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FINRA SIE Practice Exam 3|125 Questions with Verified Answers,100% CORRECT
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FINRA SIE Practice Exam 3|125 Questions with Verified Answers
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FINRA SIE Practice Exam 3|125 Questions with VerifiedAnswers
Popular Investment Securities, a FINRA member firm, produces short videos
describing the general characteristics of different types of securities. Periodically,
an interstitial appears during the video. Under FINRA's rules on communications
with the public? - CORRECT ANSWER -the appearance of the interstitial defines
the video as retail communication requiring filing.
*Probably the best example of an interstitial is the pop-up ad. Sometimes it is a
full-page ad causing the viewer to see the advertisement before being able to see
the rest of the content. Without the interstitial, a generic video describing general
characteristics of a type of security would not require filing. But, once that
advertisement pops up, it is now retail communication and must be filed.
Most business development companies (BDCs) are classified as? - CORRECT
ANSWER -Closed-ended investment company
If your client has a $21,000 net capital loss this year, and he plans to apply the
maximum deduction toward his ordinary income for the year, after this year, he
may? - CORRECT ANSWER -deduct a maximum of $3,000 per year and carry the
remaining loss forward indefinitely.
*Capital losses may be used to offset capital gains. Once all capital gains have
been offset, $3,000 of net capital losses may be used to offset ordinary income
annually. Remaining losses may be carried forward in future years until the loss is
exhausted.
An investor has a diversified portfolio of common stock with a market value of
$1.7 million and a beta of 1.20. If the OEX (S&P 100) is currently quoted at 680, to
protect the portfolio against a decline in value, the investor's best strategy is to
buy? - CORRECT ANSWER -30 PUTS
,*Buying puts is the most effective strategy to hedge the risk of decline in a stock
portfolio's market value.To determine the number of option contracts necessary
to hedge:portfolio value ($1.7 million)/market value of the index
(68,000).Multiply the result (25) by the beta of 1.20. The result is 30 contracts.
Most investment professionals believe that a diversified portfolio is the best
choice for the typical investor. Diversifying a portfolio can be accomplished by
doing all of the following except? - CORRECT ANSWER -buying securities from
different broker-dealers.
Potential investment company clients should be advised to investigate a fund by
looking at which of the following? - CORRECT ANSWER -Portfolio
-Investment Policy
*Investment policy, track record, portfolio, and sales load should all be
researched when assessing a fund. The identity of the custodian bank for the
fund, or number of shares outstanding, does not bear on its performance or
suitability.
Which of the following is not considered when trying to diversify a municipal
bond portfolio? - CORRECT ANSWER -Price
*One of the purposes of diversifying a municipal bond portfolio is to spread the
risk among the portfolio's issues. This can be accomplished by buying bonds of
differing maturities, geographical locations, and quality.
The writer of a combination expects the market to be? - CORRECT ANSWER -
Stable
*The writer, or seller, of a combination expects the market to be stable. The
buyer of a combination expects the market to be volatile. Combinations and
straddles are never bullish or bearish, as there are always both calls and puts
involved in the strategy, which are both bullish and bearish. Remember, the
definition of a combination is a put and a call on the same underlying security
with the strike prices and/or the expiration months being different.
, In a new margin account, a customer sells short 1,000 shares of XYZ at $30 per
share and deposits the required margin. If the stock subsequently falls to $25 per
share, the equity in the account is? - CORRECT ANSWER -$20,000
A customer sold 100 shares of QRS short when the stock was trading at 19. If QRS
is now trading at $14, and she wants to protect her gain, which of the following
orders should she place? - CORRECT ANSWER -Buy-Stop @ $14.25
*A buy limit order is used to buy at a lower price (when the market moves down).
A buy stop order is used to buy in a short position at a higher price (when the
market moves up). To protect the gain, a buy stop order would be placed just
above where the stock is currently trading.
Rank the following in the usual sequence of order allocation?
1-Syndicate
2-Member at the take down
3-Presale
4-Designated - CORRECT ANSWER -Presale, Syndicate, Designated and Member.
*PGDM "Professional Golfers Don't Miss".
*The standard order priority for allocation of municipal bond issues is (as stated
within the syndicate letter): presale, syndicate, designated, and member. Orders
that benefit all syndicate members have the highest priority.
A direct participation program shows the following operating results for the year:
Revenues: $3 million
-Operating expense: $1 million
-Interest expense: $200,000
-Management fees: $200,000
-Depreciation: $3 million
The cash flow from program operations is? - CORRECT ANSWER -$1,600,000
Million
*Cash flow for a partnership is calculated in the following fashion:Gross revenue
$3 millionLess operating exp -$1.2 millionLess debt interest -$200,000Less
depreciation $3 million= Net income -1.4 million (loss)To complete the cash flow
calculation add back in depreciation of $3 million= Cash flow = $1.6 million.
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