STC SIE Exam Final Practice Questions (Answered). 100% Verified, predictor!

STC SIE Exam Final Practice Questions (Answered). 100% Verified, predictor! Which of the following statements is TRUE concerning periodic payment variable annuities? A. A client's number of annuity units never changes ...

STC SIE Exam Final Practice Questions (Answered). 100% Verified, predictor! Which of the following statements is TRUE concerning periodic payment variable annuities? A. A client's number of annuity units never changes B. A client's number of accumulation units never changes C. Annuity contracts never have a beneficiary D. The monthly payout is fixed by the inflation index - ✔✔A. A client's number of annuity units never changes Which of the following securities would be subject to federal securities registration requirements? A. Securities offered through a private placement B. GNMA securities C. Municipal bonds D. Mutual fund shares - ✔✔D. Mutual fund shares Mutual fund shares would be subject to registration requirements at the state and federal level. The other securities are exempt from federal and state registration requirements. Which of the following is the likely result of persistent deflation? A. A decrease in interest rates B. A decrease in the level of inflation C. A decrease in bond prices D. An increase in the value of equities - ✔✔A. A decrease in interest rates Which of the following statements is NOT TRUE about a fidelity bond? A. It protects customers in the event their broker-dealer goes bankrupt. B. It's insurance that protects a broker-dealer in case of fraud such as forgery or counterfeit currency. C. FINRA must be notified if the bond is cancelled or substantially modified. D. It covers securities that are held at the brokerage firm as well as those in transit. - ✔✔A. It protects customers in the event their broker-dealer goes bankrupt. A fidelity bond does not protect customers in the event of broker-dealer bankruptcy; that's the role of SIPC. If a market maker has a current quote of 50.00 - 50.05 (15 x 20), this indicates that the firm is willing to: A. Sell 200 shares at $50.00 and buy 150 shares at $50.05 B. Buy 150 shares at $50.00 and sell 200 shares at $50.05 C. Sell 1,500 shares at $50.00 and buy 2,000 shares at $50.05 D. Buy 1,500 shares at $50.00 and sell 2,000 shares at $50.05 - ✔✔D. Buy 1,500 shares at $50.00 and sell 2,000 shares at $50.05 An investor purchases a 20-year 5.30% bond at par value that will yield 5.75% if called at the first call date in five years. The yield to maturity on the bond is: A. 5.30% B. More than 5.30% C. Between 5.30% and 5.75% D. 5.75% - ✔✔A. 5.30% As it relates to private securities transactions that are executed by an associated person of a brokerdealer, compensation does NOT include: A. Being paid a commission by the employing broker-dealer B. Being paid a commission by another broker-dealer C. Receiving tax benefits received by the employee D. Being given warrants by another firm - ✔✔A. Being paid a commission by the employing brokerdealer A convertible bond has a conversion price of $50 and is currently selling in the market at $1,100. The conversion ratio is: A. 20 B. 22 C. 55 D. 50 - ✔✔A. 20 To find the conversion ratio of a convertible bond, the bond's par value ($1,000) is divided by the conversion price ($50). The purchase price of a no-load fund is determined by the: A. Net asset value plus a commission B. Net asset value plus a sales charge C. Supply and demand for the fund D. Net asset value - ✔✔D. Net asset value SPDR is considered a type of: A. Index option B. Exchange-traded fund C. Mutual fund D. World currency option - ✔✔B. Exchange-traded fund Standard & Poor's Depositary Receipt (SPDR) is a type of exchange-traded fund (ETF). It can be used to refer to a specific exchange-traded fund that tracks the S&P 500 or a group of ETFs. Which of the following is NOT a benefit of investing in a real estate investment trust (REIT)? A. Stable dividend income B. Liquidity C. Passive losses D. Diversification - ✔✔C. Passive losses MSRB rules do NOT apply to: A. Registered representatives B. Broker-dealers that prepare research C. Underwriters D. Issuers - ✔✔D. Issuers During periods of deflation, the FRB will likely: A. Purchase securities in the open market B. Encourage a rise in interest rates C. Sell securities in the open market D. Issue new securities - ✔✔A. Purchase securities in the open market Alternatively, during periods of inflation, the FRB will likely sell securities in the open market. An investor with an investment objective of speculation wants to purchase a security that will increase by the same percentage as a decline in the S&P 500 Index. Which of the following securities should be recommended? A. An inverse exchange-traded fund (ETF) B. A leveraged exchange-traded fund (ETF) C. A leveraged inverse exchange-traded fund (ETF) D. An exchange-traded fund (ETF) - ✔✔A. An inverse exchange-traded fund (ETF) The third market is concerned with: A. Securities listed on an exchange that are traded directly between institutional investors B. Securities listed on an exchange, but traded in the OTC market C. Listed securities trading on an exchange D. OTC equity securities trading on an exchange - ✔✔B. Securities listed on an exchange, but traded in the OTC market A corporation that has filed for bankruptcy is to be liquidated. Which of the following securities issued by that corporation has seniority in the liquidation process? A. Mortgage bonds B. Debenture bonds C. Common stock D. Participating