SIE Exam Definitions Latest Update
100% Correct
What does a 12b-1 fee represent in mutual funds?
This is an annual charge that mutual funds impose to cover costs related to marketing and
distribution, sometimes referred to as a distribution or maintenance fee.
What is the primary functi...
1 SIE Exam Definitions Latest Update 100% Correct What does a 12b -1 fee represent in mutual funds? ✔✔ This is an annual charge that mutual funds impose to cover costs related to marketing and distribution, sometimes referred t o as a distribution or maintenance fee. What is the primary function of a 529 College Savings Plan? ✔✔ This plan allows families to save for higher education expenses on a tax -free basis, using professionally managed investment options. What are "A shares" in the context of mutual funds? ✔✔ These shares require an upfront sales fee, expressed as a percentage of the fund's net assets. What benefits does an ABLE account provide? ✔✔ It offers tax advantages for individuals with disabilitie s and their families, allowing annual contributions up to $15,000 without affecting eligibility for government aid programs. Who is considered an Accredited Investor? 2 ✔✔ An individual or institution that meets specific financial criteria and can participate in investment opportunities that are restricted to them, such as wealthy individuals or large financial entities. What is the purpose of an Accredited Investor Qu estionnaire? ✔✔ This document confirms that an investor qualifies as accredited, and it is maintained in the issuer’s records. What is meant by the Accumulation Phase in an annuity? ✔✔ This is the time period during which money is invested into an annuity before any withdrawals or payouts are made. How does Adjustable -rate Preferred Stock function? ✔✔ This type of stock has dividends that vary based on an external rate, such as that of Treasury bills, and is also known as floating -rate pre ferred stock. What is Advance Refunding? ✔✔ This is the process of issuing a new bond to pay off an existing bond, with the original bond remaining active for more than 90 days after the new bond is issued. 3 What distinguishes an Advisor -sold Plan ? ✔✔ This type of 529 savings plan is sold through financial advisors who provide investment advice and a range of options, generally with higher fees compared to direct -sold plans. What is an Affiliate? ✔✔ A person or entity that controls, is c ontrolled by, or shares control with another individual or organization. What are Agency Securities? ✔✔ These securities are issued by government -sponsored enterprises like Fannie Mae and Freddie Mac, but are not fully guaranteed by the U.S. governm ent. What is involved in an Agency Transaction? ✔✔ This involves a firm acting as an intermediary to facilitate trades between buyers and sellers. What is an All -or-none (AON) Commitment? ✔✔ This underwriting agreement requires that all the s hares be sold within a set period or the entire offering is canceled. 4 What is an Alternative Minimum Tax (AMT) bond? ✔✔ This is a type of private activity bond that is exempt from regular federal taxes but subject to the alternative minimum tax. What is an American Depository Receipt (ADR)? ✔✔ It is a certificate issued by a U.S. bank that allows shares of a foreign company to be traded on U.S. exchanges. American -style Option ✔✔an option that can be exercised at any time prior to and including the exercise date. Also called an American option . An interest ✔✔a descriptor used to indicate that a bond's purchase price will include its quoted (clean) price pl us any accrued interest since the last payment date. Annuitant ✔✔an individual entitled to receive benefits or payments from an annuity contract. Annuities ✔✔contracts sold by an insurance company used to provide steady income to individuals after retire ment, often until death.
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