SIE Kaplan Mock Exam 2022/2023 (Graded A)

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According to the U.S. Commerce Department, the economy is in a recession when a decline in real output of goods and services lasts - ANSWER6 months or more. A buy stop order at 39 could fill at wh ... ich of the following prices? 38 39 40 41 - ANSWERA buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price. Which of the following risks is the risk that congress could change the laws and negatively impact a particular company or industry? - ANSWERLegislative risk Which of the following would have no effect on the NAV per share of a mutual fund share? - ANSWERPortfolio securities had to be sold for a big capital loss. Which of the following would be unlawful regarding use of a mutual fund prospectus? - ANSWERCalling an investor's attention to a section that may be interesting Your client Nate McCann has been investing for several years and is comfortable with moderate risk as long as he can get in and out of the investment easily. His portfolio is currently mostly in stock and he would like to diversify into some other asset classes and thinks real estate would help with that. Which of the following would be most suitable for you to recommend for him? - ANSWERA Listed REIT trades on an exchange and meets Nate's requirement for liquidity. Purchased 15 years ago with a coupon of 6.25%, a corporate bond in an investor's portfolio has matured. With interest rates now substantially lower at 2.75%, this investor, having no immediate need for the proceeds, is now exposed to - ANSWERreinvestment risk. Regarding CDs and negotiable CDs issued by banks, - ANSWERonly negotiable CDs are considered money market instruments. All of the following actions would cause the NAV per share of a mutual fund to decrease except - ANSWERa large number of shareholders make withdrawals from the fund. Unless otherwise specified, the size of a firm quote is - ANSWER100 shares. A registered representative has left one firm to join another. Sometime later, the former employer discovers that some information on Form U-5 filed at the time of termination was inaccurate. The firm need not file an amended U-5 if at least how much time has gone by? - ANSWERNo stated time limit. An amended U-5 form must be filed and a copy sent to the affected former employee within 30 days of discovery of the inaccuracy. It does not matter how long it has been since the employee's termination. The locate requirement is an element of which of the following transactions? - ANSWERSell to open... When selling short (selling to open), shares must be borrowed from the dealer. The dealer finding those shares that can be loaned to the seller is part of the locate requirement. Your client Mrs. Bourne has owned has owned QRS for a few years but has now turned bearish on QRS. Which transaction would you recommend? - ANSWERBecause Mrs. Bourne already owns the stock, this would be a closing transaction and because she is bearish it would be a sell. Two investors have engaged in the same put transaction: one, the buyer who is now long the put and the other, the seller who is now short the put. All of the following are true except - ANSWERboth investors have a maximum loss potential that is limited to the premium paid. A hypothecation agreement would be best described as - ANSWERa contract allowing securities to be pledged for the loan. Mr. Smith bought an American depository receipt (ADR) in a French company at $13.03 and recently sold the shares for $24.88. How would this trading profit be taxed? - ANSWERAny trading profits (capital gains) from an ADR would only be taxable here in the United States. A capital gain is the profit realized when buying then selling the shares. Remember, dividends paid to a U.S. investor may be subject to a withholding tax by the home country of the underlying foreign stock issuer. In many cases, the amount of tax withheld by the foreign government is applied as a credit against the investor's U.S. tax liability. Why is a fixed annuity not considered to be a security? - ANSWERThe fixed annuity buyer assumes no investment risk. All of the following are taxable to the investor except - ANSWERstock dividends. A toy company is experiencing sudden strong demand for a game. Purchasing this company's stock may prove profitable in the short run. This company's stock might best be termed as - ANSWERa special situation. All of the following are true of REITs - ANSWERREITs have many similarities to investment companies but are not classified as an investment company under the Investment Company Act of 1940. Which of the following contracts have intrinsic value if the strike price is 30 and the market price is 40? - ANSWERLong call and short call All calls are in the money when the market price is above the strike price. Contracts that are in the money have intrinsic value. All of the following are possible actions of an investor who has received stock rights except - ANSWERhold the rights for a possible long-term capital gain [Show More]

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