Is the SIE exam difficult?

It's not difficult. It can be challenging because it's a new subject. However, if you find a study guide with detailed information and reinforce your learning with the textbook, flashcards, and practice tests, you are halfway to success. The last thing you'll have to do is take the exam.

How many hours should you study for the SIE exam?

You should study for two months if you have no background in accounting, finance, or economics. That's around 20-50 hours. Those with a background education in these fields take less time to complete. Within a month, they are ready for the exam.

Is the SIE exam free?

The SIE exam is not free. The exam costs $80, but college students pay $60. The exam is taken at a Prometric testing center. It consists of 85 questions, where 10 questions are not scored. If you fail the first attempt, you can retake the exam.

What is the pass rate for the SIE exam?

The pass rate is 84% overall. First-time exam takers have a pass rate of 74%. That means test-takers must score 53 questions out of the 75 scored questions. Candidates get their results immediately after they submit their answers. Before leaving the testing center, you'll know if you've passed or failed.

How many questions are on the SIE exam?

The SIE exam consists of 85 questions in total. Ten of these questions are not scored, and you won't know which ones are those. They only score 75 questions. That means you must answer all the questions to the best of your ability.

Free SIE Practice Exams 2023 - 775 SIE practice questions

Hello there!

Welcome to the alternate resource for SIE practice exams and practice quizzes.

These practice exams are designed to prepare you mentally for the actual SIE Exam with the same number of (75 questions) and the same time allowed (105 minutes) as the actual exam.

In this article, we want to dive deep into how to use the SIE practice exam, the SIE practice exam domains, the SIE exam, and why you should take it.

We’ve also embedded SIE practice questions you can use right away.

Here is an overview of exactly what we’ll cover:

FINRA SIE practice exam questions
How the SIE practice exam and practice quizzes work
SIE practice exam domains
SIE exam
Why take the SIE exam?

Let’s get started.

Other free SIE study materials:

SIE exam prep
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Table of Contents

FINRA SIE practice exams
SIE practice quizzes by domains
Domain 1: Understanding Products and their Risks
Domain 2: Knowledge of Capital Markets
Domain 3: Understanding Trading, Customer Accounts, and Prohibited Activities
Domain 4: Overview of the Regulatory Framework
How the SIE Practice Exam and Practice Quizzes Work
The SIE Exam
Why Take the SIE Exam?
Next Prep Step for SIE
FAQs

FINRA SIE practice exams

We have five full-length SIE practice exams you can use to test your exam readiness.

We’ve also put together practice questions for each SIE exam domain.

The practice exams will help you identify the SIE exam domains that you are weak in.

From there, you can focus on the questions in that individual domain to better grasp its content.

SIE Practice Exam 1

Welcome to your SIE Practice Exam 1

This test is designed to prepare you mentally for the actual SIE Exam with the same number of (75 questions) and the same time allowed (105 minutes) as the actual exam.

The SIE Exam is breakdown into four (4) Parts.

Here are the Four (4) Domains of SIE Exam with the weightage and number of questions in this practice exam:

1. Understanding Products and their Risks [33 Questions] - 44%

2. Knowledge of Capital Markets [12 Questions] - 16%

3. Understanding Trading, Customer Accounts, and Prohibited Activities [23 Questions] - 31%

4. Overview of the Regulatory Framework[7 Questions] - 09%

Please click NEXT to start your Free SIE PRACTICE EXAM right away.

Best of Luck!

All of the following statements about a home office are true except

A) the member firm must authorize the representative to open a home office.

B) a home office may be widely advertised as a place of business.

C) home offices are restricted to servicing existing customers only.

D) a home office is subject to a premise visit and review by principals of the firm and Financial Industry Regulatory Authority (FINRA) examiners.

Which of the following regarding capital and money markets is true

A) Money markets provide intermediate to long-term financing.

B) Capital markets provide intermediate to long-term financing.

C) Capital markets provide short-term financing.

D) Money markets provide long-term financing.

Shelby Bogden, your client, purchased a 6% corporate bond with a current yield of 5%. The bond was purchased at

A) par.

B) a premium.

