A broker-dealer has a line of business restricted solely to the purchase and sale of securities with trade executions being handled by another member firm. Which of the following would best describe this type of firm?
A)Prime/executing
B)Clearing/carrying
C)Market making
D)Introducing/fully dis...
a broker dealer has a line of business restricted solely to the purchase and sale of securities with trade executions being handled by another member firm
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SIE Prep - Review Questions
A broker-dealer has a line of business restricted solely to the purchase and sale of
securities with trade executions being handled by another member firm. Which of the
following would best describe this type of firm?
A)Prime/executing
B)Clearing/carrying
C)Market making
D)Introducing/fully disclosed
Lo 8.c - Answer D
A broker-dealer that accepts the risk of holding a particular security in its account to
facilitate trading and provide liquidity in that security is best described as
A) a clearing corporation.
B) a direct participation program.
C) a holding company.
D) a market maker.
Lo 8.c - Answer D
Which of these broker-dealers would most likely have correspondent firms?
A) Clearing corporation
B) A market maker
C) An introducing broker-dealer
D) A fully disclosed broker-dealer
Lo 8.c - Answer A
An institutional customer, such as a hedge fund, utilizes the services of a broker-dealer
who provides custody of securities, as well as other back-office functions, while allowing
the customer to establish relationships with other broker-dealers for the purpose of
executing orders. This account would be known as a
A) fully-disclosed account.
B) prime account.
C) self-clearing account.
D) clearing account.
Lo 8.c - Answer B
The Federal Reserve Board (FRB) does all of the following except
A) determine monetary policy.
B) enact fiscal policy.
C) regulate and impact the money supply.
D) supervise the printing of currency.
LO9.c - Answer B
All of the following are self-regulatory organizations (SROs) except
A) Securities and Exchange Commission (SEC).
, B) Financial Industry Regulatory Authority (FINRA).
C) New York Stock Exchange (NYSE).
D) Municipal Securities Rule Board (MSRB).
LO 9.a - Answer A
Broker-dealers and registered representatives may be subject to each of the following
administrative and regulatory bodies except
A) Financial Industry Regulatory Authority (FINRA).
B) NYSE.
C) Securities Investor Protection Corporation (SIPC).
D) state securities administrator.
LO 9.d - Answer C
If a married couple have a joint account with a market value of $1 million and a debit
balance of $600,000, all of which is in securities, how much coverage would this
account have?
A) $600,000
B) $1 million
C) $500,000
D) $400,000
LO 9.d - Answer D
Regarding registration for the sale of securities, those registered under the Investment
Company Act of 1940, such as mutual funds, would be considered
A) federal covered securities and not required to register at the state level.
B) securities that are exempt from registration at all levels.
C) securities required to register at both the federal and the state level.
D) federal covered securities required to register at the state level only.
LO 9.f - Answer A
An investor has a cash account with $300,000 in securities and $40,000 in cash. The
investor also has a restricted long margin account containing securities with a market
value of $220,000 and equity of $60,000. What is the extent of this investor's Securities
Investor Protection Corporation (SIPC) coverage?
A) $620,000
B) $280,000
C) $100,000
D) $400,000
LO 9.d - Answer D
An investor opens an account with BNZ Government Securities, a broker-dealer limiting
its transactions exclusively to securities issued by the U.S. government. The account
holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If
BNZ's broker-dealer business should fail, the investor would receive Securities Investor
Protection Corporation (SIPC) protection in the amount of
A) $50,000 of the cash and $450,000 of the securities.
, B) $500,000 of the securities and none of the cash.
C) $0.
D) all of the securities and all of the cash, because U.S. government securities do not
go bankrupt.
LO 9.e - Answer C
Which of the following are methods of registering securities within a state?
Registration by coordination
Registration by qualification
Registration by notification
Registration by application
A) II and III
B) I and IV
C) III and IV
D) I and II
LO 9.f - Answer D
Deanfield and Chatham Investments, LLC has recently registered as a broker-dealer
with the SEC and been accepted as a FINRA member firm. They update their website
to prominently display this fact at the top of their site and include large images of both
organizations' logos. This is
A) allowed so long as it is accurate.
B) not allowed because it is a misrepresentation.
C) allowed with proper disclaimers.
D) not allowed because it violates principals of marketing.
LO 9.a - Answer B
The Hoffman Equipment company of Anaheim, California is preparing to sell share to
the public in an IPO. They plan to sell exclusively to residents of the state of California
and use the proceeds to build a new showroom in Long Beach, California. This offer
would need to be registered with
A) the SEC.
B) no one, this is an exempt transaction.
C) the administrator of the state.
D) MSRB.
LO 9.f - Answer C
Keegan and Drew, spouses, have a checking account at Gloria City National Bank. The
balance is $450,000. What is their protection from SIPC if Gloria City fails?
A) $450,000—split evenly between the two people
B) $450,000—$250,000 for Keegan and $200,000 for Drew
C) There is no coverage for Keegan and Drew
D) $250,000—the total maximum coverage per account
LO 9.e - Answer C
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