SIE Final Exam 5
A 55-year-old investor has earned $55,000 in pension income and $1,500 from a part-time job
this year. How much can she contribute to her IRA? - ANS-$1,500
A bond is selling at a discount and yields have remained constant. As the bond gets closer to its
maturity, what happens to its price? - ANS-It increases
A broker-dealer executes but does not process transactions. If the firm processing the
transactions does not know the identity of the customers, this is known as a(n): - ANS-Omnibus
account
A broker-dealer's anti-money laundering (AML) compliance program must be approved: -
ANS-In writing by a member of senior management
A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this
stock. The broker-dealer acted in a(n): - ANS-Principal capacity and charged the client a markup
A customer owns a warrant with a strike price of $50 and the price of the underlying security has
increased from $25 to $40. The current intrinsic value of the warrant is: - ANS-Zero
A customer owns shares of restricted stock and now intends to sell them. If the proper forms are
filed with the SEC, the customer may sell these shares: - ANS-Over a 90-day period
A customer who has consistently invested in mutual funds is considering a first-time investment
in a hedge fund. When comparing mutual funds to hedge funds, which of the following
statements is NOT TRUE? - ANS-Mutual funds pool investors' money and manage the portfolio,
whereas hedge funds manage each investor's assets separately.
A individual has a mix of small-cap growth stocks, large-cap stocks from mature industries,
investment-grade bonds, speculative bonds, preferred stock, and foreign securities. She is
attempting to reduce: - ANS-Market risk
A person hears sensitive news regarding a publicly traded company before it's disseminated to
the public. If this person sold his stock, the prohibited practice that he has engaged in is referred
to as: - ANS-Insider trading
A person is completing a Form U4 to become registered and notices that the document requires
his signature. The person has an aversion to signing legal documents that he doesn't fully
understand. For clarification on the details of the form, he calls his brother who is a lawyer and
specializes in employment law. The brother indicates that if Form U4 is signed, a person is
, agreeing to: - ANS-Submit potential disputes with the firm, other member firms, customers, or
associated persons to arbitration rather than litigation
A qualified plan has all of the following characteristics, EXCEPT: - ANS-Tax-free distributions
A quote of 5.90 - 5.75 is a quote for which of the following securities? - ANS-Treasury bills
A registered person who is employed by a broker-dealer has committed an offense that makes
the person subject to statutory disqualification. The firm is MOST likely to take which of the
following actions? - ANS-No longer permit the person to be associated with the member firm
A registered person's FINRA registration has become inactive because her firm is no longer in
business. Unless she becomes employed by another member firm, she will be required to
requalify by examination after: - ANS-Two years
A registered representative has just been called up for active military duty. What is his
Continuing Education (CE) status? - ANS-CE requirements are deferred until his active duty
ends.
A registered representative is aware of a large order sitting on the firm's institutional trading
desk. He decides to execute an order for his own account before the institutional order is
entered. This practice is known as: - ANS-Frontrunning
A registered representative is sending an email to 20 individual investors. This is defined as
a(n): - ANS-Correspondence
A registered representative purchased two tickets to a concert for which he paid $175 per ticket.
If the face value of the tickets is $95 per ticket, the RR may: - ANS-Not give any tickets to a
customer
A registered representative who holds limited discretionary authority over a customer's account
may: - ANS-Buy or sell securities in the account without consulting the customer
A retail salesperson has helped his firm win the role as the lead underwriter for a local municipal
bond issue. If the underwriting is being conducted on a negotiated basis, which of the following
statements is TRUE? - ANS-It is a violation of MSRB rules if the retail salesperson had made a
$300 political contribution to a local elected official of this issuer within the past two years
A stock closes at $37. The next day the stock sells ex-dividend $0.68 per share. At what price
will the stock open the next day if it opens at the same level it closed the day before? -
ANS-36.32
A tax payment is required for which of the following events? - ANS-Cash dividend
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