SIE Study Guide| 315 QUESTIONS| WITH COMPLETE SOLUTION
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SIE (SIE)
Institución
Capella University
Section 1: Knowledge of Capital Markets Correct Answer:
The SEC
purpose/mission
when created
jurisdiction
authority Correct Answer: protect investos, maintin fair orderly & efficient markets, facilitate capital formation
by congress in 1934
US federal government
enforce federal ...
sie study guide| 315 questions| with complete solution
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Capella University
SIE (SIE)
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SIE Study Guide| 315 QUESTIONS|
WITH COMPLETE SOLUTION
Section 1: Knowledge of Capital Markets Correct Answer:
The SEC
purpose/mission
when created
jurisdiction
authority Correct Answer: protect investos, maintin fair orderly & efficient markets, facilitate
capital formation
by congress in 1934
US federal government
enforce federal security laws & create laws that regulate securities industry
jurisdiction over all writing and trading of standardized options and related contracts listed on
exchange
FINRA
,government? Correct Answer: Financial Industry Regulatory Authority
license and regulate B/Ds
license security dealer, audit dealers/associated firms, ensure compliance, write/enforce rules
governing BDs, regulate trading equities corps bonds sec features options
independent NONgovernmental
largest SRO
MSRB
supports? Correct Answer: Municipal Securities Rulemaking Board
BOD oversee Us municipal & responsible for setting/governing rules
support FINRA
SRO
Department of Treasury/IRS Correct Answer: manage federal finances by collecting taxes and
paying bills & managing currency/gov accs /public debt
IRS- US gov agency responsible for collecting most federal taxes and for administering tax rules
and regulations
State Regulators Correct Answer: state/local public service/utilities commission,
insurance/annuity, banking, company info, consumer protection
NASAA
what is it? Correct Answer: North American Securities Administrators Association
oldest international investor protection organization
(a state regulator)
The Federal Reserve
fiscal or monetary policy?
composed of?
when tighten policy? Correct Answer: the central bank of the United States
control inflation/encourage employment, responsible for clearing checks & supplying currency,
most important to loan $ to other banks & set interest rates, make bank reserve requirements
independent body (meaning looks after broader interests rather than for ones own political
interests)
,lower rate= more money borrowed= more money in circulation
BOG (board of governors), 12 fed reserve banks, fed open market committee (FOMC=set
monetary policy)
protects customers account in BD bankruptcy cash/securities up to 500,000, cash only 250,000
oversee liquidation of member firms
nonprofit
FDIC
type of agency?
why created?
funded by? Correct Answer: Federal Deposit Insurance Corporation
insures depositors of insured banks
independent agency
created by congress to maintain stable financial system, make lg/complex fin institutions
resolvable
funded by premium banks and saving associations, not taxpayers
backed by full faith and credit of US
Market Participants and Their Roles Correct Answer:
Investors
accredited
institutional (ex)
retail Correct Answer: commit capital in expectation of receiving financial returns
long term strategic position
-knowledgeable to handle risks with unregistered securities
-company/org must invest OBO ex) mutual funds, pensions, insurance companies, retirement
funds... less restrictive regulations bc better educated...can buy a lot of shares in company to
aquire voting rights in order to control
-nonprofessional, invest thru trading or online brokerage in sm amts
, Broker Dealers
introducing
clearing
prime brokers Correct Answer: buy/sell securities for own acc or OBO customers
broker(agent)- when execute orders OBO
dealer(principal)- when trade 4 own acc
-contacts w clearing firm tht handles execution of orders, has direct relationship w customer
primary goal- customer service act as middle man
-liason between investor and clearing corp, make sure trade settlement/transaction successful,
responsible for paperwork associated w clearing/execution, maintain custody of acc holders
sec/assets,
clears own trades as well as others
also called carrying broker
-provide clearing,custody,servicing security agent between client and all brokers. central source
4 closing/servcicing assets. charges fee
ex)goldmansacs
Prime Broker Correct Answer: invest manage open brokerage acc @ several clearing houses.
process and have back office clearing/processing thru a single B/D
Investment Advisors Correct Answer: person/group making investment recommendations or
doing security analysis for fee thru direct management of assets or written publications
Municipal Advisors Correct Answer: give advice to state/local gov (cities/counties/schools) on
municipal products/issuance offer advice on municipalities bond offerings
Issuers and Underwriters Correct Answer: legal entity tht develops, registers, and sell securities
2 finance
issuers can be governments, municipalities, corps, investment trusts
assume risk of managing/selling
Traders....vs investors
cons of trading(2)? Correct Answer: capitalize on short term trends vs long term
hold less assets for shorter period
capital gains taxing, commission to brokers
Market Makers
how does a market maker act? Correct Answer: stand ready to buy/sell securities to maintain
liquidity & fair/orderly market, will accomadate if noones selling what u want or buying what u
have
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