FINRA SIE Practice Test questions and answers 2022

Upon Expiration, all in-the-money S&P 100 Index call options are settled by the delivery of which of the following? Cash Which of the following statements is true about treasury stock? It is issued stock that has been subsequently reacquired by the corporation 00:52 01:31 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 Which of the following actions is required of a broker-dealer's anti-money laundering (AML) program? Designating an AML compliance officer 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 customer BUYS a 1 ABC Jan 35 PUT for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling at what price per share at expiration? $38 The call provision of a bond stipulates which of the following factors? Call date and call price When is interest on Treasury notes paid? Semiannually The owner of which of the following products is MOST exposed to inflationary risk? Treasury bonds (because it's long-term) 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 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 (1,000 x 100 = 100,000 shares; 1 million - 900k = 100k) 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 ($250 is the limit PER election) Which of the following stakeholders has first claim priority in a Chapter 11 proceeding? Secured debt holders [Order of liquidation at bankruptcy: 1. Unpaid wages 2. Taxes (IRS) 3. Secured claims (mortgages) 4. Secured liabilities (bonds) 5. Unsecured liabilities (debentures) and general creditors 6. Subordinated debt 7. Preferred Stockholders 8. Common stockholders] An investors 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 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 investments are generally traded according to their average life rather than their stated maturity dates? Asset-backed securities UTMA (Minor) accounts are opened under the tax ID of the: minor Stability in the value of debt portfolio is greatest when: maturities of the debt securities are short 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 products is adversely impacted if the issuer's credit rating is downgraded? Exchange-traded notes (ETNs) 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 (20% increase in number of stock BUT market cap remains the same) A married couple who earned income that exceeded $300,000 in each of the prior two years ad reasonably expects the same for the current year is: an accredited investor 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. Roth 401(k) and Roth IRA individual retirement account (IRA) plans are share which of the following features? Qualified distributions are excluded from federal income tax Under normal circumstances, a customer's letter of intent on a mutual fund purchase is valid for what maximum period of time? 13 months A broker-dealer is permitted to accept payment for a new issue form a new customer when the: registration is effective Regular way settlement on Treasury bond is: next business day (T + 1) Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors? Qualified institutional buyers (QIBs) A customer is an officer of a company that is involved in some significant changes. Which of the following corporate affairs would be considered inside information if the customer shares them with his registered representative? -Pending transactions -Top management changes -Imminent financial liquidity problems Under FINRA rules, noncash compensation connected with the sale of variable contracts include... -Gifts -Meals -Lodging Under a system of STATUTORY voting, a common stockholder has as many for each vacancy on the board of directors as the number of... shares owned by the stockholder The redemption value of an open-end investment company's shares is based on the: NAV computed after the order is received. Direct participation programs (DDPs) provide: exposure to non-correlated assets with steady returns When a broker-dealer charges a commission on a securities transaction, it has acted as: an agent 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 At the time of issuance, which of the following securities normally has the longest period of EXPIRATION? Warrants Which of the following Form U4 reportable events results in a statutory disqualification? A felony CONVICTION for a DUI charge Call protection is MOST valuable to a bond owner when the PRICES are generally Rising (because interest RATES will be decreasing) 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 What is the cost basis of an inherited mutual fund? The NAV of the shares when the owner dies