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SIE STC USA Greenlight Exam 1 (Questions & Answers) 100% Correct!!
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SIE STC USA Greenlight Exam 1 (Questions & Answers) 100% Correct!!
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Name: Score:85 Multiple choice questions
Term 1 of 85
Municipal bonds that are backed by the taxing power and the full faith and credit of the issuer are
referred to as:
Revenue Bonds
General Obligation Bonds
Moral Obligation Bonds
Special Assessment Bonds
Term 2 of 85
Which of the following statements describes the greatest risk associated with mortgage-backed
securities?
Borrowers might default on their mortgage payments
The market for mortgage-backed securities is illiquid
The market price of the bonds might fall due to a rating downgrade
Falling interest rates might accelerate early repayment of principal
,Term 3 of 85
A person has had a brokerage account with an online securities trading firm, but has just been
hired by a broker-dealer. Which of the following statements is TRUE?
The person is not permitted to maintain the account
The person is only permitted to maintain the account if a principal of the employing firm
provides written approval for each order prior to the order being entered.
The person is permitted to maintain the account if his employer provides written consent
within three months of being hired.
The person is permitted to maintain the account if his employer provides written consent
within 30 days of being hired.
Term 4 of 85
Which of the following investors typically are entitled to vote?
Common stockholders only
Common and preferred stockholders only
All stockholders an convertible bondholders
All stockholders and senior debt holders
Term 5 of 85
When can a European style option be exercised?
At any time up until the expiration date
Only on the expiration date
During the week before the expiration date
on the day after the expiration dateEuropean style options can only be exercised on
option's expiration date.
,Term 6 of 85
A U.S. Treasury bill is sold in the secondary market on Thursday, March 14. It has a regular-way
settlement of:
Monday, March 18
Friday, March 15
Wednesday, March 20
Thursday, March 14
, Term 7 of 85
A corporation has a 7% cumulative preferred stock issue outstanding. The company paid a $5
dividend three years ago, $6 two years ago, and $7 last year. If the company wants to pay a
common stock dividend in the current year, the cumulative preferred stockholders must first
receive a dividend of:
A. $17
B. $10
C. $7
D. $3
B
Moral obligation bonds are municipal revenue bonds that are payable by the state if
revenues from the project do not satisfy debt service payments. However, in order for the
state to service the debt, approval of the state legislature is required. Double-barreled
bonds are issued as revenue bonds that are additionally backed by the general obligation
of the full faith and credit of the issuing municipality.
B
The cumulative preferred stockholders should receive a yearly dividend of 7%. Since it's a
cumulative issue, any dividend that's not paid (in arrears) must be made up prior to a
common dividend being paid. If a common dividend is to be paid in the current year, the
cumulative preferred stockholders must first receive $10 ($7 for the current year plus $2
missed from three years ago plus $1 missed from two years ago). Since the cumulative
preferred stockholders received the full dividend last year, there are no further dividend
payments in arrears to consider.
B
Broker-dealers have a suitability obligation to all customers. For noninstitutional or retail
customers, the broker-dealer (or registered person at the firm) must have a reasonable
basis for recommending a transaction based on information obtained from the customer
concerning her investment profile. This would include the customer's age, financial situation
and needs, tax status, investment objectives, investment experience, investment time
horizon, liquidity needs, and risk tolerance. Obtaining a customer's investment profile is
important when a registered person is determining whether a recommended security or
strategy is suitable for the customer.
A
According to the MSRB's Political Contribution Rules a municipal finance professional (MFP)
is permitted to make a maximum contribution of $250 per election to an individual for
whom she can vote. However, if the MFP cannot vote for the candidate, no contribution can
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