SIE - Test Questions, Multiple Choice with explanations
NYSE-listed stock transactions generally take place on Third-market transaction
the floor of the NYSE. However, when they occur off the
floor, this is referred to as a: Explanation:
Brokerage firms often transact in exchange-listed securities directly with their
institutional customers, without the involvement of a formal exchange. This is
known as a third-market transaction and is often done for trading efficiency,
better execution, and/or better price, though the transaction is still reported to the
NYSE ticker tape as promptly as if it had taken place on the floor.
When investment securities are referred to as exempt, SEC registration
this generally refers to exemption from what?
Explanation:
Securities such as U.S. Government bonds and bonds issued by states,
counties, and cities, otherwise called municipal bonds, do not have to be
registered with the Securities & Exchange Commission (SEC). They are thus
referred to as exempt securities.
Hedge funds and mutual funds are two examples of Institutional investors
which type of investor?
Explanation:
institutional investors are large investors that are considered sophisticated
enough to make their own investment decisions. They can only be legal entities,
such as real estate investment trusts, venture capital funds, insurance
companies, credit unions, banks, pension funds, hedge funds, and mutual funds.
Investor A holds 100 shares of Company XYZ in his Secondary market
personal brokerage account. He decides to sell these
shares for a profit. This transaction will take place on the: Explanation:
The secondary market is what most people know as the "stock market." It
facilitates transactions in existing securities that are not sold directly by the
issuer. Investors purchase these securities from other investors through accounts
held by brokerage firms like Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with The fact that the government cannot guarantee the accuracy of the information in
a prospectus
Explanation:
The SEC reviews the information in a registration statement, it does not approve
or disapprove of the information, nor does it guarantee the accuracy of the
information disclosures. Therefore no sales agent can say to a prospect that
these are 'government approved' securities.
SIPC, the securities investor protection corporation is: D. None of the above
A. An insurance entity which protects investors Explanation:
investments again market losses up to $500,000 SIPC was set up to protect customer ACCOUNTS in the event of a broker-dealer
B. An insurance entity which protects investors who are bankruptcy, not protect investments against loss. Be careful of the wording in this
sold worthless securities question. Cash & securities in customer accounts are 'insured' up to $500,000 in
C. A Congressional guarantee against losses in the the event the B/D goes bankrupt and the cash and securities can't be located
securities markets and properly returned to the customer.
D. None of the above
In most cases, Federal Securities Laws: A. Supersede State securities laws
A. Supersede State securities laws Explanation:
B. Are subordinate to State securities laws Federal securities laws typically supersede State laws.
C. Are given the same weight as State securities laws
D. None of the above
Which of the following are not considered money market D. ADRs
securities?
Explanation:
A. T-bills Since the 'money market' includes short term debt instruments only, and since
B. Commercial Paper ADRs represent ownership (equity) in foreign stocks, ADRs are not debt.
C. Reverse Repos
D. ADRs
When a corporation goes public, it is issuing: A. Common stock
A. Common stock Explanation:
B. Preferred stock Going public means sharing equity ownership (common stock) with public
C. Convertible bonds investors, for the first time (Initial public offering, IPO).
D. Any of the above
, SIE - Test Questions, Multiple Choice with explanations
The term 'issuer' most often refers to: D. A business, a municipality, or a federal governmental entity which is seeking to
raise capital from the sale of securities.
A. A corporation seeking to raise additional capital for
expansion or modernization purposes Explanation:
B. A business which prints up securities certificates such Whether one considers answers A, B, or C partially accurate, the last answer, D
as bonds and stocks is the most complete therefore best answer.
C. A business which has satisfied the listing
requirements of one or more approved stock exchanges
D. A business, a municipality, or a federal governmental
entity which is seeking to raise capital from the sale of
securities.
Every publicly-traded corporation is required to have a D. The transfer agent ensures that dividend payments go out to all registered
transfer agent and a registrar. The primary distinction owners of record on the payable date.
between the two is:
Explanation:
A. They are not different --- they perform the same This is one of the functions of a Transfer Agent. Registrars make sure that a
function company does not issue more shares than authorized in the Charter.
B. The registrar keeps the record of all stock and bond
holders
C. The transfer agent transmits the payment for
securities from the purchaser to the seller in all
secondary market trades.
D. The transfer agent ensures that dividend payments go
out to all registered owners of record on the payable
date.
