SIE Exam Study Guide with all Correct & 100% Verified
Answers |Latest Version |Already Graded A+
The Securities & Exchange Commission (SEC) was created by Congress in ✔Correct Answer-
1934
The term 'disclaimer' is most often associated with ✔Correct Answer-The fact that the
government cannot guarantee the accuracy of the information in a prospectus
The SEC reviews the information in a registration statement, it does not approve or disapprove
of the information, nor does it guarantee the accuracy of the information disclosures.
Therefore no sales agent can say to a prospect that these are 'government approved' securities.
SIPC, the securities investor protection corporation is: ✔Correct Answer-SIPC was set up to
protect customer ACCOUNTS in the event of a broker-dealer bankruptcy, not protect
investments against loss.
Be careful of the wording in this question. Cash & securities in customer accounts are 'insured'
up to $500,000 in the event the B/D goes bankrupt and the cash and securities can't be located
and properly returned to the customer.
In most cases, Federal Securities Laws: ✔Correct Answer-Supersede State securities laws
Which of the following are not considered money market securities? ✔Correct Answer-ADRs
Since the 'money market' includes short term debt instruments only, and since ADRs represent
ownership (equity) in foreign stocks, ADRs are not debt.
When a corporation goes public, it is issuing: ✔Correct Answer-Common stock
Going public means sharing equity ownership (common stock) with public investors, for the first
time (Initial public offering, IPO).
The term 'issuer' most often refers to: ✔Correct Answer-A business, a municipality, or a
federal governmental entity which is seeking to raise capital from the sale of securities.
Every publicly-traded corporation is required to have a transfer agent and a registrar. The
primary distinction between the two is: ✔Correct Answer-The transfer agent ensures that
dividend payments go out to all registered owners of record on the payable date.
, This is one of the functions of a Transfer Agent. Registrars make sure that a company does not
issue more shares than authorized in the Charter.
One of the more attractive features of common stock is that: ✔Correct Answer-One cannot
lose more than one's investment
You cannot lose more than you've put at risk. A common stockholder cannot be held liable for
any debts of the corporation, therefore they have limited liability.
When the market price of a company's common stock has reached triple digits ($100 or above),
the Board of Directors may elect to declare which of the below to make the shares more
affordable? ✔Correct Answer-A stock split
When a corporate Board announces a 10% stock dividend, shareholders know they will be
receiving: ✔Correct Answer-More shares
Stock dividends are not Cash dividends - they are dividends in the form of additional shares.
Boards of Directors in the publicly-traded sphere are elected by corporate stockholders, using
which of the following methods? ✔Correct Answer-Statutory voting, regular voting,
cumulative voting
Call option contracts are considered to have intrinsic value: ✔Correct Answer-when CMV
exceeds exercise price
Call option contracts go 'in the money' (intrinsic value) when the current market value of the
underlying security exceeds the exercise price (strike price) of the option. If a call option's
exercise price is $20, and the underlying stock is trading at $25, the intrinsic value of the call
option is $5.
Reinvestment risk is least present in: ✔Correct Answer-Since with a Zero coupon instrument
there is no annual income to 'reinvest,' Zeroes have no reinvestment risk.
What are the typical features of ETF ✔Correct Answer-1. They are marginable
2. They often are sector-driven portfolios
NOT TYPICAL FEATURE: They are traded each day based upon 4:00 pm NAV
Exchange traded funds trade on exchanges at market prices determined by supply and demand
- the same as regular corporate stocks.
Accumulation units are most often associated with: ✔Correct Answer-annuities
Answers |Latest Version |Already Graded A+
The Securities & Exchange Commission (SEC) was created by Congress in ✔Correct Answer-
1934
The term 'disclaimer' is most often associated with ✔Correct Answer-The fact that the
government cannot guarantee the accuracy of the information in a prospectus
The SEC reviews the information in a registration statement, it does not approve or disapprove
of the information, nor does it guarantee the accuracy of the information disclosures.
Therefore no sales agent can say to a prospect that these are 'government approved' securities.
SIPC, the securities investor protection corporation is: ✔Correct Answer-SIPC was set up to
protect customer ACCOUNTS in the event of a broker-dealer bankruptcy, not protect
investments against loss.
Be careful of the wording in this question. Cash & securities in customer accounts are 'insured'
up to $500,000 in the event the B/D goes bankrupt and the cash and securities can't be located
and properly returned to the customer.
In most cases, Federal Securities Laws: ✔Correct Answer-Supersede State securities laws
Which of the following are not considered money market securities? ✔Correct Answer-ADRs
Since the 'money market' includes short term debt instruments only, and since ADRs represent
ownership (equity) in foreign stocks, ADRs are not debt.
When a corporation goes public, it is issuing: ✔Correct Answer-Common stock
Going public means sharing equity ownership (common stock) with public investors, for the first
time (Initial public offering, IPO).
The term 'issuer' most often refers to: ✔Correct Answer-A business, a municipality, or a
federal governmental entity which is seeking to raise capital from the sale of securities.
Every publicly-traded corporation is required to have a transfer agent and a registrar. The
primary distinction between the two is: ✔Correct Answer-The transfer agent ensures that
dividend payments go out to all registered owners of record on the payable date.
, This is one of the functions of a Transfer Agent. Registrars make sure that a company does not
issue more shares than authorized in the Charter.
One of the more attractive features of common stock is that: ✔Correct Answer-One cannot
lose more than one's investment
You cannot lose more than you've put at risk. A common stockholder cannot be held liable for
any debts of the corporation, therefore they have limited liability.
When the market price of a company's common stock has reached triple digits ($100 or above),
the Board of Directors may elect to declare which of the below to make the shares more
affordable? ✔Correct Answer-A stock split
When a corporate Board announces a 10% stock dividend, shareholders know they will be
receiving: ✔Correct Answer-More shares
Stock dividends are not Cash dividends - they are dividends in the form of additional shares.
Boards of Directors in the publicly-traded sphere are elected by corporate stockholders, using
which of the following methods? ✔Correct Answer-Statutory voting, regular voting,
cumulative voting
Call option contracts are considered to have intrinsic value: ✔Correct Answer-when CMV
exceeds exercise price
Call option contracts go 'in the money' (intrinsic value) when the current market value of the
underlying security exceeds the exercise price (strike price) of the option. If a call option's
exercise price is $20, and the underlying stock is trading at $25, the intrinsic value of the call
option is $5.
Reinvestment risk is least present in: ✔Correct Answer-Since with a Zero coupon instrument
there is no annual income to 'reinvest,' Zeroes have no reinvestment risk.
What are the typical features of ETF ✔Correct Answer-1. They are marginable
2. They often are sector-driven portfolios
NOT TYPICAL FEATURE: They are traded each day based upon 4:00 pm NAV
Exchange traded funds trade on exchanges at market prices determined by supply and demand
- the same as regular corporate stocks.
Accumulation units are most often associated with: ✔Correct Answer-annuities
