SIE (MASTERY TEST) 2022/2023 WITH COMPLETE SOLUTIONS

SIE (MASTERY TEST) 2022/2023 WITH COMPLETE SOLUTIONS This study source was downloaded by from CourseH on :49:57 GMT -06:00 All of the following are U.S. government agency debt securities EXCEPT A) Government National Mortgage Association securities B) Farm Credit Administration securities C) Federal National Mortgage Association securities D) Treasury notes - ANSWER D) Treasury notes GNMA, Freddie & Fannie, Farm Credit Admin Numbers measuring the output of goods and services have been declining for just under 2 years. The economy would be characterized as A) being just under the recessionary measurement threshold B) expanding C) being in an economic trough within the business cycle D) being in a depression - ANSWER D) being in a depression a trough is the end of of of declining period Which of the following mutual fund share classes has no back-end load, lower operating expenses, and low or no 12b-1 fees? A) Class A B) Class B C) Class C upon conversion to Class B D) Class C - ANSWER A) Class A The federal act that requires registration with the SEC as a face-amount certificate company, unit investment trust company, or management company is A) the Securities Act of 1933 B) the Investment Company Act of 1940 C) the Trust Indenture Act of 1939 D) the Securities Exchange Act of 1934 - ANSWER Investment Company Act of 1940 Local government investment pools (LGIPs) are established by A) states to provide municipalities a place to invest funds short term B) local municipalities to allow states a place to invest funds short term C) states to provide municipalities a place to invest funds long term D) the federal government to provide municipalities a place to invest funds long term - ANSWER STATES provide municipalities a place to invest funds SHORT term Regarding stock rights and stock warrants, which of the following is TRUE? A) Warrants are sometimes bundled with other securities. B) Warrants have a short-term subscription length (expiry). C) Rights cannot be sold in the open market, only exercised once received. D) Rights are exercised to purchase shares at a premium, above the security's price when issued. - ANSWER A) Warrants are sometimes bundled with other securities. This study source was downloaded by from CourseH on :49:57 GMT -06:00 Which of the following persons would be allowed to purchase shares of an initial public offering (IPO)? A) An attorney acting on behalf of the managing underwriter B) The grandparent of a member broker-dealer employee C) Someone owning 15% of a member broker-dealer D) The father of a member broker-dealer employee - ANSWER B) The grandparent of a member broker-dealer employee Aunts, uncles, grandparents are NOT considered immediate family Which of the following offering types would be used for a deal that will be sold exclusively to residents of one state? A) A Reg A offering B) A Reg. S offering C) A Rule 144 offering D) A Rule 147 offering - ANSWER D) A Rule 147 offering Which of the following is correct concerning an uncovered call writer? A) The premium is the maximum gain and the loss potential is unlimited. B) Both gains and losses are unlimited since the position is uncovered. C) The premium is the maximum loss and the gain potential is unlimited. D) Both gains and losses are limited to the premium received from the sale of the option. - ANSWER A) The premium is the maximum gain and the loss potential is unlimited. All of the following are benefits of a traditional IRA EXCEPT A) contributions may be tax deductible B) funds may be withdrawn without penalty for certain exemptions C) no penalty is charged for failing to withdraw funds after age 70½ D) earnings accumulate on a tax-deferred basis - ANSWER C) no penalty is charged for failing to withdraw funds after age 70½ MUST withdraw funds after 70 1/2 RMDs TRUE A) contributions may be tax deductible B) funds may be withdrawn without penalty for certain exemptions D) earnings accumulate on a tax-deferred basis In general, a corporation assumes the least risk when it obtains funds from the sale of A) secured bonds B) zero coupons This study source was downloaded by from CourseH on :49:57 GMT -06:00 C) preferred stock D) debentures - ANSWER preferred stock - equity does not have to be paid back Unlike the other choices, the sale of preferred stock does not entail the assumption of debt and is therefore the least risky. It is always riskier to borrow than it is to raise equity because equity does not have to be paid back. A customer owns 1,000 shares of stock subject to a 2:3 reverse stock split. The position will now consist of A) fewer shares worth more per share, but the same net position value B) more shares worth less per share, but the same net position value C) more shares worth more per share with an increased net position value D) fewer shares worth less per share with a decreased net position value - ANSWER reverse stock split: Shares decrease, price per share increases A) fewer shares worth more per share, but the same net position value The Achieving a Better Life Experience (ABLE) Act of 2014 enabled the establishment of ABLE accounts for certain individuals. All of the following regarding ABLE accounts are true EXCEPT A) contributions can be made by any person, including the account beneficiary B) eligibility is limited to those where the onset of