One of the more attractive features of common stock is A. One cannot lose more than one's investment
that:
Explanation:
A. One cannot lose more than one's investment You cannot lose more than you've put at risk. A common stockholder cannot be
B. The stockholders have the right to vote on quarterly held liable for any debts of the corporation, therefore they have limited liability.
dividends
C. The stockholders have the right to choose Officers
D. Any of the above
When the market price of a company's common stock B. A stock split
has reached triple digits ($100 or above), the Board of
Directors may elect to declare which of the below to Explanation:
make the shares more affordable? Splitting a stock provides each shareholder with more shares and the CMV
(current market value) of the stock will decline proportionately. Because of the
A. Reverse stock split reduced price in the market, it becomes more 'affordable.'
B. A stock split
C. A stock dividend
D. Any of the above
When a corporate Board announces a 10% stock A. more shares
dividend, shareholders know they will be receiving:
Explanation:
A. more shares Stock dividends are not Cash dividends - they are dividends in the form of
B. money additional shares.
C. both of the above
D. neither of the above
Boards of Directors in the publicly-traded sphere are D. any of the above are possible voting procedures
elected by corporate stockholders, using which of the
following methods? Explanation:
All three are correct - in fact, Regular and Statutory are the same.
A. statutory voting
B. regular voting
C. cumulative voting
D. any of the above are possible voting procedures
Call option contracts are considered to have intrinsic A. when CMV exceeds exercise price
value:
Explanation:
A. when CMV exceeds exercise price Call option contracts go 'in the money' (intrinsic value) when the current market
B. when exercise price exceeds CMV value of the underlying security exceeds the exercise price (strike price) of the
C. when CMV is equal to exercise price option. If a call option's exercise price is $20, and the underlying stock is trading
D. when the option holder has exercised the option at $25, the intrinsic value of the call option is $5.
, SIE - Test Questions, Multiple Choice with explanations
Reinvestment risk is least present in: D. Zero coupon Treasury Bond
A. 2% 10 year Treasury Note Explanation:
B. 3% 10 year AA rated Municipal G.O. Since with a Zero coupon instrument there is no annual income to 'reinvest,'
C. 4% 10 year AAA rated Corporate debenture Zeroes have no reinvestment risk.
D. Zero coupon Treasury Bond
All of the below are typical features of an ETF except: C. they are traded each day based upon 4:00 pm NAV
A. they are marginable Explanation:
B. they often are sector-driven portfolios Exchange traded funds trade on exchanges at market prices determined by
C. they are traded each day based upon 4:00 pm NAV supply and demand - the same as regular corporate stocks.
D. none of the above are exceptions
Accumulation units are most often associated with: B. annuities
A. life insurance Explanation:
B. annuities Variable annuities sell 'accumulation units' to purchasers, whose price each day
C. mutual funds is based upon the 4 pm net asset value of the separate account.
D. ETFs
One of the most frequently issued money market C. of 270 days
instruments is commercial paper. Typically, this
investment has a maximum maturity: Explanation:
The maximum maturity is 9 months or 270 days.
A. of one year
B. of 90 days
C. of 270 days
D. of 180 days
The Securities Industry Essentials examination gives a A. the right to take one or more of the top-off representative exams
candidate
Explanation:
A. the right to take one or more of the top-off This SIE exam enables the candidate to take one of several different FINRA
representative exams registered reps exam.
B. the right to trade securities
C. the right to engage in phone solicitation of sales
prospects
D. all of the above
Certain securities are marginable under Regulation T of B. options
the Securities & Exchange Act of 1934 except:
Explanation:
A. listed stocks Regulation T does not permit margin under normal circumstances on Option
B. options contracts.
C. NASDAQ stocks
D. all of the above are marginal under Reg. T
When an investor is bearish on the broad stock market A. buying puts on the S&P 500 index is an appropriate strategy
A. buying puts on the S&P 500 index is an appropriate Explanation:
strategy Buying broad-based Index Put options will provide a hedge against the decline in
B. buying calls on the S&P 500 index is an appropriate the broad market.
strategy
C. buying mutual funds is an appropriate strategy
D. not investing in the market is an appropriate strategy
A customer wishes to liquidate 100 shares of ABC A. 904.78
common at the market. If the current inside market is
904.78 - 905.57, the client's transaction will occur Explanation:
disregarding commissions and other charges at The best (inside) bid is the price at which a client's liquidation (sell) order will be
executed.
