STC SIE Final Exam Prep #5 Questions
and Answers
When warrants are issued, the exercise price is:
A. Lower than the current market price of the stock
B. Higher than the current market price of the stock
C. Equal to the current market price of the stock
D. Based on the average price of the stock over the last year - Answer- B. Higher than
the current market price of the stock
A individual has a mix of small-cap growth stocks, large-cap stocks from mature
industries, investment-grade bonds, speculative bonds, preferred stock, and foreign
securities. She is attempting to reduce:
A. Liquidity risk
B. Credit risk
C. Money-rate risk
D. Market risk - Answer- D. Market risk
The U.S. government does NOT guarantee the payment of interest and principal for
which of the following securities?
A. GNMA (Ginnie Mae) securities
B. Treasury notes
C. Treasury Receipts
D. FHLMC (Freddie Mac) securities - Answer- D. FHLMC (Freddie Mac) securities
The Municipal Securities Rulemaking Board (MSRB) does NOT regulate which of the
following?
A. Municipal dealers
B. Municipal salespersons
C. Municipal advertising
D. Municipal issuers - Answer- D. Municipal issuers
If an investment's distribution increases by 3% while inflation has increased by 3%,
what's the impact on the investment's purchasing power?
A. It decreases.
B. It stays the same.
C. It increases.
D. It increases by 3%. - Answer- B. It stays the same.
, When an investment's distribution increases by the same amount as inflation, the
purchasing power remains the same. If inflation outpaces an investment's return, the
purchasing power will decrease. If the rate of inflation is lower than an investment's
return, the purchasing power will increase. (17591)
Which of the following stipulations is NOT included in a letter of intent?
A. The maximum time limit for the letter of intent is 13 months.
B. The letter of intent may be backdated for up to 90 days.
C. The fund may stop redemptions during the duration of the letter of intent.
D. The fund may place some of the initially purchased shares in an escrow account to
protect against the failure to fulfill the letter of intent. - Answer- C. The fund may stop
redemptions during the duration of the letter of intent.
The 5% Markup Policy applies to:
A. A primary distribution (new issue)
B. A registered secondary distribution requiring a prospectus
C. Securities quoted on Nasdaq
D. Municipal securities - Answer- C. Securities quoted on Nasdaq
A retail salesperson has helped his firm win the role as the lead underwriter for a local
municipal bond issue. If the underwriting is being conducted on a negotiated basis,
which of the following statements is TRUE?
A. The retail salesperson is not permitted to make a political contribution of any amount
to an elected official of this issuer
B. It is a violation of MSRB rules if the retail salesperson had made a $300 political
contribution to a local elected official of this issuer within the past two years
C. The retail salesperson is required to register as a Municipal Securities Principal
D. The action by the retail salesperson is a violation of MSRB rules - Answer- B. It is a
violation of MSRB rules if the retail salesperson had made a $300 political contribution
to a local elected official of this issuer within the past two years
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):
A. Prime broker
B. Clearing broker
C. Omnibus account
D. Fully disclosed account - Answer- C. Omnibus account
The cash flow received from dividends and/or interest, plus any appreciation or
depreciation in the value of an investment, is referred to as the:
A. Realized gain
and Answers
When warrants are issued, the exercise price is:
A. Lower than the current market price of the stock
B. Higher than the current market price of the stock
C. Equal to the current market price of the stock
D. Based on the average price of the stock over the last year - Answer- B. Higher than
the current market price of the stock
A individual has a mix of small-cap growth stocks, large-cap stocks from mature
industries, investment-grade bonds, speculative bonds, preferred stock, and foreign
securities. She is attempting to reduce:
A. Liquidity risk
B. Credit risk
C. Money-rate risk
D. Market risk - Answer- D. Market risk
The U.S. government does NOT guarantee the payment of interest and principal for
which of the following securities?
A. GNMA (Ginnie Mae) securities
B. Treasury notes
C. Treasury Receipts
D. FHLMC (Freddie Mac) securities - Answer- D. FHLMC (Freddie Mac) securities
The Municipal Securities Rulemaking Board (MSRB) does NOT regulate which of the
following?
A. Municipal dealers
B. Municipal salespersons
C. Municipal advertising
D. Municipal issuers - Answer- D. Municipal issuers
If an investment's distribution increases by 3% while inflation has increased by 3%,
what's the impact on the investment's purchasing power?
A. It decreases.
B. It stays the same.
C. It increases.
D. It increases by 3%. - Answer- B. It stays the same.
, When an investment's distribution increases by the same amount as inflation, the
purchasing power remains the same. If inflation outpaces an investment's return, the
purchasing power will decrease. If the rate of inflation is lower than an investment's
return, the purchasing power will increase. (17591)
Which of the following stipulations is NOT included in a letter of intent?
A. The maximum time limit for the letter of intent is 13 months.
B. The letter of intent may be backdated for up to 90 days.
C. The fund may stop redemptions during the duration of the letter of intent.
D. The fund may place some of the initially purchased shares in an escrow account to
protect against the failure to fulfill the letter of intent. - Answer- C. The fund may stop
redemptions during the duration of the letter of intent.
The 5% Markup Policy applies to:
A. A primary distribution (new issue)
B. A registered secondary distribution requiring a prospectus
C. Securities quoted on Nasdaq
D. Municipal securities - Answer- C. Securities quoted on Nasdaq
A retail salesperson has helped his firm win the role as the lead underwriter for a local
municipal bond issue. If the underwriting is being conducted on a negotiated basis,
which of the following statements is TRUE?
A. The retail salesperson is not permitted to make a political contribution of any amount
to an elected official of this issuer
B. It is a violation of MSRB rules if the retail salesperson had made a $300 political
contribution to a local elected official of this issuer within the past two years
C. The retail salesperson is required to register as a Municipal Securities Principal
D. The action by the retail salesperson is a violation of MSRB rules - Answer- B. It is a
violation of MSRB rules if the retail salesperson had made a $300 political contribution
to a local elected official of this issuer within the past two years
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):
A. Prime broker
B. Clearing broker
C. Omnibus account
D. Fully disclosed account - Answer- C. Omnibus account
The cash flow received from dividends and/or interest, plus any appreciation or
depreciation in the value of an investment, is referred to as the:
A. Realized gain
