SIE Final Exam with al Correct & 100% Verified Answers |
Actual Complete Exam |Already Graded A+
The department of a brokerage firm that advises a corporation regarding the structure and
timing of a potential stock offering and also assists in the underwriting of securities is the
✔Correct Answer-Investment banking department
A customer has an account with a discount broker-dealer that specializes in online trading. If the
customer is being charged a commission, the firm is MOST likely acting in which of the following
capacities? ✔Correct Answer-Agent
Which of the following statements is TRUE regarding a prime broker? ✔Correct Answer-It may
execute and clear transactions, and may also provide securities lending services to a hedge fund
The third market is concerned with: ✔Correct Answer-Securities listed on an exchange, but
traded in the OTC market
If ABC Brokerage (a broker-dealer) purchases 600 shares of stock from a customer and places
the securities into its inventory, it likely acted as a(n): ✔Correct Answer-Dealer
An investment advisory firm will charge customers which of the following? ✔Correct Answer-
A fee that's based on assets under management
A broker-dealer acting in an agency capacity will charge customers a: ✔Correct Answer-
Commission
When trading equity securities, the term dark pool is BEST defined as trading: ✔Correct
Answer-Between investors, allowing them to buy and sell securities anonymously without
quotes being displayed
Which of the following statements is NOT TRUE concerning a clearing corporation? ✔Correct
Answer-It is responsible for automated book-entry changes in the ownership of securities.
The Pink Marketplace displays: ✔Correct Answer-The market makers for stocks that are not
listed on either the NYSE or Nasdaq
Which of the following organizations provides clearing services for equity securities?
✔Correct Answer-The National Securities Clearing Corporation (NSCC)
A market maker is quoting a stock as follows: Bid 23.50, Offer 23.70. This means that the market
maker will: ✔Correct Answer-Buy shares at 23.50 and sell shares at 23.70
,A broker-dealer executes but does not process transactions. If the firm processing the
transactions does not know the identity of the customers, this is known as a(n): ✔Correct
Answer-Omnibus account
The investment banking department of a broker-dealer does NOT typically perform which of the
following activities? ✔Correct Answer-Buying and selling securities for both customers and
the firm's own account
The type of market in which an issuer raises capital by selling its securities to investors is
referred to as the: ✔Correct Answer-Primary market
The goal of which of the following entities is to increase the volume of securities transactions by
eliminating physical delivery with a book entry system? ✔Correct Answer-DTCC
A municipal advisor provides advice to which of the following? ✔Correct Answer-A local town
that intends to issue securities
A broker-dealer is clearing its trades through another broker-dealer but is not disclosing specific
information regarding its clients. Who is responsible for maintaining the account records?
✔Correct Answer-The introducing broker-dealer.
Which of the following statements is FALSE regarding a broker-dealer acting as a market maker
in a stock? ✔Correct Answer-It makes money by charging commissions for executing
transactions
A customer sells 500 shares of stock to a broker-dealer that makes a market in the stock. The
broker-dealer acted in a(n): ✔Correct Answer-Principal capacity and charged the customer a
markdown
The OTC Bulletin Board (OTCBB) is BEST defined as: ✔Correct Answer-A quotation system for
securities that are not listed on either the NYSE or Nasdaq
An investor who is searching for a quote on a non-listed stock may find it on: ✔Correct
Answer-OTCBB
Which of the following organizations does NOT enforce MSRB rules? ✔Correct Answer-The
MSRB
The Investment Advisers Act of 1940 regulates which of the following? ✔Correct Answer-The
fee charged by an accountant for providing advice concerning securities
A person has opened an account at a brokerage firm. In which of the following situations is her
account protected by SIPC? ✔Correct Answer-The firm files for bankruptcy and ceases doing
business.
,Which of the of the following statements is NOT TRUE about SIPC? ✔Correct Answer-It's an
agency of the U.S. government.
MSRB rules do NOT apply to: ✔Correct Answer-Issuers
The Securities Investor Protection Corporation is funded by: ✔Correct Answer-Assessments
on broker-dealers
If there is a violation of securities laws, which of the following is responsible for taking criminal
action? ✔Correct Answer-The Department of Justice (DOJ)
Which of the following statements is TRUE regarding the role of SIPC? ✔Correct Answer-SIPC
covers separate customers.
The Municipal Securities Rulemaking Board (MSRB) does NOT regulate which of the following?
✔Correct Answer-Municipal issuers
"Blue Sky Laws" were established by: ✔Correct Answer-Uniform Securities Act
The primary purpose of the North American Securities Administrators Association is to:
✔Correct Answer-Create rules, laws, and exam requirements for states
The primary purpose of a self-regulatory organization (SRO) is to: ✔Correct Answer-Promote
fair and equitable practices among members
If SIPC does not cover in full a customer's account in a brokerage firm that has gone bankrupt,
the investor is a: ✔Correct Answer-General creditor
If a broker-dealer declares bankruptcy, which of the following positions is fully covered by SIPC?
