Securities Industry Essentials Certification Test (2024) || All Questions & Answers (Rated A+)
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Securities Industry Essentials
Securities Industry Essentials Certification Test (2024) || All Questions & Answers (Rated A+)
Securities Industry Essentials Certification Test (2024) || All Questions & Answers (Rated A+)
A 55-year-old investor purchased a 6% DEF convertible mortgage bond at 90 with 10 years until maturity. I...
, Securities Industry Essentials
Certification Test (2024) || All Questions
& Answers (Rated A+)
A 55-year-old investor purchased a 6% DEF convertible mortgage bond at 90 with
10 years until maturity. If the bond is currently trading at 97, what is the current
yield?
A) 5.72%
B) 6 %
C) 6.19 %
D) 6.67 % - ANSWER - C) 6.19%
When determining the yield all you need is the market price of the bond and the
coupon/interest rate. The investor is 55 y/o or the bond is a convertible mortgage
bond that was purchased at $900 (90% of 1000 par) with 10 years until maturity. You
need 6%, 97, current yield
Which of the following is TRUE of UGMA accounts?
A) there can be only one minor and one custodian per account
B) there can be more than one minor and one custodian per account
C) securities can only be purchased on margin
D) they must set up for children who have reached the age of minority - ANSWER -
A) there can be only one minor and one custodian per account
Choices a and b oppose each other. If there are two opposing answers in almost all
cases one of the us right. Ignore c and d.
Uniform Gifts to Minors Act (UGMA) accounts are set up for minors who are too
young to have their own accounts. Each account is limited to one minor and one
custodian
Which of the following is TRUE of the 5% markup policy?
I) it covers commissions charged to customers when executing trades on an agency
basis
II) it covers markups on stock sold to customers from inventory
Iii) it covers markdowns on stock purchased from customers for inventory
Iv) risk less and simultaneous transactions are covered
A) I and Iv only
B) Iv only
C) Ii and iii only
D) I, Ii, iii, Iv
Answer is D
,The 5% markup policy applies to nonexempt securities sold or purchased from
customers - ANSWER -
Primary market or primary offer - ANSWER - This is where securities are sold by the
issuer- a corporation or a government - to the investing public in what are known as
issuer transactions
It is an issuer that is selling a security to raise capital
Mr. B is a conservative investor. Which of the following would you recommend to
him?
a. Buying out options
B. Busing long-term income adjustment bonds
C. Buying common stock of an aggressive growth company
D. Buying treasury notes - ANSWER - D. Buying treasury notes
Treasury notes are considered the safest of all securities
The initial maturity on a standard option is - ANSWER - 9 months
Options give the purchaser the right to buy or sell securities at a fixed price. Options
are considered derivatives (securities that derive their value from another security)
they are linked to underlying security. Standard options have an initial maturity of 9
months.
Which of the following companies would be MOST affected by interest rate
fluctuations?
a. SKNK Perfume Corp
b. Bulb Utility Co
c. Crawford Vitamin Supplements Inc
d. LQD Water Bottling Co. - ANSWER - B. Bulb Utility Co.
Although all companies maybe somewhat affected by interest rate fluctuations, the
question uses the word most. If interest rates increase, companies have to issue
bonds with higher coupon(interest) rates. This higher rate, in turn, greatly affects the
companies' bottom lines. Therefore you are looking for a company that issues lists of
bonds. Utility companies are most affected by interest rate fluctuations because
they're highly leveraged (issue a lot of bonds)
A stockholder owns 800 shares of WHY common stock. WHY stockholders were
given cumulative voting rights. If there are 3 vacancies on the board of directors,
stockholders can cast any of the following votes EXCEPT
A) 800 for one candidate
B) 800 for each candidate
C)2, 400 for one candidate
D) 900 for each candidate - ANSWER - D) 900 for each candidate
A: the stockholder can use 800 shares to vote for only one candidate - he doesn't
have to use all 2400 votes
, B: another voting arrangement because nobody said the stockholder had to use all
his votes for one candidate
C: the stockholders has a total of 2400 votes to cast
D. This is the number that the stockholders cannot cast because of the word except
and 900x3 is 2700
In which order, from first to last, are the following actions taken when opening a new
options account?
I. Send the customer an ODD
II. Have the ROP approve the account
III. Execute the transaction
IV. Have the customer send in an OAA
A) I II III IV
B) II, I, IV, III
C) III, I, II, IV
D) I, III, II, IV - ANSWER - A) I II III IV
Because option transactions are so risky the customer has RTO receive an options
risk disclosure document (ODD) prior to opening the account. After the client
receives the ODD, the registered options principal (ROP) needs to approve the
account before any transactions can be executed. The customer signs and returns
an options account agreement (OAA) within 15 days after the account is approved
by the ROP.
Which TWO of the following are the minimum requirements for an investor to be
considered accredited ?
I. An individual with a net worth of $500,000
II. An invisible with a net worth of $1 mill
III. Am individual who earned $200000 per year in the most recent 2 years and has a
reasonable expectation of reaching that same level in that current year
IV. An individual who earned $300,000 per year in the most recent 3 years and has a
reasonable expectation that same level in the current year
A) I and iii
B) I and Iv
C) Ii and iii
D) Ii and iv - ANSWER - Choice c - Ii and iii
Both statements deal with net worth
To be considered an accredited investor the minimum requirement is a net worth of 1
mill and/or yearly income of $200,000 in most recent 2 years, with a reasonable
expectation of reaching that same level in the current year. If minimum were not
used then answer IV would also be correct
All of the following are true about open-end funds EXCEPT
I. They issue common stock
II. They issue preferred stock
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