SIE Exam Caril Questions and Answers
Graded A+
What type of risk is associated specifically with a particular sector, company, or investment
category?
Unique or nonsystematic risk
In which scenarios can an investor gain ownership of stock?
By purchasing call options or selling call opti...
1 SIE Exam Caril Questions and Answers Graded A+ What type of risk is associated specifically with a particular sector, company, or investment category? ✔✔Unique or nonsystematic risk In which scenarios can an investor gain ownership of stock? ✔✔By purchasing call options or selling call options (The holder of a call option can acquire stock at a set price if the option is exercised. Con versely, the seller of a put option must buy stock at the set price if the option is exercised) What term describes the cost associated with an options contract, given as a dollar amount per share of the underlying stock? ✔✔Option premium Wha t does the term "strike price" refer to in the context of an options contract? ✔✔The agreed -upon price at which stock can be bought or sold when the option is exercised, specified in dollars per share 2 How can a customer who anticipates an increase in ABC's stock price and cannot afford to buy 100 shares immediately use options to benefit from this expected rise? ✔✔By purchasing call options or selling put options (Both strategies are used when exp ecting a price increase) What is the term for an opportunity provided to existing shareholders to buy additional shares at a specific price within a set timeframe? ✔✔Rights offering (Typically valid for about 30 to 45 days) What are American Depositary Receipts (ADRs) and how are they utilized? ✔✔ADRs are certificates issued by banks that represent shares of a foreign company, which are traded and pay dividends in U.S. dollars Which types of records need to be preserved for a duration of six years? ✔✔Customer account ledgers Although underwriters assist with document preparation and submission, who is ultimately responsible for the accuracy and completeness of these documents? 3 ✔✔The company issuing the securities Whic h organizations function as clearing and depository entities in the financial markets? ✔✔Depository Trust Company and National Securities Clearing Corporation (Additionally, carrying and clearing firms may also fulfill these roles) What responsibi lities does a transfer agent typically have? ✔✔A transfer agent, often a bank, manages the correct issuance of securities, cancels old certificates, issues new ones, maintains ownership records, and addresses issues related to lost, stolen, or destroye d certificates What is the role of a clearing corporation in financial transactions? ✔✔It acts as an intermediary in trades; examples include commercial banks and broker -dealers, although the role isn't restricted to these entities Who is cat egorized as a control person in the context of securities? ✔✔Individuals or entities (including corporations or trusts) that own or control at least 10% of the issuer's equity securities, or unaffiliated persons holding 10% or more of the outstanding shares 4 What are the two main elements that make up Return on Investment (ROI)? ✔✔Gains from capital appreciation and income To boost the overall economy, what measure is often taken? ✔✔Purchasing securities through open -market operations to reduce interest rates What is the timeframe for a customer to meet a Regulation T margin call? ✔✔Settlement date plus an additional 2 business days (S + 2) What defines a fully disclos ed broker -dealer? ✔✔A broker -dealer that introduces its transactions to a clearing firm for processing Which SEC regulation focuses on safeguarding customer information? ✔✔Regulation S -P What term is used when a market maker fails to adhe re to its quoted price? ✔✔"Backing away"
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