✔Correct Answer-$300,000 in stock, $100,000 in cash
For SIPC coverage purposes, which of the following would not represent "separate customer
accounts"? ✔Correct Answer-A cash account and a margin account owned by the same
individual
Which of the following is NOT considered a self-regulatory organization (SRO)? ✔Correct
Answer-The Securities Exchange Commission (SEC)
Preemptive rights give existing stockholders the right to: ✔Correct Answer-Maintain their
proportionate interest in a corporation
The security with the longest expiration date would normally be a: ✔Correct Answer-Warrant
, An investor would have the right to buy the stock of a corporation for the longest period of time
by purchasing a: ✔Correct Answer-Warrant
XYZ corporation has 7,000,000 shares of common stock ($1 par value) authorized, of which
5,000,000 shares have been issued. There are 500,000 shares of treasury stock. The current
market price of XYZ is 20.
The market capitalization of XYZ common stock is: ✔Correct Answer-$90,000,000
A company in which your client owns stock is about to make a rights offering. The client informs
you that he does not plan on subscribing to the offer. You would tell the client that his
proportionate ownership interest in the company would: ✔Correct Answer-Decrease
ABC Corporation's charter authorized the issuance of up to 1,000,000 shares of stock. The
company has issued 100,000 shares, but has 5,000 shares of treasury stock. How many shares
of ABC's stock are outstanding? ✔Correct Answer-95,000
Common and preferred stock are similar in that: ✔Correct Answer-The dividends for both
must be declared by the board of directors
Last year, a company failed to pay the full dividend to its preferred shareholders, but now wants
to pay a cash dividend on its common shares. Which preferred stock must be paid all of the
dividends in arrears before the dividend can be paid on its common shares? ✔Correct
Answer-Cumulative preferred
Which shares of preferred stock may increase the most if the value of the company's common
stock appreciates? ✔Correct Answer-
A corporation has a 9% cumulative preferred stock issue outstanding. The company paid a $7
dividend in 2012 and $8 in 2013. If the company wants to pay a common stock dividend in
2014, the cumulative preferred stockholders must first receive a dividend of: ✔Correct
Answer-$12
The Electro Corporation intends to raise additional funds from its existing shareholders to avoid
diluting their interest in the company. The corporation will be engaging in a: ✔Correct
Answer-Rights offering
A method of voting that gives smaller, less substantial stockholders a greater degree of voting
power over the larger, more substantial stockholders is: ✔Correct Answer-Cumulative voting
All of the following statements are TRUE regarding ADRs, EXCEPT: ✔Correct Answer-The
increased trading volume and enhanced liquidity in the U.S. markets lead to prices that are
virtually identical to those of the underlying stock in the issuer's host country
Actual Complete Exam |Already Graded A+
The department of a brokerage firm that advises a corporation regarding the structure and
timing of a potential stock offering and also assists in the underwriting of securities is the
✔Correct Answer-Investment banking department
A customer has an account with a discount broker-dealer that specializes in online trading. If the
customer is being charged a commission, the firm is MOST likely acting in which of the following
capacities? ✔Correct Answer-Agent
Which of the following statements is TRUE regarding a prime broker? ✔Correct Answer-It may
execute and clear transactions, and may also provide securities lending services to a hedge fund
The third market is concerned with: ✔Correct Answer-Securities listed on an exchange, but
traded in the OTC market
If ABC Brokerage (a broker-dealer) purchases 600 shares of stock from a customer and places
the securities into its inventory, it likely acted as a(n): ✔Correct Answer-Dealer
An investment advisory firm will charge customers which of the following? ✔Correct Answer-
A fee that's based on assets under management
A broker-dealer acting in an agency capacity will charge customers a: ✔Correct Answer-
Commission
When trading equity securities, the term dark pool is BEST defined as trading: ✔Correct
Answer-Between investors, allowing them to buy and sell securities anonymously without
quotes being displayed
Which of the following statements is NOT TRUE concerning a clearing corporation? ✔Correct
Answer-It is responsible for automated book-entry changes in the ownership of securities.
The Pink Marketplace displays: ✔Correct Answer-The market makers for stocks that are not
listed on either the NYSE or Nasdaq
Which of the following organizations provides clearing services for equity securities?
✔Correct Answer-The National Securities Clearing Corporation (NSCC)
A market maker is quoting a stock as follows: Bid 23.50, Offer 23.70. This means that the market
maker will: ✔Correct Answer-Buy shares at 23.50 and sell shares at 23.70
,A broker-dealer executes but does not process transactions. If the firm processing the
transactions does not know the identity of the customers, this is known as a(n): ✔Correct
Answer-Omnibus account
The investment banking department of a broker-dealer does NOT typically perform which of the
following activities? ✔Correct Answer-Buying and selling securities for both customers and
the firm's own account
The type of market in which an issuer raises capital by selling its securities to investors is
referred to as the: ✔Correct Answer-Primary market
The goal of which of the following entities is to increase the volume of securities transactions by
eliminating physical delivery with a book entry system? ✔Correct Answer-DTCC
A municipal advisor provides advice to which of the following? ✔Correct Answer-A local town
that intends to issue securities
A broker-dealer is clearing its trades through another broker-dealer but is not disclosing specific
information regarding its clients. Who is responsible for maintaining the account records?