A. 904.78
B. 905.57
C. at the last transaction price prior to entering this order
D. at a price agreed to between the firm and the
customer
NYSE-listed stock transactions generally take place on Third-market transaction
the floor of the NYSE. However, when they occur off the
floor, this is referred to as a: Explanation:
Brokerage firms often transact in exchange-listed securities directly with their
institutional customers, without the involvement of a formal exchange. This is
known as a third-market transaction and is often done for trading efficiency,
better execution, and/or better price, though the transaction is still reported to the
NYSE ticker tape as promptly as if it had taken place on the floor.
When investment securities are referred to as exempt, SEC registration
this generally refers to exemption from what?
Explanation:
Securities such as U.S. Government bonds and bonds issued by states,
counties, and cities, otherwise called municipal bonds, do not have to be
registered with the Securities & Exchange Commission (SEC). They are thus
referred to as exempt securities.
Hedge funds and mutual funds are two examples of Institutional investors
which type of investor?
Explanation:
institutional investors are large investors that are considered sophisticated
enough to make their own investment decisions. They can only be legal entities,
such as real estate investment trusts, venture capital funds, insurance
companies, credit unions, banks, pension funds, hedge funds, and mutual funds.
Investor A holds 100 shares of Company XYZ in his Secondary market
personal brokerage account. He decides to sell these
shares for a profit. This transaction will take place on the: Explanation:
The secondary market is what most people know as the "stock market." It
facilitates transactions in existing securities that are not sold directly by the
issuer. Investors purchase these securities from other investors through accounts
held by brokerage firms like Fidelity or Charles Schwab.
The term 'disclaimer' is most often associated with The fact that the government cannot guarantee the accuracy of the information in
a prospectus
Explanation:
The SEC reviews the information in a registration statement, it does not approve
or disapprove of the information, nor does it guarantee the accuracy of the
information disclosures. Therefore no sales agent can say to a prospect that
these are 'government approved' securities.
SIPC, the securities investor protection corporation is: D. None of the above
A. An insurance entity which protects investors Explanation:
investments again market losses up to $500,000 SIPC was set up to protect customer ACCOUNTS in the event of a broker-dealer
B. An insurance entity which protects investors who are bankruptcy, not protect investments against loss. Be careful of the wording in this
sold worthless securities question. Cash & securities in customer accounts are 'insured' up to $500,000 in
C. A Congressional guarantee against losses in the the event the B/D goes bankrupt and the cash and securities can't be located
securities markets and properly returned to the customer.
D. None of the above
In most cases, Federal Securities Laws: A. Supersede State securities laws
A. Supersede State securities laws Explanation:
B. Are subordinate to State securities laws Federal securities laws typically supersede State laws.
C. Are given the same weight as State securities laws
D. None of the above
Which of the following are not considered money market D. ADRs
securities?
Explanation:
A. T-bills Since the 'money market' includes short term debt instruments only, and since
B. Commercial Paper ADRs represent ownership (equity) in foreign stocks, ADRs are not debt.
C. Reverse Repos
D. ADRs
When a corporation goes public, it is issuing: A. Common stock
A. Common stock Explanation:
B. Preferred stock Going public means sharing equity ownership (common stock) with public
C. Convertible bonds investors, for the first time (Initial public offering, IPO).
D. Any of the above
, SIE - Test Questions, Multiple Choice with explanations
The term 'issuer' most often refers to: D. A business, a municipality, or a federal governmental entity which is seeking to
raise capital from the sale of securities.
A. A corporation seeking to raise additional capital for
expansion or modernization purposes Explanation:
B. A business which prints up securities certificates such Whether one considers answers A, B, or C partially accurate, the last answer, D
as bonds and stocks is the most complete therefore best answer.
C. A business which has satisfied the listing
requirements of one or more approved stock exchanges
D. A business, a municipality, or a federal governmental
entity which is seeking to raise capital from the sale of
securities.
Every publicly-traded corporation is required to have a D. The transfer agent ensures that dividend payments go out to all registered
transfer agent and a registrar. The primary distinction owners of record on the payable date.
between the two is:
Explanation:
A. They are not different --- they perform the same This is one of the functions of a Transfer Agent. Registrars make sure that a
function company does not issue more shares than authorized in the Charter.
B. The registrar keeps the record of all stock and bond
holders
C. The transfer agent transmits the payment for
securities from the purchaser to the seller in all
secondary market trades.
D. The transfer agent ensures that dividend payments go
out to all registered owners of record on the payable
date.
