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SIE Exam Chapters 1-5(100% Correct)
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Bid - ANSWERRepresents a clients selling price - This is the price at which the MM will buy dealer to dealer markets - ANSWERNASDAQ -Non-physical; phone and computer network - Negotiated market - unlimited number of registered "market makers" -Classified as a securities exchange OTCBB (Bull...

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  • October 18, 2024
  • 19
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • sie exam chapters 1 5100 correct
  • bid answerrepresents a clients selling price

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SIE Exam Chapters 1-5(100% Correct)

Bid - ANSWERRepresents a clients selling price

- This is the price at which the MM will buy

dealer to dealer markets - ANSWERNASDAQ

-Non-physical; phone and computer network

- Negotiated market

- unlimited number of registered "market makers"

-Classified as a securities exchange

OTCBB (Bulletin Board) - ANSWERMust be reporting companies

Third Market - ANSWER- Listed securities traded otc

- Do not maintain an inventory

Issuers - ANSWERAre legal entities that raise capital by issuing securities. These include:

Corporations

U.S. Treasury and Government Agencies

State and local governments

Banks

Foreign Governments

Equity - ANSWERUsed by corporations and banks

- represents ownership

Debt - ANSWEREx: Notes and bonds

Represent and issuers promise to pay

Broker - ANSWER-Firm acts as a agent or conduit

- Finds another party willing to take the other side of trade

- Collect commission for the service

- No risk to the firm

Dealer - ANSWER-Firm acts as a principal

- Firm takes the other side of the trade

- Entitled to markup/markdown

- Risk= Using their own money to take the other side of the trade

,Investment Banking - ANSWER-Issuance

- Acts as an underwriter

- Merger and Acquisition

- Private Equity

- Debt and equity capital markets

Research - ANSWER-Research reports on which companies should be bought or sold

Private Client - ANSWER- Retail Brokerage

Sales and Trading - ANSWER-Fixed income

-Equity

-Bonds and debt

Market-Maker - ANSWERIs a broker-dealer that chooses to display quotes to buy or sell a specific
amount of securities at specific prices

-Quotes are firm for at least 100 shares=round lots

Make Spreads

Ask or Offer - ANSWERRepresents a clients purchase price

- This is the price at which the MM will sell

Investment Adviser - ANSWERIs a firm that charges customers a fee for managing their securities
portfolios.

- The fee is based on the assets under management

- An IA is considered a large or institutional customer of a broker dealer

Municipal Advisor - ANSWERIs a person or firm who advises municipalities on bond offerings and
must be registered with the SEC

- Typically advise issuers (ex: state, county or city) regarding the structure and timing of a new
offering.

institutional investor - ANSWERCustomers with a large amount of assets

- Banks

- Insurance companies

- Investment companies

-corporations, partnerships

-Registered investment advisers

- public and private pension plans

-Hedge funds

, Retail Investor - ANSWER- Individual Investors who are not defined as institutional investors

Accredited Investors - ANSWERInstitutional investors as well as individuals who have met a financial
test

- Net worth of $1,00,000 excluding primary residence

- Annual income of $200,000 in each of the last 2 years, $300,000 for married couples

Qualified Institutional Buyer (QIB) - ANSWERBuyer must own and invest a minimum of $100 of
securities

- cannot be a natural person

primary market - ANSWERmarket for selling financial assets that can only be redeemed by the
original holder



Issuer-Underwriter-Investor

IPO - ANSWERInitial Public Offering

secondary market - ANSWERTrading markets that facilitate the exchange of existing financial
instruments among investors

Non-Exchnage Issues (OTC) - ANSWEROften low prices and thinly traded

-Two systems which offer real-time quotations:

1.OTCBB (Bulletin Board)

2. OTC Pink Markets

OTC Pink Markets - ANSWERMay be non-reporting companies

Trader - ANSWERExecute trades for their firm or their firms clients

- Do not maintain an inventory

Fourth Market - ANSWERtransactions made directly between large institutional buyers and sellers of
securities

Dark Pools - ANSWERProvides liquidity for large institutional investors and high-frequency traders.

- Quotes are not disseminated to the public

- Limits impact on the market

- Anonymous

DTTC: Depository Trust and Clearing Corp - ANSWERProvides cleaning, settlement and information
services for its members

- Is parents of the National Securities Clearing Corporation

- Guarantees Settlements

- Removes counterparty risk

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