preferred stock - ✔✔A. Mortgage bonds An order that becomes a market order when it sells at or below (or at or above) a particular price is called a: A. Market order B. Limit order C. Stop order D. Stop-limit order - ✔✔C. Stop order A stop order is when an order is triggered and then you sell at the very next price regardless of what it is. The Pink Marketplace displays: A. All trades involving OTC equities that occurred on the previous day B. The market makers for stocks that are not listed on either the NYSE or Nasdaq C. The designated market maker assigned to each stock that trades on the NYSE D. The market makers for stocks that are listed on Nasdaq - ✔✔B. The market makers for stocks that are not listed on either the NYSE or Nasdaq The person who distributes interest in a DPP is referred to as the: A. Distributor B. Syndicator C. Managing partner D. Limited partner - ✔✔B. Syndicator The investment banking department of a broker-dealer does NOT typically perform which of the following activities? A. Assisting a corporation in raising capital B. Acting as an underwriter when an issuer wants to offer bonds C. Assisting a company that's restructuring after declaring bankruptcy D. Buying and selling securities for both customers and the firm's own account - ✔✔D. Buying and selling securities for both customers and the firm's own account Persons who violate federal insider trading regulations are subject to all of the following penalties, EXCEPT: A. Treble damages B. Prison terms C. Return any profits made D. FINRA fines - ✔✔D. FINRA fines According to SRO rules, an email message complaining about excessive commissions sent to an RR's personal electronic device: A. Does not constitute an official complaint since the electronic device is not an official broker-dealer contact channel and its use for business is typically prohibited B. Is a complaint and must be maintained by the broker-dealer C. Is a complaint and must be forwarded to the appropriate SRO D. Must be followed up within 10 business days by a written document from the client to be considered an official complaint - ✔✔B. Is a complaint and must be maintained by the broker-dealer Which of the following statements is TRUE regarding the approval of an official statement? A. The SEC provides approval. B. FINRA provides approval. C. The MSRB provides approval. D. Official statements are not required to be approved by a regulator. - ✔✔D. Official statements are not required to be approved by a regulator. Official statements are neither approved nor required by any regulator. However, if official statements are created, they must be distributed to purchasers. Statutory disqualification is: A. An accusation of wrongdoing B. The suspension of a registration C. An indictment that's filed against a member firm D. An investigation into wrongdoing - ✔✔B. The suspension of a registration The call premium of a bond refers to the amount: A. An investor must pay above par to buy a callable bond B. Over par value that the issuer must pay to exercise the call privilege C. The issuer must add to the semiannual interest payments to offset the call feature D. Added to the price at issuance to compensate for the call privilege - ✔✔B. Over par value that the issuer must pay to exercise the call privilege A stock's price has risen due to an overall market increase. This increase in price is considered: A. A non-taxable capital gain B. A taxable capital gain C. An unrealized capital gain D. Amortization - ✔✔C. An unrealized capital gain The increase in the stock's price is considered an unrealized capital gain or appreciation. A capital gain is only realized if an asset has increased in value and it is subsequently sold at that higher price. XYZ Mutual Fund, an open-end investment company, has an NAV of $20 and a public offering price of $21.40. The prospectus states that the sales charge for purchases of fund shares of $25,000 through $49,999 is 4%. Approximately how many shares can the customer buy for $35,000? A. 1,600 shares B. 1,635 shares C. 1,680 shares D. 1,750 shares - ✔✔C. 1,680 shares Which of the following is TRUE for the buyers of put options? A. They have the right to buy 100 shares of stock. B. They have the right to sell 100 shares of stock. C. They have the obligation to buy 100 shares of stock. D. They have the obligation to sell 100 shares of stock. - ✔✔B. They have the right to sell 100 shares of stock. A customer sells 500 shares of stock to a broker-dealer that makes a market in the stock. The brokerdealer acted in a(n): A. Agency capacity and charged the customer a commission B. Principal capacity and charged the customer a commission C. Agency capacity and charged the customer a markup D. Principal capacity and charged the customer a markdown - ✔✔D. Principal capacity and charged the customer a markdown A broker-dealer that's always willing to buy and/or sell shares of stock is considered a market maker. A market maker will normally act in a principal capacity and charge a customer a markdown when buying the stock from the customer and a markup when selling the stock to the customer. An investor has recently rolled over $900,000 from a 401(k) plan to an IRA. She's concerned that the market will fall dramatically. About what risk is the investor most concerned? A. Non-systematic risk B. Systematic risk C. Business risk D. Inflation risk - ✔✔B. Systematic risk Which of the following is exposed to the greatest amount of capital risk? A. Common stock B. Corporate bonds C. American depositary receip