SIE PRACTICE EXAM QUESTIOS AND ANSWERS
Which corporate voting procedures entitles a shareholder to one vote per share, and
votes must be divided evenly among the candidates being voted on? - Answers -
Statutory voting
What market refers to the trading of exchange-listed securities in the over-the-counter
market? These trades allow institutional investors to trade blocks of securities directly,
rather than through an exchange, providing liquidity and anonymity to buyers. - Answers
-Third market
All are characteristics of a REIT EXCEPT - Answers -it is a publicly traded open-end
investment company
(it is closed-end)
What can an investor sign which allows him or her to receive breakpoint discounts
based upon a commitment to buy a specified number of mutual fund shares over a
period of time, usually 13 months - Answers -Letter of intent
What is a type of exchange rate system in which a country ties its currency to a basket
of other currencies or to another measure of value, such as gold? - Answers -Fixed
exchange rate system
What will result if money distributed from a 529 plan is not used to pay for qualifying
education expenses? - Answers -The gain is taxed as ordinary income, and a 10%
penalty is applied
An investor who believes that an economic recession is imminent should purchase
which type of stock? - Answers -Defensive stock because they tend to outperform
during economic downturns
What is true regarding dividends paid by growth stocks and value stocks? - Answers -
Because they are growing and expanding, growth stocks typically do not pay large
dividends
What is a type of broker that acts as a liaison between an investor and a clearing
corporation by helping to ensure that trades are settled appropriately and transactions
are successfully completed? - Answers -Clearing broker
What form must broker-dealers, investment advisers, or issuers of securities fill out in
order to terminate the registration of an individual in the appropriate jurisdiction? It is
also known as the Uniform Termination Notice for Securities Industry Registration. -
Answers -U5
, An order to sell a stock at a price below the current market price is called a - Answers -
sell stop order
What regulation was adopted to update short sale regulations and to address concerns
regarding potentially abusive naked short selling? - Answers -Regulation SHO
A fraudulent investment operation where the operator provides fabricated reports and
generates investment returns for older investors through revenue paid by new investors,
rather than from legitimate business activities or profits of financial trading is called a -
Answers -Ponzi scheme
An investor sells a naked call on Omikron for a $250 premium. What is true regarding
the investors position? - Answers -The investor's potential loss is unlimited
Which act created the SEC and empowered it with broad authority over all aspects of
the securities industry? - Answers -Securities Exchange Act of 1934
A free tool provided by FINRA that is intended to help consumers research the
professional backgrounds of brokers and brokerage firms, as well as investment advisor
firms and advisors? - Answers -BrokerCheck
The Federal Reserve Board performs what actions? - Answers -It sets monetary policy,
but does not set tax policy
An offering of shares to existing stockholders on a pro-rata basis is called a - Answers -
Rights offering
The difference between a bond's price and the conversion parity price is referred to as -
Answers -conversion premium
An individual who meets what criteria must register as an investment adviser? -
Answers -The individual provides advice or analyses concerning securities
The individual is in the business of providing investment advice
The individual provides investment advice for compensation
A type of preferred stock that gives the investor the right to receive dividends equal to
the normally specified rate, as well as an additional dividend based on a specific
predetermined condition is called a - Answers -participating preferred stock
Profit sharing plans have what characteristic? - Answers -they can be invested entirely
in company stock
What is true regarding the Central Registration Depository (CRD)? - Answers -It was
developed by NASAA and the NASD
It consolidated a multiple paper-based state licensing and regulatory process into a
single, nationwide computer system
Which corporate voting procedures entitles a shareholder to one vote per share, and
votes must be divided evenly among the candidates being voted on? - Answers -
Statutory voting
What market refers to the trading of exchange-listed securities in the over-the-counter
market? These trades allow institutional investors to trade blocks of securities directly,
rather than through an exchange, providing liquidity and anonymity to buyers. - Answers
-Third market
All are characteristics of a REIT EXCEPT - Answers -it is a publicly traded open-end
investment company
(it is closed-end)
What can an investor sign which allows him or her to receive breakpoint discounts
based upon a commitment to buy a specified number of mutual fund shares over a
period of time, usually 13 months - Answers -Letter of intent
What is a type of exchange rate system in which a country ties its currency to a basket
of other currencies or to another measure of value, such as gold? - Answers -Fixed
exchange rate system
What will result if money distributed from a 529 plan is not used to pay for qualifying
education expenses? - Answers -The gain is taxed as ordinary income, and a 10%
penalty is applied
An investor who believes that an economic recession is imminent should purchase
which type of stock? - Answers -Defensive stock because they tend to outperform
during economic downturns
What is true regarding dividends paid by growth stocks and value stocks? - Answers -
Because they are growing and expanding, growth stocks typically do not pay large
dividends
What is a type of broker that acts as a liaison between an investor and a clearing
corporation by helping to ensure that trades are settled appropriately and transactions
are successfully completed? - Answers -Clearing broker
What form must broker-dealers, investment advisers, or issuers of securities fill out in
order to terminate the registration of an individual in the appropriate jurisdiction? It is
also known as the Uniform Termination Notice for Securities Industry Registration. -
Answers -U5
, An order to sell a stock at a price below the current market price is called a - Answers -
sell stop order
What regulation was adopted to update short sale regulations and to address concerns
regarding potentially abusive naked short selling? - Answers -Regulation SHO
A fraudulent investment operation where the operator provides fabricated reports and
generates investment returns for older investors through revenue paid by new investors,
rather than from legitimate business activities or profits of financial trading is called a -
Answers -Ponzi scheme
An investor sells a naked call on Omikron for a $250 premium. What is true regarding
the investors position? - Answers -The investor's potential loss is unlimited
Which act created the SEC and empowered it with broad authority over all aspects of
the securities industry? - Answers -Securities Exchange Act of 1934
A free tool provided by FINRA that is intended to help consumers research the
professional backgrounds of brokers and brokerage firms, as well as investment advisor
firms and advisors? - Answers -BrokerCheck
The Federal Reserve Board performs what actions? - Answers -It sets monetary policy,
but does not set tax policy
An offering of shares to existing stockholders on a pro-rata basis is called a - Answers -
Rights offering
The difference between a bond's price and the conversion parity price is referred to as -
Answers -conversion premium
An individual who meets what criteria must register as an investment adviser? -
Answers -The individual provides advice or analyses concerning securities
The individual is in the business of providing investment advice
The individual provides investment advice for compensation
A type of preferred stock that gives the investor the right to receive dividends equal to
the normally specified rate, as well as an additional dividend based on a specific
predetermined condition is called a - Answers -participating preferred stock
Profit sharing plans have what characteristic? - Answers -they can be invested entirely
in company stock
What is true regarding the Central Registration Depository (CRD)? - Answers -It was
developed by NASAA and the NASD
It consolidated a multiple paper-based state licensing and regulatory process into a
single, nationwide computer system
