SIE Exam Full Test 75 Questions Answers. The exam’s purpose is to protect the investing public by ensuring that the individuals who sell or give information about securities have mastered the skills and general knowledge that competent practicing representatives need to have.
The SIE exam itself is a computer-based exam given at Prometric (www.prometric.com/finra) test centers throughout the United States. The 75-question exam, administered by the FINRA, is 105 minutes in duration. A score of 70 percent or better gets candidates a passing grade and puts big smiles on their faces. After passing the SIE, the results remain valid for four years from the date you pass.
Time: 1 hour and 45 minute
Total Item: 75 questions
The passing score for the SIE is 70 (on a scale of 0 to 100)
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Question 1 of 75
The par value of a common stock is
Question 2 of 75
Tender offers typically __________ the price of the outstanding shares of a corporation
Question 3 of 75
Which of the following ARE TRUE about ADRs?
I. They are receipts for foreign securities in U.S. markets.
II. Dividends are paid in the foreign currency.
III. Investors do not receive the actual stock certificates.
IV. They are non-negotiable
Question 4 of 75
Perry Payday owns 1,200 shares of ABCD Corporation common stock. ABCD announces a 1 for 2 reverse split. If the price of ABCD closed at $10 the day prior to the split, what would Perry’s position be after the split?
Question 5 of 75
An investor purchased 200 shares of DDD common stock at $41 per share. DDD previously announced a 5 percent stock dividend payable to shareholders of record. On the date prior to the ex-dividend date, DDD closed at $44 per share. What would be the investor’s position on the ex-dividend date?
Question 6 of 75
WXY Corporation common stock closed at $45 on the business day prior to the ex-dividend date. If WXY previously announced a 77-cent dividend, at what price will the stock open the next trading day?
Question 7 of 75
A corporation has issued 6% $100 par cumulative preferred stock. It paid $4 in dividends the first year and $3 in dividends the second year. If the corporation wants to declare a dividend for common shareholders the following year, how much must the company pay per share to preferred stockholders?
Question 8 of 75
Which of the following preferred stocks would most likely pay the highest dividend if issued by the same corporation?
Question 9 of 75
Rights are automatically received by
Question 10 of 75
Which of the following is/are TRUE of warrants?
Question 11 of 75
Jane Q. Investor purchased 100 AA rated bonds issued by COW Corp. Jane purchased the bonds at 105 percent of par value, and they are currently trading in the market at 104. If the coupon rate is 7½ percent, how much annual interest does Jane receive?
Question 12 of 75
Jon Bearishnikoff is a 62-year-old investor who has 50 percent of his portfolio invested in common stock of up-and-coming companies. The other 50 percent of his portfolio is invested in a variety of stocks of more secure companies. Jon would like to start investing in bonds. If Jon’s main concern is the safety of his investment, which of the following bonds would you LEAST likely recommend?
Question 13 of 75
Monique Moneybags purchased one XYZ convertible mortgage bond at 105. Two years later, the bond is trading at 98. If the coupon rate of the bond is 6%, what is the current yield of the bond?
Question 14 of 75
Place the following Standard & Poor’s bond ratings in order from highest to lowest.
Question 15 of 75
Issuers would call their bonds when interest rates
Question 16 of 75
ABCD convertible bonds are convertible into 25 shares of common stock. If the stock trades at 36, what is the parity price of the bond?
Question 17 of 75
SNK Surfboard Company wants to import boogie boards from an Italian manufacturer in Sicily. SNK would use which of the following money market instruments to finance the importing of the boogie boards?
Question 18 of 75
A corporate bond indenture includes which of the following?
I. The coupon rate
II. The maturity date
III. Par value
IV. Any collateral securing the bond
Question 19 of 75
Mike Smith has 100 DEF corporate bonds with a coupon rate of 4½ percent. The bonds were purchased at 98 percent of $1,000 par each. How much interest will Mike receive the next time he gets paid?
