SIE exam
What type of risk is unique to a specific industry, business enterprise, or investment
type? - ANS-Nonsystematic risk
Under which of the following circumstances is an investor in a position to acquire stock?
- ANS-Buy a call, sell a call (The holder of a call has the right to buy stock at the strike
price if exercised. The seller of a put is obligated to buy stock at the strike price if
exercised)
Options- a premium - ANS-the cost of an option contract, expressed in dollars per share
of the underlying stock
Options- strike price - ANS-The price at which the stock will be bought or sold if the
contract is exercised, expressed in dollars per share
A customer believes that ABC's price will go up but does not have the money to buy 100
shares right now. How could the customer use options to profit from an increase in the
stock's price? - ANS-buy calls, write puts (both are bullish)
A corporation's offer to current stockholders of the ability to purchase a proportionate
number of new shares at a specific price for a limited time is called a - ANS-right (they
usually expire in 30-45 days)
American depositary receipts (ADRs) - ANS-issued by banks, represent a specific
number of shares of a foreign company, and trade and pay dividends in dollars
Which of the following records must be maintained for 6 years? - ANS-Customer
ledgers (statements)
While underwriters can assist with preparation and filing, the accuracy and adequacy of
these documents is the responsibility of the - ANS-Issuing corporation
What institutions serve as depository and clearing facilities? - ANS-Depository Trust
Company and National Securities Clearing Corporation (most specifically) then carrying
and clearing firms can act as these as well.
What is a transfer agent? - ANS-(often a bank) for a corporation is responsible for
ensuring that its securities are issued in the correct owner's name, canceling old and
,issuing new certificates, maintaining records of ownership, and handling problems
relating to lost, stolen, or destroyed certificates
What is the function of the clearing corporation? - ANS-Acting as an intermediary in a
trade, examples of these can be a commercial bank, can be a broker-dealer but doesn't
have to be
Who is considered a control person (security) - ANS-those owned by directors, officers,
or persons (which include corporations, trusts, etc.) who own or control 10% or more of
the issuer's equity securities (an unaffiliated person would have to own 10% or more of
the outstanding shares)
What are the two components of Return on Investment? - ANS-Capital gains and
income
To expand the overall economy, we want to - ANS-buy securities via open-market
operations, pushing interest rates down
To meet a Regulation T margin call, a customer would have how long? -
ANS-settlement plus 2 additional business days (or S + 2)
What is A fully disclosed broker-dealer - ANS-one that introduces its business to a
carrying firm to clear transactions
The regulation enacted by the SEC to protect the privacy of customer information is
known as - ANS-Regulation S-P
A market maker that does not honor its firm quote is said to be - ANS-"backing away"
A deficit in the U.S. balance of payments can occur if - ANS-interest rates in foreign
countries are higher than U.S. domestic rates and U.S. consumers are purchasing
(importing) foreign goods
The general partner of a limited partnership has responsibility of - ANS-Organizing and
managing the partnership, assumes unlimited liability, and is responsible for paying all
partnership debts
To grow or expand the economy, U.S. fiscal policy should be to - ANS-cut taxes (so
consumers have more money to spend) and increase government spending for
programs and development (to create more jobs)
, What is the federal funds rate - ANS-the rate commercial money center banks charge
each other for an overnight, unsecured loan
The Federal Open Market Committee (FOMC) - ANS-buy or sell Treasury securities in
the open market. Purchases add money to the economy, making the money available to
lend more plentiful, and sales take money out of the economy, making money available
to lend less plentiful.
Reports of rising inventories generally occur during which period of the business cycle?
- ANS-Contraction, due to a lack of consumer demand
Who is exempt from registering with SIPC? - ANS-Those who deal exclusively with US
Government securities (i.e.-Treasury bonds), exclusively municipality securities, and in
redeemable investment company securities
Retail investor - ANS-An individual who makes investments such as the purchase of
securities for his or her account rather than for an organization
Market maker - ANS-Any entity, individual or organization, willing to accept the risk of
holding a particular security in its own account to facilitate trading and provide liquidity in
that security
When the Federal Reserve Board wants to expand (loosen) the money supply, it will -
ANS-buy Treasury securities from banks in the open market
SROs functioning under the SEC include... - ANS-FINRA, MSRB and CBOE
Mild inflation can - ANS-encourage growth and stimulate the economy
Discount rate - ANS-The rate the FRB charges member banks
Prime rate - ANS-The rate commercial banks (Wells Fargo) charges their most
creditworthy investors (Lincoln Financial). Prime rate decreases when banks sell
securities because there's money money in the market and don't need to charge as
much. Raise the rate when they buy securities.
