SIE Chapter 1 Test with all Correct & 100% Verified
Answers |Latest Version |Guaranteed to Pass
What is an issuer? ✔Correct Answer-Entities that raise capital(provide liquidity) through
securities
What are five examples of issuers? ✔Correct Answer-Corporations
US Treasury & Government Agencies
State and Local Governments
Banks
Foreign Governments
Types of securities that may be issued ✔Correct Answer-Equity & Debt
Equity ✔Correct Answer-used by corporations
Stock
Represents ownership
Debt ✔Correct Answer-Notes & bonds
Represent an issuers promise to pay
Way to raise funds
Can be from all the issuers
Who bridges the gaps between issuers and investors? ✔Correct Answer-Financial Firms:
BDs & IAs
What is a dealer? ✔Correct Answer-Acts as a principal
Firm takes the other side of the trade
Entitled to a mark up/mark down(sort of like commission)
Inventory/Risk
What is a broker? ✔Correct Answer-Acts as an agent
Finds another party willing to take the other side of the trade
No risk to firm
Collects commission for the service
What is a markup? mark down? ✔Correct Answer-markup: client is buying-firm is selling--
selling at a higher price
markdown: client is selling-firm is buying--acquire for a lower price
What is the broker dealer department known as: Investment Banking ✔Correct Answer-
Works directly with the issuers to arrange and structure their securities
, AKA the UNDERWRITER
Assists with Mergers & acquisitions, Private equity, Debt & Equity Capital Markets, and
restructuring after bankruptcy
What is the broker dealer department known as: Research ✔Correct Answer-
recommendations for buy, sell, or hold
What is the broker dealer department known as: Private Client ✔Correct Answer-AKA Retail
Brokerage
Deals with the investors
What is the broker dealer department known as: Sales ✔Correct Answer-Market individual
and packaged stocks and bonds to both retail and institution
REGISTERED REPS
INVESTMENT ADVISER REPS
What is the broker dealer department known as: Trading ✔Correct Answer-Execution of
trades
What are two other names for debt ✔Correct Answer-Bonds and fixed income
What is the broker dealer department known as: Operations ✔Correct Answer-Paperwork,
funds and securities transfers are handled according to industry standards
Generate customer statements, confirmations, & tax records
What is the broker dealer department known as: Information Barriers ✔Correct Answer-
Certain info should not be discussed in other departments--avoid insider trading
What is a market maker? ✔Correct Answer-A BD chooses to display quotes into trading
system to indicate its readiness to buy and/or sell securities at a specific prices
BID & ASK PRICES
Maintain an inventory of securities
at least 100 shares
Subject to SRO rules
Round lot ✔Correct Answer-100 shares or multiples of 100 shares of a particular stock
What is a bid price? ✔Correct Answer-Client selling, brokerage firm buying(LIQUIDATION
PRICE)
What is a ask price ✔Correct Answer-Brokerage selling, client buying
AKA Offer price
The difference between Bid and Ask price is known as ✔Correct Answer-the spread
Answers |Latest Version |Guaranteed to Pass
What is an issuer? ✔Correct Answer-Entities that raise capital(provide liquidity) through
securities
What are five examples of issuers? ✔Correct Answer-Corporations
US Treasury & Government Agencies
State and Local Governments
Banks
Foreign Governments
Types of securities that may be issued ✔Correct Answer-Equity & Debt
Equity ✔Correct Answer-used by corporations
Stock
Represents ownership
Debt ✔Correct Answer-Notes & bonds
Represent an issuers promise to pay
Way to raise funds
Can be from all the issuers
Who bridges the gaps between issuers and investors? ✔Correct Answer-Financial Firms:
BDs & IAs
What is a dealer? ✔Correct Answer-Acts as a principal
Firm takes the other side of the trade
Entitled to a mark up/mark down(sort of like commission)
Inventory/Risk
What is a broker? ✔Correct Answer-Acts as an agent
Finds another party willing to take the other side of the trade
No risk to firm
Collects commission for the service
What is a markup? mark down? ✔Correct Answer-markup: client is buying-firm is selling--
selling at a higher price
markdown: client is selling-firm is buying--acquire for a lower price
What is the broker dealer department known as: Investment Banking ✔Correct Answer-
Works directly with the issuers to arrange and structure their securities
, AKA the UNDERWRITER
Assists with Mergers & acquisitions, Private equity, Debt & Equity Capital Markets, and
restructuring after bankruptcy
What is the broker dealer department known as: Research ✔Correct Answer-
recommendations for buy, sell, or hold
What is the broker dealer department known as: Private Client ✔Correct Answer-AKA Retail
Brokerage
Deals with the investors
What is the broker dealer department known as: Sales ✔Correct Answer-Market individual
and packaged stocks and bonds to both retail and institution
REGISTERED REPS
INVESTMENT ADVISER REPS
What is the broker dealer department known as: Trading ✔Correct Answer-Execution of
trades
What are two other names for debt ✔Correct Answer-Bonds and fixed income
What is the broker dealer department known as: Operations ✔Correct Answer-Paperwork,
funds and securities transfers are handled according to industry standards
Generate customer statements, confirmations, & tax records
What is the broker dealer department known as: Information Barriers ✔Correct Answer-
Certain info should not be discussed in other departments--avoid insider trading
What is a market maker? ✔Correct Answer-A BD chooses to display quotes into trading
system to indicate its readiness to buy and/or sell securities at a specific prices
BID & ASK PRICES
Maintain an inventory of securities
at least 100 shares
Subject to SRO rules
Round lot ✔Correct Answer-100 shares or multiples of 100 shares of a particular stock
What is a bid price? ✔Correct Answer-Client selling, brokerage firm buying(LIQUIDATION
PRICE)
What is a ask price ✔Correct Answer-Brokerage selling, client buying
AKA Offer price
The difference between Bid and Ask price is known as ✔Correct Answer-the spread