Question 20 of 75
Which of the following types of corporate bond issues is most likely to have a sinking fund?
Question 21 of 75
All of the following are types of secured bonds EXCEPT
Question 22 of 75
Which of the following is the formula that determines the current yield of a bond?
Question 23 of 75
Melissa R. Corporation has issued $6 million dollars’ worth of 30-year callable bonds with a par value of $1,000, a coupon rate of 5¼%, and 7 years call protection. Melissa R. Corporation would least likely call the bonds when interest rates are generally.
Question 24 of 75
Which of the following are possible maturities for a U.S. Treasury bill?
I. 4 weeks
II. 8 weeks
III. 16 weeks
IV. 26 weeks
Question 25 of 75
Which of the following U.S. government securities has interest payments that vary according to inflation or deflation?
Question 26 of 75
Which of the following securities are money market instruments?
I. Banker’s acceptances
III. Commercial paper
IV. Treasury notes
Question 27 of 75
Which of the following are direct obligations of the U.S. government?
Question 28 of 75
How frequently will a mutual fund with a turnover ratio of 20% replace its total holdings?
Question 29 of 75
All but which of the following are considered securities under the Uniform Securities Act?
Question 30 of 75
When a bond is selling at a premium to par, the yield to maturity (YTM) will always be __________ the bond’s coupon rate. If a bond is selling at a discount to par, the YTM will always be __________ the bond’s coupon rate.
Question 31 of 75
Which of the following elements of FINRA’s Continuing Education Program focuses on compliance, ethical, and sales practice standards? Its content is derived from industry rules and regulations, and accepted standards and practices in the industry.
Question 32 of 75
Which of the following imposed an obligation on the SEC to consider the impacts that any new regulation would have on competition, and empowered the SEC to establish a national market system and a system for nationwide clearing and settlement of securities transactions?
Question 33 of 75
Congress has provided which of the following entities with the power to supervise self-regulatory organizations (SROs) as a matter of public interest?
Question 34 of 75
Which of the following is required by the IRS if a taxpayer uses the substantially equal periodic payment (SEPP) exception to the premature distribution penalty?
Question 35 of 75
Which of the following is a person who, for compensation, makes recommendations regarding securities, manages client accounts, and determines which advice regarding securities should be given?
Question 36 of 75
A long stock position is considered __________, and a short stock position is considered __________.
Question 37 of 75
Pete, an elderly business owner, is interested in establishing a retirement plan that will provide the greatest retirement benefit to himself. Which of the following plans should Pete select?
Question 38 of 75
The S&P index has __________ risk.
Question 39 of 75
Which of the following mutual fund share classes will charge investors a back-end load?
Question 40 of 75
Which of the following provides an exemption from registration for public offerings and includes two offering tiers (Tier 1 and Tier 2)?
Question 41 of 75
Which of the following is a requirement in which financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them?
Question 42 of 75
Which of the following forms of ownership allows an investor to own securities without a certificate?
Question 43 of 75
Which of the following has the mission of protecting investors, municipal entities, and the public interest by promoting a fair and efficient municipal market, regulating firms that engage in municipal securities and advisory activities, and promoting market transparency?
Question 44 of 75
Which of the following projects are MORE likely to be financed by general obligation bonds than revenue bonds (discussed later in this chapter)?
I. New municipal hospital
II. Public sports arena
III. New junior high school
IV. New library
Question 45 of 75
Rank the following municipal bonds in order from safest to riskiest.
I. Revenue bonds
II. Moral obligation bonds
III. Public housing authority bonds
IV. Industrial development revenue bonds
Question 46 of 75
Mrs. Stevenson is an investor who is in the 30-percent tax bracket. Which of the following securities would provide Mrs. Stevenson with the BEST after-tax yield?
Question 47 of 75
According to FINRA Rule 3240, which of the following is correct regarding borrowing and lending arrangements between a Registered Investment Advisor and its customers?