4 stages of the business cycle - ANS-expansion (recovery), peak (prosperity),
contraction (decline), trough, and then expansion (recovery) again
What type of risk is unique to a specific industry, business enterprise, or investment
type? - ANS-Nonsystematic risk
Under which of the following circumstances is an investor in a position to acquire stock?
- ANS-Buy a call, sell a call (The holder of a call has the right to buy stock at the strike
price if exercised. The seller of a put is obligated to buy stock at the strike price if
exercised)
Options- a premium - ANS-the cost of an option contract, expressed in dollars per share
of the underlying stock
Options- strike price - ANS-The price at which the stock will be bought or sold if the
contract is exercised, expressed in dollars per share
A customer believes that ABC's price will go up but does not have the money to buy 100
shares right now. How could the customer use options to profit from an increase in the
stock's price? - ANS-buy calls, write puts (both are bullish)
A corporation's offer to current stockholders of the ability to purchase a proportionate
number of new shares at a specific price for a limited time is called a - ANS-right (they
usually expire in 30-45 days)
American depositary receipts (ADRs) - ANS-issued by banks, represent a specific
number of shares of a foreign company, and trade and pay dividends in dollars
Which of the following records must be maintained for 6 years? - ANS-Customer
ledgers (statements)
While underwriters can assist with preparation and filing, the accuracy and adequacy of
these documents is the responsibility of the - ANS-Issuing corporation
What institutions serve as depository and clearing facilities? - ANS-Depository Trust
Company and National Securities Clearing Corporation (most specifically) then carrying
and clearing firms can act as these as well.
What is a transfer agent? - ANS-(often a bank) for a corporation is responsible for
ensuring that its securities are issued in the correct owner's name, canceling old and
,issuing new certificates, maintaining records of ownership, and handling problems
relating to lost, stolen, or destroyed certificates
What is the function of the clearing corporation? - ANS-Acting as an intermediary in a
trade, examples of these can be a commercial bank, can be a broker-dealer but doesn't
have to be
Who is considered a control person (security) - ANS-those owned by directors, officers,
or persons (which include corporations, trusts, etc.) who own or control 10% or more of
the issuer's equity securities (an unaffiliated person would have to own 10% or more of
the outstanding shares)
What are the two components of Return on Investment? - ANS-Capital gains and
income
To expand the overall economy, we want to - ANS-buy securities via open-market
operations, pushing interest rates down
To meet a Regulation T margin call, a customer would have how long? -
ANS-settlement plus 2 additional business days (or S + 2)
What is A fully disclosed broker-dealer - ANS-one that introduces its business to a
carrying firm to clear transactions
The regulation enacted by the SEC to protect the privacy of customer information is
known as - ANS-Regulation S-P
A market maker that does not honor its firm quote is said to be - ANS-"backing away"
A deficit in the U.S. balance of payments can occur if - ANS-interest rates in foreign
countries are higher than U.S. domestic rates and U.S. consumers are purchasing
(importing) foreign goods
The general partner of a limited partnership has responsibility of - ANS-Organizing and
managing the partnership, assumes unlimited liability, and is responsible for paying all
partnership debts
To grow or expand the economy, U.S. fiscal policy should be to - ANS-cut taxes (so
consumers have more money to spend) and increase government spending for
programs and development (to create more jobs)
, What is the federal funds rate - ANS-the rate commercial money center banks charge
each other for an overnight, unsecured loan
The Federal Open Market Committee (FOMC) - ANS-buy or sell Treasury securities in
the open market. Purchases add money to the economy, making the money available to
lend more plentiful, and sales take money out of the economy, making money available
to lend less plentiful.
Reports of rising inventories generally occur during which period of the business cycle?
- ANS-Contraction, due to a lack of consumer demand
Who is exempt from registering with SIPC? - ANS-Those who deal exclusively with US
Government securities (i.e.-Treasury bonds), exclusively municipality securities, and in
redeemable investment company securities
Retail investor - ANS-An individual who makes investments such as the purchase of
securities for his or her account rather than for an organization
Market maker - ANS-Any entity, individual or organization, willing to accept the risk of
holding a particular security in its own account to facilitate trading and provide liquidity in
that security
When the Federal Reserve Board wants to expand (loosen) the money supply, it will -
ANS-buy Treasury securities from banks in the open market
SROs functioning under the SEC include... - ANS-FINRA, MSRB and CBOE
Mild inflation can - ANS-encourage growth and stimulate the economy
Discount rate - ANS-The rate the FRB charges member banks
Prime rate - ANS-The rate commercial banks (Wells Fargo) charges their most
creditworthy investors (Lincoln Financial). Prime rate decreases when banks sell
securities because there's money money in the market and don't need to charge as
much. Raise the rate when they buy securities.
4 stages of the business cycle - ANS-expansion (recovery), peak (prosperity),
contraction (decline), trough, and then expansion (recovery) again