✔Correct Answer-The introducing broker-dealer.
Which of the following statements is FALSE regarding a broker-dealer acting as a market maker
in a stock? ✔Correct Answer-It makes money by charging commissions for executing
transactions
A customer sells 500 shares of stock to a broker-dealer that makes a market in the stock. The
broker-dealer acted in a(n): ✔Correct Answer-Principal capacity and charged the customer a
markdown
The OTC Bulletin Board (OTCBB) is BEST defined as: ✔Correct Answer-A quotation system for
securities that are not listed on either the NYSE or Nasdaq
An investor who is searching for a quote on a non-listed stock may find it on: ✔Correct
Answer-OTCBB
Which of the following organizations does NOT enforce MSRB rules? ✔Correct Answer-The
MSRB
The Investment Advisers Act of 1940 regulates which of the following? ✔Correct Answer-The
fee charged by an accountant for providing advice concerning securities
A person has opened an account at a brokerage firm. In which of the following situations is her
account protected by SIPC? ✔Correct Answer-The firm files for bankruptcy and ceases doing
business.
,Which of the of the following statements is NOT TRUE about SIPC? ✔Correct Answer-It's an
agency of the U.S. government.
MSRB rules do NOT apply to: ✔Correct Answer-Issuers
The Securities Investor Protection Corporation is funded by: ✔Correct Answer-Assessments
on broker-dealers
If there is a violation of securities laws, which of the following is responsible for taking criminal
action? ✔Correct Answer-The Department of Justice (DOJ)
Which of the following statements is TRUE regarding the role of SIPC? ✔Correct Answer-SIPC
covers separate customers.
The Municipal Securities Rulemaking Board (MSRB) does NOT regulate which of the following?
✔Correct Answer-Municipal issuers
"Blue Sky Laws" were established by: ✔Correct Answer-Uniform Securities Act
The primary purpose of the North American Securities Administrators Association is to:
✔Correct Answer-Create rules, laws, and exam requirements for states
The primary purpose of a self-regulatory organization (SRO) is to: ✔Correct Answer-Promote
fair and equitable practices among members
If SIPC does not cover in full a customer's account in a brokerage firm that has gone bankrupt,
the investor is a: ✔Correct Answer-General creditor
If a broker-dealer declares bankruptcy, which of the following positions is fully covered by SIPC?
✔Correct Answer-$300,000 in stock, $100,000 in cash
For SIPC coverage purposes, which of the following would not represent "separate customer
accounts"? ✔Correct Answer-A cash account and a margin account owned by the same
individual
Which of the following is NOT considered a self-regulatory organization (SRO)? ✔Correct
Answer-The Securities Exchange Commission (SEC)
Preemptive rights give existing stockholders the right to: ✔Correct Answer-Maintain their
proportionate interest in a corporation
The security with the longest expiration date would normally be a: ✔Correct Answer-Warrant
, An investor would have the right to buy the stock of a corporation for the longest period of time
by purchasing a: ✔Correct Answer-Warrant
XYZ corporation has 7,000,000 shares of common stock ($1 par value) authorized, of which
5,000,000 shares have been issued. There are 500,000 shares of treasury stock. The current
market price of XYZ is 20.
The market capitalization of XYZ common stock is: ✔Correct Answer-$90,000,000
A company in which your client owns stock is about to make a rights offering. The client informs
you that he does not plan on subscribing to the offer. You would tell the client that his
proportionate ownership interest in the company would: ✔Correct Answer-Decrease
ABC Corporation's charter authorized the issuance of up to 1,000,000 shares of stock. The
company has issued 100,000 shares, but has 5,000 shares of treasury stock. How many shares
of ABC's stock are outstanding? ✔Correct Answer-95,000
Common and preferred stock are similar in that: ✔Correct Answer-The dividends for both
must be declared by the board of directors
Last year, a company failed to pay the full dividend to its preferred shareholders, but now wants
to pay a cash dividend on its common shares. Which preferred stock must be paid all of the
dividends in arrears before the dividend can be paid on its common shares? ✔Correct
Answer-Cumulative preferred
Which shares of preferred stock may increase the most if the value of the company's common
stock appreciates? ✔Correct Answer-
A corporation has a 9% cumulative preferred stock issue outstanding. The company paid a $7
dividend in 2012 and $8 in 2013. If the company wants to pay a common stock dividend in
2014, the cumulative preferred stockholders must first receive a dividend of: ✔Correct
Answer-$12
The Electro Corporation intends to raise additional funds from its existing shareholders to avoid
diluting their interest in the company. The corporation will be engaging in a: ✔Correct
Answer-Rights offering
A method of voting that gives smaller, less substantial stockholders a greater degree of voting
power over the larger, more substantial stockholders is: ✔Correct Answer-Cumulative voting
All of the following statements are TRUE regarding ADRs, EXCEPT: ✔Correct Answer-The
increased trading volume and enhanced liquidity in the U.S. markets lead to prices that are
virtually identical to those of the underlying stock in the issuer's host country