C) below par.

D) a discount.

Which of the following is a characteristic shared by both corporate debentures and income bonds

A) Neither pay interest.

B) Both must pay principal as it comes due.

C) Both are a type of mortgage bond.

D) Both are secured by assets of the corporation.

All of the following accounts are for unincorporated businesses except

A) corporate accounts.

B) limited liability company accounts.

C) partnership accounts.

D) sole proprietorship accounts.

Regarding investment products, which of the following is true?

A) Both derivatives and debt represent ownership in an issuing company.

B) Derivative securities represent ownership in an issuing company.

C) Debt securities represent ownership in an issuing company.

D) Equity securities represent ownership in an issuing company.

A customer investing in common equity securities could realize all of the following except

A) current income via dividend declarations.

B) protection of principal investment.

C) potential hedge against inflation.

D) potential capital appreciation.

Common shareholders wanting to vote on issues at a shareholder meeting can do so in all of the following ways except

A) in person.

B) by proxy delivered by mail

C) by telephone or text message.

D) by proxy delivered online.

Exempt from the penny stock rules are

A) solicited transactions.

B) unsolicited transactions.

C) both solicited and unsolicited transactions.

D) all transactions.

10.

An individual owning shares of a corporation's common stock would have all of the following rights except

A) to review a list of stockholders

B) to vote when unable to be present at a stakeholder meeting

C) to vote for those who will serve on the board of directors (BOD)

D) to declare dividends

11.

For preferred shares, the annual dividend payment is

A) fixed and stated as a percentage of its current market value (CMV).

B) subject to variation and stated as a percentage of its par value.

C) fixed and stated as a percentage of its par value.

D) subject to variation and stated as a percentage of its current market value (CMV).

12.

All of the following could be characterized as benefits to owning common stock except

A) income potential via the receipt of dividends.

B) limited liability.

C) capital gains via increases in share price.

D) low dissolution priority.

13.

A company has distributed profits to its shareholders. This type of distribution would most likely be in the form of

A) bonds.

B) warrants.

C) dividends.

D) options.

14.

Which of these is an equity security?

A) Mortgage bonds

B) Debentures

C) Preferred stock

D) Municipal bonds

15.

An example of a fixed-income security would include all of the following except

A) a municipal bond that has historically made late interest payments.

B) preferred stock that has historically paid dividends.

C) common stock that has historically paid dividends.

D) a money market instrument that has historically made timely interest payments.

16.

All corporations will issue

A) common stock.

B) common and preferred stock.

C) different classes of common stock.

D) preferred stock.

17.

Each of the following are likely benefits of owning shares of common stock except

A) dividend payments.

B) voting rights.

C) interest payments.

D) limited liability.

18.

Characteristics common to penny stocks would include which of the following?

A) Market price greater than or equal to $5 per share and unlisted

B) Market price less than $5 per share and unlisted

C) Market price greater than or equal to $5 per share and listed on an exchange or Nasdaq

D) Market price less than $5 per share and listed on an exchange or Nasdaq

19.

A customer has held an account with a broker-dealer for over one year. A registered representative associated with the firm recommends the purchase of an unlisted security trading at $3.50. What documentation, if any, is required prior to the trade?

A) Both suitability and disclosure statements must be obtained.

B) A disclosure statement is required, but not a suitability statement.

C) No documentation is required.

D) A suitability statement is needed, but not a disclosure statement.

20.

Because common stock can be sold or given away, it is considered to be

A) preemptive.

B) freely transferrable.

C) voted by proxy.

D) limited in liability.

21.

Common stockholders owning dividend paying stocks are exposed to

A) current income risk but not market risk.

B) market risk and current income risk.

C) market risk but not current income risk.

D) neither market risk nor current income risk.

22.

Under the rules, a penny stock is defined as an unlisted, security trading at less than

A) $2 per share on three consecutive days.

B) $5 per share.

C) $2.50 per share on three consecutive days.

D) $1 per share.

23.

A company's business operations are overseen by

A) a board of directors (BOD) elected by bondholders.

B) bondholders placed in position by the board of directors (BOD).