One of the more attractive features of common stock is A. One cannot lose more than one's investment
that:
Explanation:
A. One cannot lose more than one's investment You cannot lose more than you've put at risk. A common stockholder cannot be
B. The stockholders have the right to vote on quarterly held liable for any debts of the corporation, therefore they have limited liability.
dividends
C. The stockholders have the right to choose Officers
D. Any of the above
When the market price of a company's common stock B. A stock split
has reached triple digits ($100 or above), the Board of
Directors may elect to declare which of the below to Explanation:
make the shares more affordable? Splitting a stock provides each shareholder with more shares and the CMV
(current market value) of the stock will decline proportionately. Because of the
A. Reverse stock split reduced price in the market, it becomes more 'affordable.'
B. A stock split
C. A stock dividend
D. Any of the above
When a corporate Board announces a 10% stock A. more shares
dividend, shareholders know they will be receiving:
Explanation:
A. more shares Stock dividends are not Cash dividends - they are dividends in the form of
B. money additional shares.
C. both of the above
D. neither of the above
Boards of Directors in the publicly-traded sphere are D. any of the above are possible voting procedures
elected by corporate stockholders, using which of the
following methods? Explanation:
All three are correct - in fact, Regular and Statutory are the same.
A. statutory voting
B. regular voting
C. cumulative voting
D. any of the above are possible voting procedures
Call option contracts are considered to have intrinsic A. when CMV exceeds exercise price
value:
Explanation:
A. when CMV exceeds exercise price Call option contracts go 'in the money' (intrinsic value) when the current market
B. when exercise price exceeds CMV value of the underlying security exceeds the exercise price (strike price) of the
C. when CMV is equal to exercise price option. If a call option's exercise price is $20, and the underlying stock is trading
D. when the option holder has exercised the option at $25, the intrinsic value of the call option is $5.
, SIE - Test Questions, Multiple Choice with explanations
Reinvestment risk is least present in: D. Zero coupon Treasury Bond
A. 2% 10 year Treasury Note Explanation:
B. 3% 10 year AA rated Municipal G.O. Since with a Zero coupon instrument there is no annual income to 'reinvest,'
C. 4% 10 year AAA rated Corporate debenture Zeroes have no reinvestment risk.
D. Zero coupon Treasury Bond
All of the below are typical features of an ETF except: C. they are traded each day based upon 4:00 pm NAV
A. they are marginable Explanation:
B. they often are sector-driven portfolios Exchange traded funds trade on exchanges at market prices determined by
C. they are traded each day based upon 4:00 pm NAV supply and demand - the same as regular corporate stocks.
D. none of the above are exceptions
Accumulation units are most often associated with: B. annuities
A. life insurance Explanation:
B. annuities Variable annuities sell 'accumulation units' to purchasers, whose price each day
C. mutual funds is based upon the 4 pm net asset value of the separate account.
D. ETFs
One of the most frequently issued money market C. of 270 days
instruments is commercial paper. Typically, this
investment has a maximum maturity: Explanation:
The maximum maturity is 9 months or 270 days.
A. of one year
B. of 90 days
C. of 270 days
D. of 180 days
The Securities Industry Essentials examination gives a A. the right to take one or more of the top-off representative exams
candidate
Explanation:
A. the right to take one or more of the top-off This SIE exam enables the candidate to take one of several different FINRA
representative exams registered reps exam.
B. the right to trade securities
C. the right to engage in phone solicitation of sales
prospects
D. all of the above
Certain securities are marginable under Regulation T of B. options
the Securities & Exchange Act of 1934 except:
Explanation:
A. listed stocks Regulation T does not permit margin under normal circumstances on Option
B. options contracts.
C. NASDAQ stocks
D. all of the above are marginal under Reg. T
When an investor is bearish on the broad stock market A. buying puts on the S&P 500 index is an appropriate strategy
A. buying puts on the S&P 500 index is an appropriate Explanation:
strategy Buying broad-based Index Put options will provide a hedge against the decline in
B. buying calls on the S&P 500 index is an appropriate the broad market.
strategy
C. buying mutual funds is an appropriate strategy
D. not investing in the market is an appropriate strategy
A customer wishes to liquidate 100 shares of ABC A. 904.78
common at the market. If the current inside market is
904.78 - 905.57, the client's transaction will occur Explanation:
disregarding commissions and other charges at The best (inside) bid is the price at which a client's liquidation (sell) order will be
executed.
A. 904.78
B. 905.57
C. at the last transaction price prior to entering this order
D. at a price agreed to between the firm and the
customer
