1 SIE EXAM 2024 Questions and Answers Graded A+ When was the Federal Reserve Board created, and what was its purpose? ✔✔ The Federal Reserve Board was established on December 23, 1913, to manage financial crises. It operates independently of political influence, wi th the Federal Reserve Act aimed at maintaining price stability, ensuring full employment, and managing long -term interest rates. What are the main responsibilities of FINRA compared to the MSRB? ✔✔ FINRA regulates brokerage firms and their personnel. ✔✔ The MSRB oversees the municipal securities market, including the activities of dealers, municipal advisers, and provider s. Municipal Securities Rulemaking Board What are the main tasks of the Department of the Treasury? ✔✔ The Department of the Treasury is responsible for collecting revenue, borrowing funds, managing expenditures, and printing currency. What are the Federal Reserve's key functions and responsibilities? 2 ✔✔ The Federal Reserve aims to bolster the U.S. economy's global standing, balance the private interests of banks with governmental duties, protect consumer credit rights, and ensure financ ial system stability while mitigating systemic risks. What is the role of the Federal Deposit Insurance Corporation (FDIC)? ✔✔ Established in 1933, the FDIC insures bank accounts to protect individuals from losses due to bank failures. It covers checking and savings accounts, money market accounts, CDs, and IRAs, but not annuities, mutual funds, life insurance policies, bonds, or stocks, with coverage up to $250,000 per person. What is the objective of State (Blue -Sky) Regulation? ✔✔ Based on the Uniform Securities Act (USA), State (Blue -Sky) Regulation allows states to impose additional requirements for issuers and financial intermediaries. Private investment funds must register in their home state and each state where they operate. What is the function of the North American Securities Administrators Association (NASAA)? ✔✔ Established in 1919 in Kansas, NASAA includes 67 securities administrators from North America responsible for licensing securities firms and investment professionals, and protecting clients seeking investment advice or dealing with securities. 3 What requirements does the Securities Act of 1933 impose? ✔✔ The Securities Act of 1933, the first major securities law, requires companies to register public securities with the SEC and mandates investment bankers to provide accurate information about new securities to investors, including descriptions of the security and the company's business and properties, as well as certified financial statements. How is the Federal Reserve System structured? ✔✔ The system includes the Board of Governors, the Federal Open Market Committee, twelve Regional Federal Reserve Banks, and member banks across the country. The Federal Reserve Board is appointed by the U.S. president and oversees twelve regional Federal Reserve Banks that supervise private commercial ba nks. Who comprises the Federal Open Market Committee (FOMC)? ✔✔ The FOMC includes the seven members of the board of governors and the twelve presidents of the regional Federal Reserve Banks, with only a subset of the presidents having a vote at any one ti me. What does the Securities Exchange Act of 19 34 regulate? 4 ✔✔ The act oversees the trading of securities in the secondary market to promote financial transparency and reduce fraud and market manipulation. It established the SEC, led by five presidentially appointed commissioners and divided into divis ions such as trading and markets, investment management, corporation finance, enforcement, and economic and risk analysis. What does the Investment Advisers Act of 1940 entail? ✔✔ The act outlines who must register with the SEC as an investment adviser an d prohibits practices like front -running and churning. Exempt entities include banks, lawyers, accountants, brokers, publishers, government securities advisers, credit rating agencies, and family offices. What is the purpose of the Securities Investor Pro tection Act (SIPA)? ✔✔ Created by Congress, SIPA protects customers of insolvent brokerage firms through the SEC, self -regulating organizations, and the Securities Investor Protection Corporation (SIPC). What coverage does the SIPC provide? ✔✔ SIPC protec tion covers up to $500,000 per customer, including up to $250,000 in cash per account. It applies to the equity in margin accounts and includes joint accounts, corporate accounts, individual accounts, trust accounts, Roth IRAs, Traditional IRAs, and accoun ts managed by legal guardians or estate executors.
