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FINRA SIE Chap 1 Exam 59 Questions with Verified Answers,100% CORRECT
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FINRA SIE Chap 1 Exam 59 Questions with Verified Answers
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FINRA SIE Chap 1 Exam 59 Questions with Verified AnswersWhat are the quailfications of a an accredited investor? - CORRECT ANSWER 1.
200,000 annual income (single)
2. 300,000 annual income (joint/married) (last two years)
3. $1,000,000 net worth EXCLUDING primary residence
For accredited investors does in include primary residence? - CORRECT ANSWER No!
Must have a networth not including primary residence
What is the DTCC's goal? - CORRECT ANSWER to automate and centrailze clearing
and settlement. The securities do not have to be physical.
How are equities cleared? (i.e what agency?) - CORRECT ANSWER National
Securities Clearing Corporation (NSCC)
what does the National Securities Clearing Corporation (NSCC) do? - CORRECT
ANSWER - a subsidiary to the DTCC
- The National Securities Clearing Corporation (NSCC) provides clearing services for
the majority of broker-to-broker equity trades in the United States.
What is the purpose of clearing agencies/corporations? name 3 main suctions -
CORRECT ANSWER -It provides trade comparison and reporting services.
-It assists broker-dealers in transferring assets in a customer account to another broker-
dealer.
-It offers customers the ability to have real-time trade matching.
What does a DTC do? - CORRECT ANSWER has the responsibility for automated
book-entry changes in the ownership of securities
Where are non listed stocks found? - CORRECT ANSWER Over the counter markets
(OTC equities) can be found on the OTCBB (bulletin) board and OTC pink marketplace
Who maintains accounts for ominous accounts in clearing? - CORRECT ANSWER The
introducing firms
What is a broker-dealer? - CORRECT ANSWER a financial intermediary that connects
issuers of securities to investors
, What does a broker do? - CORRECT ANSWER Brokers act as AGENTS that have
commission by connecting buyers and sellers (or issuers and investors)
What does it mean to be an agent and a principal - CORRECT ANSWER agent = act on
behalf of someone else, arranges for the asset for the customer
principal = provides the service,
What does a dealer do? - CORRECT ANSWER dealer acts as a principal and makes
profit on markups / markdowns (spreads) PDM.
Hold inventory so have invetory risk
What does the market maker do? - CORRECT ANSWER Market maker stands ready to
buy and sell at the stated prices. They will quote and people will buy in lots. They are
obligated to buy and sell at the quoted price
provide liquidity
What is the bid - CORRECT ANSWER What the Broker will Buy at
I.e what me can sell to the broker for
What is the ask - CORRECT ANSWER what the broker will sell at
i.e what I can buy it for
What does an investment advisor do? - CORRECT ANSWER Charges a fee for
managing a portfolio (i.e is not transaction based). Typically a fee based on AUM.
Will be the customer of brokers or dealers.
Retail investors - CORRECT ANSWER pretty much anything that isnt classified as the
others. Individuals with limited (average) asset amount
What are institutional investors? - CORRECT ANSWER Large amount of assets, not a
natural person, such as banks, hedge funds, pensions, etc
can investment advisors be muni advisors? - CORRECT ANSWER YES! Muni advisors
are advisors that help governments with their municipal bonds (i.e who to underwrite,
how to go about it)
Accredited investors - CORRECT ANSWER a step above retail. these are more
sophisticated investors that meet certain requirements.
NOT a pool of money! But can be both natural persons and intuitions such as banks
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