Comprehensive SIE Practice Exam - Complete Solutions (Answered) The primary purpose of a syndicate desk in the context of an equity offering is to: build an order book and allocate the stock Which of the following resp
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Comprehensive SIE Practice Exam - Complete Solutions (Answered) The primary purpose of a syndicate desk in the context of an equity offering is to: build an order book and allocate the stock Which of the following responses describes an advantage of index funds? Lower management fees due to passive management of the fund Which of the following comparisons best describes the essential difference between a primary distribution and a secondary distribution? A primary distribution involves a sale of newly issued shares by the issuer while a secondary distribution involves the sale of already issued and outstanding shares. The computation of dollar prices and accrued interest on municipal bonds is normally on what calendar basis? 30/360 Direct participation programs (DPPs) provide: exposure to non-correlated assets Call protection is most valuable to a bond owner when bond prices are generally: rising Which of the following represents the effect of a stock split? The price per share of common stock decreases Stability in the value of a debt portfolio is greatest when: maturities of the debt securities are short. Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program? Designating an AML compliance officer Which of the following actions violates FINRA rules regarding selling away? Engaging in private securities transactions without written prior consent of the employing BD Company ABC announces a 20% stock dividend for its common shareholders. If a customer holds 1,000 shares at $50.00, what is the new price and number of shares following the payment of the stock dividend? 1,200 shares at $41.67 Roth 401(k) and Roth individual retirement account (IRA) plans share which of the following features? Qualified distributions are excluded from federal income tax An associated person who is not a registered representative is permitted to engage in which of the following activities? Provide account opening forms to a new customer The last transaction in XYZ 5.50s 2030 was at 102. This bond is selling at: a premium A registered representative (RR) who wants to place a mutual fund advertisement must obtain written approval from which of the following parties? A registered principal of the RR's firm Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? 13 months To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue? Rights The call provision of a bond stipulates which of the following factors? Call date and call price A decline in the gross domestic product (GDP) must last for at least how many quarters to be considered a recession? 2 quarters Regular way settlement on Treasury bonds is: next business day Which of the following statements is true regarding a customer account held as tenants in common? The ownership of the decedent's assets is governed by their will or state law. Which of the following statements is true about treasury stock? It is issued stock that has been subsequently reacquired by the corporation Which of the following investment risks is the greatest risk in a variable life insurance policy? Market risk In the event of a stock split, which of the following parties is required to maintain a record of the shareholders eligible to receive the additional shares? Transfer agent UTMA accounts are opened under the tax ID of the: minor Under industry regulations, an initial purchase of $3,000 of common stock in a margin account requires a cash deposit of: $2,000 At issue, which of the following debt securities mature in one year or less? Money market instruments Which of the following considerations should a registered representative explain to a customer when recommending a 529 savings plan? The potential deductibility of contributions from state taxes A transaction in which a writer covers a position by purchasing an option is called: a closing purchase Broker-dealer ABC seeks to underwrite a municipal securities offering by a local town in which the mayor is currently seeking re-election. A municipal finance professional who resides in the town and works for ABC contributed $200 to the mayor's re-election campaign 13 months ago. If the employee wants to support the campaign further without impacting the municipal securities business of the firm, he is permitted to make an additional contribution of up to what amount? $50 In which of the following situations is an employee of a public company permitted to trade upon information without violating insider trading laws? An independent securities analyst explains to the employee why the earnings for the company next quarter could be markedly poorer than expected. Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? Secured debt holders An investor owns 100 shares of XYZ common stock at the current market price of $50 per share. If XYZ conducts a 1-for-2 reverse stock split, the investor's post-split stock position will be: 50 shares at $100 per share A registered representative is reviewing the following portfolio: • 30% ABC Energy Company • 30% XYZ Health Care Company • 30% Exchange-traded fund (tracks the S&P 500) • 10% Money market funds Which of the following risks is inherent in this portfolio? Nonsystematic Which of the following communications with the public is considered misleading? Literature providing 10-year performance information to support predictions of future performance A savings account at a bank is guaranteed by which of the following entities? FDIC All of the following risks apply to both foreign and domestic debt instruments except: exchange The redemption value of an open-end investment company's shares is based on the: NAV computed after the order is received A registered representative (RR) wants to participate in a private securities transaction. Which of the following actions must the RR take? Send written notice to his supervisor outlining the activity and compensation structure A member of a stock exchange responsible for providing liquidity in a security by being willing to buy and sell at all times is known as: a market maker In a period of low inflation and economic recession, the Federal Reserve is expected to take which of the following actions? Buy bonds in the open market In the over-the-counter market, the term "spread" refers to the difference between the: bid and asked prices Which of the following statements is true regarding the concept of an annuity contract? The kind of annuity selected partly determines the payment amounts to the annuitant When selling a fixed amount of a base currency to purchase a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive? The spot exchange rate If a market maker posts a quote of 10.00 - 10.10 [25×10], which of the following actions is the market maker willing to take? Buy 2,500 shares at $10.00 and sell 1,000 shares at $10.10 No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons? No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points Under FINRA rules, noncash compensation connected with the sale of variable contracts includes all of the following items except: commissions A customer has a cash balance in her account together with long positions in several securities. She has made no securities transactions in the account during the past 18 months. How often must the firm send her an account statement? Quarterly Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? Qualified institutional buyers (QIBs) Under FINRA rules, which of the following activities by a registered representative requires written notification to her firm? Driving part time for a transportation network company on weekends Which of the following security types provides investors with a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis? Variable rate demand note Which of the following investments are generally traded according to their average life rather than their stated maturity dates? Asset-backed securities Under Federal Reserve Regulation T, a 90-day restriction is imposed when a customer opens and closes which of the following positions? The same stock in a cash account without paying for the stock in full Blue-sky laws are regulated by which of the following entities? State securities regulators A company announces a tender offer to its shareholders with the intent to buy a maximum of 1 million shares of its outstanding stock at $10 per share and sets no minimum number of shares to be purchased. An investor wants to participate in this offer and tenders his 1,000 share position. At the close of the offer period, only 900,000 shares have been tendered. How many, if any, of the investor's shares will the company purchase? 1,000 Which of the following statements is true about all U.S. government agency issues? They are exempt from registration under the Securities Act of 1933 Which of the following actions is required when a firm receives cash in excess of $10,000 from one customer in one business day? File a Currency Transaction Report (CTR)
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