SIE Practice Exam 2022 with completed solutions rated A+

Which corporate voting procedures entitles a shareholder to one vote per share, and votes must be divided evenly among the candidates being voted on? Statutory voting What market refers to the trading of exchange-listed securities in the over-the-counter market? These trades allow institutional investors to trade blocks of securities directly, rather than through an exchange, providing liquidity and anonymity to buyers. Third market 00:35 01:36 An investor sells a naked call on Omikron for a $250 premium. What is true regarding the investors position? The investor's potential loss is unlimited Which act created the SEC and empowered it with broad authority over all aspects of the securities industry? Securities Exchange Act of 1934 A free tool provided by FINRA that is intended to help consumers research the professional backgrounds of brokers and brokerage firms, as well as investment advisor firms and advisors? BrokerCheck The Federal Reserve Board performs what actions? It sets monetary policy, but does not set tax policy An offering of shares to existing stockholders on a pro-rata basis is called a Rights offering The difference between a bond's price and the conversion parity price is referred to as conversion premium An individual who meets what criteria must register as an investment adviser? The individual provides advice or analyses concerning securities The individual is in the business of providing investment advice The individual provides investment advice for compensation A type of preferred stock that gives the investor the right to receive dividends equal to the normally specified rate, as well as an additional dividend based on a specific predetermined condition is called a participating preferred stock Profit sharing plans have what characteristic? they can be invested entirely in company stock What is true regarding the Central Registration Depository (CRD)? It was developed by NASAA and the NASD It consolidated a multiple paper-based state licensing and regulatory process into a single, nationwide computer system Its computerized database contains the licensing and disciplinary histories on more than 650,000 securities professionals and 5,200 securities firms Who is responsible for maintaining fair and orderly markets for an assigned set of listed firms? They operate both manually and electronically to facilitate price discovery during market opens, closes, and during periods of trading imbalances and instability. Designated Market Makers If real GDP declined the last 3 quarters, how many more consecutive quarters of decline would be needed to be classified as an economic depression? 3 quarters What is a correct reason to purchase a particular investment for a client's portfolio? Blue chip common stocks because they provide a hedge against inflation An unconditional promise to pay a sum of money to a payee, either at a fixed or determinable future time, under specific terms is called a Promissory note A trade surplus results from a country exporting more than it imports William, age 56, recently retired from Epsilon Inc., and would like to take a distribution from a retirement plan to pay for medical expenses. What plan would allow William to take a penalty free withdrawal? 401(k) from Epsilon Inc Match the state of the business cycle with the description that follows for questions 19-22 A. Trough B. Expansion C. Contraction D. Peak _______ Recession contraction _________ Utilization at its lowest level Trough _______ Recovery Expansion ________ GDP at its highest point Peak All are characteristics of a REIT EXCEPT it is a publicly traded open-end investment company (it is closed-end) What can an investor sign which allows him or her to receive breakpoint discounts based upon a commitment to buy a specified number of mutual fund shares over a period of time, usually 13 months Letter of intent What is a type of exchange rate system in which a country ties its currency to a basket of other currencies or to another measure of value, such as gold? Fixed exchange rate system What will result if money distributed from a 529 plan is not used to pay for qualifying education expenses? The gain is taxed as ordinary income, and a 10% penalty is applied An investor who believes that an economic recession is imminent should purchase which type of stock? Defensive stock because they tend to outperform during economic downturns What is true regarding dividends paid by growth stocks and value stocks? Because they are growing and expanding, growth stocks typically do not pay large dividends What is a type of broker that acts as a liaison between an investor and a clearing corporation by helping to ensure that trades are settled appropriately and transactions are successfully completed? Clearing broker What form must broker-dealers, investment advisers, or issuers of securities fill out in order to terminate the registration of an individual in the appropriate jurisdiction? It is also known as the Uniform Termination Notice for Securities Industry Registration. U5 An order to sell a stock at a price below the current market price is called a sell stop order What regulation was adopted to update short sale regulations and to address concerns regarding potentially abusive naked short selling? Regulation SHO A fraudulent investment operation where the operator provides fabricated reports and generates investment returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profits of financial trading is called a Ponzi scheme What is a self-regulatory organization (SRO)? FINRA NYSE SIPC Which is the largest options exchange in the US, and focuses on options contracts for individual equities and indexes? CBOE (Chicago Board Options Exchange) What is the formula to calculate an investment's real return? Real return = Nominal return - inflation A currency transaction report is a report that US financial institutions are required to file with FinCEN (Financial Crime Exchange Network) Investment advisors that have custody of client assets or require prepayment of advisory fees _______ or more in advance, and in excess of ______ for each client, must file an audited balance sheet with the SEC as of the end of the investment adviser's fiscal year 6 months; $500 The three categories of firm communications that are defined and regulated by FINRA Rule 2210 are Correspondence Institutional communication Retail communication The right to demand the repayment of monies paid if there has been a bad delivery of a stock or security is called Reclamation An advertisement used by register investment companies that advise readers to obtain a full prospectus is called ________ It is not permitted to include an application to invest, and it must contain specific caveats pursuant to SEC Rule 482 Omitting prospectus