C) stockholders placed in position by the board of directors (BOD).

D) a board of directors (BOD) elected by shareholders.

24.

Voting rights are a privilege generally afforded to

A) preferred shareholders only.

B) common shareholders only.

C) neither common nor preferred shareholders.

D) both common and preferred shareholders.

25.

When a company wants to issue additional shares of stock, the preemptive right given to existing shareholders allows those shareholders to

A) maintain their proportionate ownership in the corporation.

B) pass on their proportionate ownership in the corporation to an heir.

C) increase their proportionate ownership in the corporation.

D) decrease their proportionate ownership in the corporation.

26.

In the dividend disbursement process three of the four critical dates are determined by the board of directors (BOD) but one is determined by either Financial Industry Regulatory Authority (FINRA) for OTC stocks or the exchange for listed stocks. Which one is it?

A) declaration

B) payable

C) ex-dividend

D) record

27.

A share of stock in the hands of a stockholder represents

A) no entitlement to receive profits through dividends when distributed but the right to vote for who will serve on the board of directors (BOD).

B) entitlement to receive profits through dividends when distributed and the right to vote for who will serve on the board of directors (BOD).

C) neither the entitlement to receive profits through dividends when distributed nor the right to vote for who will serve on the board of directors (BOD).

D) entitlement to receive profits through dividends when distributed but not the right to vote for who will serve on the board of directors (BOD).

28.

Before effecting an initial penny stock transaction for a new customer, the registered representative must do all of the following except

A) confirm that a margin account has been established.

B) confirm whether the person is an established customer.

C) obtain a signed risk disclosure document from the customer.

D) obtain a signed suitability statement from the customer.

29.

Regarding the rights of a common stockholder, each of the following is true except

A) stockholders have a limited right to examine the minutes of meetings held by the board of directors.

B) stockholders may never be part of the management of the company.

C) stockholders can vote for those who will serve on the board of directors.

D) stockholders have the right to receive audited financial statements annually.

30.

Regarding transferability for common shares, which of the following is true?

A) Shares can be sold without the permission of the corporation but may never be simply given away.

B) Shares can be sold or given away without the permission of the corporation.

C) Shares can be sold or given away but only with the permission of the corporation.

D) Shares can be sold but not given away, unless the permission of the corporation is received first.

31.

Someone who purchases shares of a corporation's common stock has

A) neither liability nor voting rights.

B) limited liability and voting rights.

C) no liability and no voting rights.

D) unlimited liability and voting rights.

32.

Common shareholders have the right to

A) no access to a company's books and records.

B) access a company's books and records with Securities and Exchange Commission (SEC) permission.

C) full access to a company's books and records.

D) limited access to a company's books and records.

33.

Which of the following is an example of an equity security?

A) Equipment trust certificates

B) Debentures

C) Mortgage bonds

D) Preferred shares

34.

The Securities Act of 1933 requires that

A) both exempt and nonexempt new issues be registered with the Securities and Exchange Commission (SEC) before public sale.

B) registration with the Securities and Exchange Commission (SEC) before public sale can be made be an option for all new issues.

C) all new issues be exempted from registration with the Securities and Exchange Commission (SEC) so that they may be sold to the public.

D) a new issue, unless specifically exempted from the Act, be registered with the Securities and Exchange Commission (SEC) before public sale.

35.

Which of the following is true regarding the primary market?

A) It is regulated by the Securities Act of 1934.

B) Price is determined by supply and demand.

C) Issuer transactions occur in the primary market.

D) The NYSE is an example of a primary market.

36.

Regarding primary offerings, which of the following is true?

A) A corporation can have only one primary offering—the initial public offering (IPO).

B) There is no limit to the number of primary offerings a corporation can issue.

C) A corporation can have two primary offerings—the initial public offering (IPO) and an additional public offering (APO).

D) After its initial public offering (IPO), a corporation can have only one more primary offering—its subsequent primary offering (SPO).

37.

A corporation needs to build a new manufacturing facility costing several hundred million dollars. In which of the following markets could this new capital be raised?

A) Government bond market

B) Secondary market

C) Municipal bond market

D) Capital market

38.