a significant disability occurred before the age of 26 C) contributions to ABLE accounts are tax deductible D) income earned in an ABLE account is not taxed - ANSWER contributions to ABLE accounts are NOT tax deductible TRUE income earned in an ABLE account is not taxed Your customer retired 2 years ago at age 70. He recently took a job with a retailer greeting customers. He would like to contribute to a retirement plan to accumulate additional money with the view to leave something to his grandchildren. You would most likely advise him to open A) a mutual fund B) a Roth IRA C) an annuity D) a traditional IRA - ANSWER A broker-dealer designated as a carrying firm would be expected to do all of the following EXCEPT A) maintain a lower net capital than noncarrying BDs B) perform back-office functions such as sending trade confirmations to customers This study source was downloaded by from CourseH on :49:57 GMT -06:00 C) take custody of customer funds and securities D) clear transactions for customer accounts - ANSWER A) maintain a lower net capital than noncarrying BDs * maintain a HIGHER net capital than noncarrying BDs TRUE - perform back-office functions such as sending trade confirmations to customers - take custody of customer funds and securities - clear transactions for customer accounts Regarding delivery for listed option contracts when exercised, which of the following is TRUE? A) Currency and index options are cash settled in U.S. dollars. B) Equity and index options are settled in U.S. dollars. C) Equity options are cash settled in U.S. dollars. D) Currency and equity options are settled in the underlying security. - ANSWER Foreign currency & index options are cash settled Janet Johnson, a registered representative and licensed insurance agent, meets in the home with a 50-year-old widower to discuss what to do with life insurance proceeds of his deceased spouse. The widower is apprehensive about liquidity. Johnson hands him a prospectus for a variable annuity and recommends the funds be conservatively invested in separate accounts within the annuity. Johnson takes time to carefully explain and illustrate a 6% gross return over a 20-year period, and further explains that earnings will grow tax deferred. What did Johnson do wrong? A) Nothing. Johnson made a careful, individualized presentation of a securities product. B) Johnson recommended a variable annuity to an individual who is looking for liquidity. C) The separate accounts should have been presented as mutual funds. D) Johnson waited until the presentation to deliver the prospectus. - ANSWER If the Midlands Pencil Corporation has issued several different debt securities, an investor would expect the lowest income stream from A) ordinary debentures B) speculative bonds C) subordinated debentures D) convertible debentures - ANSWER A) convertible debentures. Although convertible debentures have many positive features for the investor, the major negative is that, in exchange for those benefits, the investor accepts a lower rate of interest. Which of the following sell transactions is NOT subject to the holding period restriction specified in SEC Rule 144? This study source was downloaded by from CourseH on :49:57 GMT -06:00 A) Unregistered stock acquired by a corporate affiliate in a stock option program B) Stock acquired by a corporate affiliate in a private placement C) Stock acquired on the NYSE by a corporate affiliate D) Unregistered stock acquired by a nonaffiliate under an investment letter - ANSWER C) Stock acquired on the NYSE by a corporate affiliate Unregistered stock, if held by a non-affiliate, must still subject to the holding period Which of the following may be considered suspicious? A) Transactions that alone, or in the aggregate, involve at least $2,000 B) A client expressing undue concern about substantial commissions being charged to the account C) A customer unconcerned about losses D) Moving large sums of money between accounts with the same last names - ANSWER C) A customer unconcerned about losses D) Moving large sums of money between accounts with the same last names Your broker-dealer is a fully disclosed firm. This means that it A) accepts customer funds to be held at the BD B) holds customer securities at the BD C) introduces its business to a clearing agent D) acts as its own back office, performing all functions such as sending out customer statements - ANSWER C) introduces its business to a clearing agent If a real estate investment trust (REIT) distributes 85% of its net investment income to shareholders, on how much of its net investment income must the trust pay taxes? A) 15% B) Only on that portion not taxable to the shareholders C) 85% D) 100% - ANSWER A registered representative is permitted to work from a home residence conducting normal business activities. Regarding the arrangement, all of the following statements are true EXCEPT A) the location would be subject to a premise visit by and review by a principal of the firm B) approval of the member firm's self-regulatory organization (SRO) is required C) taking customer orders for the purchase and sale of securities would be permitted at this location D) the address and telephone number of this location may not be advertised - ANSWER D) the address and telephone number of this location may not be advertised *** address & telephone number maybe advertised