer
cial0banks?
A)0Prime0rate
B)0Discount0rate
C)0Federal0funds0rate
D)0Call0rate0-0ans✔C)0Federal0funds0rate
A0customer0contacts0her0registered0representative0to0buy0an0OTC0stock.0Rather0than0
buying0it0directly0from0a0market0maker,0the0broker-dealer0contacts0another0broker-
dealer,0who0buys0it0from0a0market0maker0creating0two0levels0of0transaction0fees.0This0
is0known0as:
A)0Free-riding0and0withholding