Question 48 of 75
Which of the following investments will provide tax-exempt interest if the proceeds are used to pay for qualifying education expenses?
(1) FNMA funds
(2) Series EE bonds
(3) Treasury bonds
(4) Treasury bills
Question 49 of 75
Which of the following type of bond is unregistered, with no record kept regarding the owner or transactions involving ownership?
Question 50 of 75
Which of the following is/are correct regarding liquidity and marketability?
(1) Liquidity is the ability to sell or redeem an investment quickly and at a known price without incurring a significant loss of principal.
(2) Marketability is the speed and ease with which an investment may be bought or sold.
Question 51 of 75
Which of the following are among the criteria to be an “accredited investor”?
Question 52 of 75
All but which of the following are characteristics of American Depository Receipts (ADRs)?
Question 53 of 75
Which of the following accurately describes the difference between rights and warrants?
(1) A warrant may be attached to new debt or preferred issues to make the issues more attractive to buyers.
(2) Rights and warrants have different lifespans.
(3) Warrants usually expire within a few weeks.
(4) Rights may continue without expiring for up to several years.
Question 54 of 75
Which of the following is the governing body of FINRA, which oversees the administration of its affairs and the promotion of its welfare, objectives, and purposes?
Question 55 of 75
Which of the following municipal securities could have a rating of MIG 2?
II. Tax-exempt commercial paper
Question 56 of 75
Which of the following is NOT TRUE about general obligation bonds?
Question 57 of 75
A municipal securities broker-dealer sells 100 GO bonds to a customer on a principal basis. How much of a markup may the broker-dealer charge?
Question 58 of 75
Which of the following documents include all relevant information about a municipal issuer?
Question 59 of 75
A special assessment bond is backed by
Question 60 of 75
According to MSRB rules, brokerage firms must keep all municipal securities advertising
I. for a minimum of 3 years
II. for a minimum of 6 years
III. easily accessible for a minimum of 1 year
IV. easily accessible for a minimum of 2 years
Question 61 of 75
Municipal bonds issued by each of the following would be triple tax-free EXCEPT
Question 62 of 75
Municipal bonds settle the regular way in
Question 63 of 75
Under MSRB rules, how often must broker-dealers and municipal securities dealers send out investment brochures to their customers stating that they are registered with the SEC and MSRB?
Question 64 of 75
According to MSRB rules, which of the following are considered forms of advertising?
I. Market letters
II. Seminar text
III. Official statements
IV. Offering circulars
Question 65 of 75
What is the taxable equivalent yield for an investor purchasing a 5% municipal bond if she’s in the 24% tax bracket?
Question 66 of 75
All of the following are types of municipal notes EXCEPT
Question 67 of 75
Which of the following IS NOT a type of municipal fund security?
Question 68 of 75
All things being equal, which of the following municipal bonds would most likely have the lowest coupon rate?
Question 69 of 75
Under MSRB rules, all syndicates must establish an allocation of orders, which states which orders are to be filled first. Place the typical allocation of orders in order from first to be filled to last to be filled.
Question 70 of 75
Preferred stock that does not have to pay missed dividends is considered which of the following?
Question 71 of 75
Which of the following rules permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time?
Question 72 of 75
Which of the following is/are correct regarding a flat yield curve?
(1) It generally indicates an economic slowdown.
(2) It occurs when there is little difference between short-term and long-term yields for debt instruments of the same credit quality.
Question 73 of 75
Which of the following SEC regulations requires firms to have policies and procedures addressing the protection of customer information and records? This regulation also requires firms to provide initial and annual privacy notices to customers describing information sharing policies.
Question 74 of 75
According to the Telephone Consumer Protection Act, solicitors are prohibited from calling residences before __________ and after __________ local time.
Question 75 of 75
Which of the following describes the illegal practice of excessive buying and selling of securities in a customer’s account without considering the customer’s investment goals? Its primary goal is to generate commissions that benefit the broker.