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Final Exam 02 SIE 85 Questions with Verified Answers,100% CORRECT
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Final Exam 02 SIE 85 Questions with Verified Answers
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Final Exam 02 SIE 85 Questions with Verified AnswersIf a newly hired person is employed by a broker-dealer and will be offering
corporate securities, she can become FINRA registered by:
a. Passing the SIE Exam only
b. Passing the SIE Exam the Series 6 Exam
c. Passing the Series 6 Exam only
d. Passing the SIE Exam and the Series 7 Exam - CORRECT ANSWER d. Passing the
SIE Exam and the Series 7 Exam
In order to become properly registered or qualified, a newly hired person must
pass the SIE Exam and the appropriate FINRA licensing exam. To offer corporate
securities, a person must pass the Series 7 Exam plus the SIE Exam.
Which of the following statements is NOT TRUE concerning a clearing
corporation?
a. It provides trade comparison and reporting services.
b. It is responsible for automated book-entry changes in the ownership of
securities.
c. It assists broker-dealers in transferring assets in a customer account to another
broker-dealer.
d. It offers customers the ability to have real-time trade matching. - CORRECT
ANSWER b. It is responsible for automated book-entry changes in the ownership
of securities.
The responsibility for automated book-entry changes in the ownership of
securities is a function of a depository facility (e.g., the DTC), not a clearing
corporation. Each of the other choices are functions of a clearing system, such as
the National Securities Clearing Corporation (NSCC).
All of the following are considered a good delivery in the sale of 500 shares of
common stock, EXCEPT:
,a. Four 50-share certificates and ten 30-share certificates
b. Ten 50-share certificates
c. Five 100-share certificates
d. One 500-share certificate - CORRECT ANSWER a. Four 50-share certificates and
ten 30-share certificates
Delivery must be made in 100-share certificates, multiples of 100, or any
combination that adds up to 100 shares. Four certificates of 50 shares is
acceptable, but ten 30-share certificates is not, since 30-share certificates cannot
be combined to add up to 100 shares.
A customer gives his registered representative the following instructions. Buy 100
shares of General Motors whenever you think the price is right. Under current
regulations, the order:
a. Must be executed immediately
b. May not be accepted
c. Must be marked discretionary and approved by a branch manager
d. May be accepted and may be executed anytime that day - CORRECT ANSWER d.
May be accepted and may be executed anytime that day
The order may be accepted and is not a discretionary order requiring written
power of attorney. The customer told the registered representative which stock
to buy (GM) and the amount (100 shares). The phrase whenever you think the
price is right means the registered representative may use her judgement as to
when the stock should be purchased. The order does not need to be executed
immediately, but must be executed sometime during the day it was received.
A corporation may choose to pay its shareholders with cash dividends or stock
dividends. Which of the following statements concerning the tax status of these
events is the most accurate?
a. While only the stock dividend is taxable when received, the receipt of cash
dividends will require the investor to adjust in her cost basis per share.
b. Neither form of dividend is taxable.
c. While only the cash dividend is taxable when received, the receipt of stock
dividends will require the investor to adjust her cost basis per share.
,d. Both forms of dividends are taxable. - CORRECT ANSWER c. While only the cash
dividend is taxable when received, the receipt of stock dividends will require the
investor to adjust her cost basis per share.
Only cash dividends are taxable in the year in which they are received. The
payment of a stock dividend increases the number of shares held by each
shareholder. Since the stock's price will fall in the market, the IRS does not
consider there to be a taxable event. However, shareholders are required to
adjust their cost basis per share.
The fund that would probably have the least price volatility is a(n):
a. International equity fund
b. Growth fund
c. Long-term municipal bond fund
d. Short-term corporate bond fund - CORRECT ANSWER d. Short-term corporate
bond fund
In general, bond funds are less volatile than equity funds. Within the bond
category, the NAVs of short-term bond funds are considerably less volatile than
long-term bond funds whether corporate or municipal.
Which of the following statements is TRUE concerning an account statement?
a. The statement must include a disclosure that clients should promptly notify the
broker-dealer if they discover a discrepancy.
b. The statement shows all activity in the account for the entire year.
c. The statement must be delivered at or prior to the settlement of a transaction.
d. Customers who provide discretionary authority to a broker-dealer do not
receive an account statement. - CORRECT ANSWER a. The statement must include
a disclosure that clients should promptly notify the broker-dealer if they discover
a discrepancy.
The statement must include a disclosure that clients should promptly notify the
broker-dealer if they discover a discrepancy. Account statements must be sent to
clients at least quarterly; however, most firms send monthly statements for active
accounts. Statements show transactions for the period, not the entire year. Trade
, confirmations (not account statements) must be sent at or prior to the settlement
of a trade.
An investor who purchases stock in a closely held corporation with a small
number of outstanding shares should be MOST concerned about which of the
following types of risks?
a. Reinvestment
b. Regulatory
c. Liquidity
d. Interest-rate - CORRECT ANSWER c. Liquidity
Investments in thinly traded issues such as the stock described in the question
tend to be illiquid. Investors may have trouble finding buyers for their shares if
they need to sell them. This can result in investors either being unable to liquidate
their holdings, or having to take a large loss to do so.
Member firms must maintain records of all gifts that exceed:
a. $50
b. $25
c. $100
d. Any amount - CORRECT ANSWER d. Any amount
Records of gifts of any value must be maintained by member firms. The maximum
gift permitted is $100.
Interest on Treasury Inflation Protected Securities (TIPS) is:
a. Subject to federal and state income tax
b. Exempt from federal and state income tax
c. Subject to state income tax, but exempt from federal income tax
d. Subject to federal income tax, but exempt from state income tax - CORRECT
ANSWER d. Subject to federal income tax, but exempt from state income tax
Interest on any U.S. Treasury security is subject to federal income tax, but exempt
from state income tax. This is the opposite of the tax treatment on municipal
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