Securities Industry Essentials Certification Exam (2024) || With Questions & 100% Accurate Answers
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Securities Industry Essentials
Securities Industry Essentials Certification Exam (2024) || With Questions & 100% Accurate Answers
Securities Industry Essentials Certification Exam (2024) || With Questions & 100% Accurate Answers
All broker/dealers registered with the SEC must be SPIC members except: - ANSWER - - banks that d...
, Securities Industry Essentials
Certification Exam (2024) || With
Questions & 100% Accurate Answers
All broker/dealers registered with the SEC must be SPIC members except: -
ANSWER - - banks that deal exclusively in municipal securities
- firms that deal exclusively in U.S. government securities
- firms that deal exclusively in redeemable investment company securities
What is the definition of a customer? - ANSWER - anyone who has cash or
securities in the posession of a broker-dealer.
What happens if the SEC or any SRO finds indication that a broker-dealer is in
financial difficulty? - ANSWER - The SPIC will be notified immediately, and if the
SPIC determines that the member has failed or is in imminent danger of failing. The
court will issue a protective decree if the broker-dealer is insolvent and will then
promptly appoint a trustee for the liquidation of the broker-dealer's business, and the
member is prohibited from engaging in business
What is the basic coverage under SPIC? - ANSWER - no more than $500,000 per
separate customer, this includes no more than $250,000 in cash
- cash and margin accounts for the same customer are combined when determining
SPIC coverage
- only the equity in a margin account is converted, not the full market value
Federal Deposit Insurance Corporation (FDIC) - ANSWER - It is an independent
agency of the Untied States federal government created during the Great
Depression in response to widespread bank failures, and massive losses to bank
customers. It also preserves public confidence in the banking system by insuring
deposits on checking and savings accounts for up to$250,000. The funds are
provided by premiums paid by all participating institutions. If a member financial
institution fails, the customer deposits are sold to another institution.
investor - ANSWER - someone who provides money or resources for an enterprise
or corporation with the expectation of financial or other gain.
retail investor - ANSWER - an individual who makes investments such as the
purchase of securities
institutional investor - ANSWER - an entity that pools money to purchase securities
and other investment assets. example: bank, insurance companies, pensions, hedge
funds, and mutual funds
a preliminary prospectus is used to solicit - ANSWER - indications of interest before
the effective date, and cannot be distributed before the registration date
, Economic growth has slowed to a halt with little consumer demand, but prices for
goods and services are still rising. This is known as economic - ANSWER -
stagflation
A private securities transaction - ANSWER - is exempt from registration under the
Act of 1933 and can be sold to individual accredited investors
An institution or a person responsible for making all investment, management, and
distribution decisions in an account maintained in the best interests of another is
known as a - ANSWER - custodian
Regarding a shelf registration filed with the SEC, which of the following statements
are TRUE? - ANSWER - A supplemental prospectus must be filed before each sale
and Portions of a shelf offering can be sold over a 3-year period without having to
reregister the security
Securities and Exchange Commission - ANSWER - (SEC) created under the
Securities Exchange Act of 1934, this is the security industry's primary regulatory
body. Brokers/Dealers must apply and be approved for registration with the SEC.
The SEC also regulates all exchanges and trading markets.
What is a broker/dealer subject to if they do not comply with SEC rules? - ANSWER
- censure, limits on activities, functions, or operations, suspension/revocation of tis
registration, or fine
Self-Regulatory Organizations - ANSWER - (SROs) function under the SEC's
oversight. Each SRO is accountable to the Commission for enforcing federal
securities laws, and supervising securities practices within an assigned jurisdiction.
Financial Industry Regulatory Authority (FINRA) - ANSWER - regulates all matters
related to investment banking (securities underwriting), trading in the OTC market,
trading in NYSE related securities, and the conduct of member firms.
What are FINRA's main purposes and objectives? - ANSWER - 1. Promote the
investment banking and securities business, standardize principles and practices,
promote high standards of commercial honor, and encourage the observance of
federal and state securities laws.
2. Provide a medium for communication among its members and between its
members, the government, and other agencies.
3. Adapt, administer, and enforce rules designed to prevent fraudulent and
manipulative practices as well as to promote just and equitable principles of trade.
4. Promote self-discipline among members and investigate and resolve grievances.
Chicago Board Options Exchange (CBOE) - ANSWER - regulates all matters related
to trading standardized options and related contracts listed on that exchange
Municipal Securities Rulemaking Board (MSRB) - ANSWER - regulates (but cannot
enforce) all matters related to the underwriting and trading of state and municipal
securities. Also has no regulatory power over the municipalities who issue municipal
securities.
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