A corporation sells shares to the investing public in order to raise capital. This is known as

A) an issuer transaction.

B) a secondary market transaction.

C) an exchange market execution.

D) a primary, or investor-to-investor, transaction.

39.

A company is considering raising capital without going through the registration process requirements mandated by the Securities Act of 1933. To be exempt from the act, which of the following offerings might they employ?

A) Additional public offering (APO)

B) Private (nonpublic) securities offering

C) Initial public offering

D) Shelf offering

40.

Which of the following statements is true?

A) Municipalities, the federal government, and corporations can raise funds in the capital markets.

B) Only municipalities can raise funds in the capital markets.

C) Only corporations can raise funds in the capital markets.

D) Only the federal government and municipalities can raise funds in the capital markets.

41.

Each of the following may be traded on an exchange except

A) life insurance.

B) bonds.

C) options.

D) equities.

42.

Private placements are primarily sold to

A) investment bankers.

B) individuals who do not meet the definition of accredited investor.

C) institutional investors.

D) general public investors.

43.

Which of the following best describes a prospectus?

A) It is a truth-in-lending document required whenever a loan is made to an issuer via the purchase of its debt securities.

B) It is a full and fair disclosure of all material information and facts regarding the issuance of securities.

C) It is a useful but not mandatory document showing detailed information intended to offer investors adequate reason to purchase shares.

D) It is a document, required by securities law, which offers limited information about an issuer's securities to be offered to the public.

44.

For nonexempt securities being offered to the public for the first time by a corporate issuer, which of the following would be applicable?

A) Securities Act of 1933 regulating securities traded in the secondary market

B) Securities Act of 1934 regulating securities that must be offered by prospectus

C) Securities Act of 1933 regulating issues that must be offered by prospectus

D) Securities Act of 1934 regulating issues that must be offered by prospectus

45.

The primary purpose of the Securities Act of 1933 is to

A) require full and fair disclosure in connection with the sale of securities to the public.

B) regulate all persons associated with industry member firms.

C) authorize the designated self-regulatory organizations (SROs) to enforce securities rules and regulations.

D) provide a basis for the regulation of exchanges and electronic trading venues.

46.

Which of the following best describes how a sell stop at 39 order would be filled?

A) The next price above 39 after the market rises to 39

B) The next available price after the market price rises to 39

C) The next price below 39 after the market falls to 39

D) The next available price after the market price falls to 39

47.

Which of the following best describes how a market order to sell would fill if placed when the price of the stock is a 40?

A) The next available price

B) The next available price below 40

C) The next available price above 40

D) Only at 40

48.

A market order to buy must be executed when and at what available price?

A) Immediately, at the highest

B) Within 24 hours, at the highest

C) Immediately, at the lowest

D) Within 24 hours, at the lowest

49.

Caleb McCann got a tip from his brother Nate on XYZ stock two months ago. Caleb hasn't previously been investing in the stock market but has been watching this stock since he got the tip from his brother. Caleb is now very bullish on XYZ and wants to place a trade. Which of the following would you recommend?

A) Sell XYZ to close a long position

B) Buy XYZ to close out a short position

C) Sell XYZ to open a short position

D) Buy XYZ to open a long position

50.

Your client, Mary Quinn, wants to place an order to sell a stock in her portfolio when the current price is 45, but she is only willing to sell if she can sell for at least 47. Which order should she place?

A) A sell stop limit order

B) A sell stop order

C) A market order

D) A sell limit order

51.

Your client, Jane Anderson, has owned QRS for a few years but has now turned bearish on QRS. What transaction would you recommend?

A) Buy QRS to open

B) Buy QRS to close

C) Sell QRS to open

D) Sell QRS to close

52.

John Christensen places a buy limit order at 42 when the market price of the stock is at 45. Which of the following best describes how the order would fill?

A) The order can only be filled at a price of 42 or lower

B) The order would be filled between when the stock price is between 42 and 45

C) The order would be filled immediately because the market price is already above 42

D) The order would be filled at the next available price after the stock price drops to 42

53.

Which of the following would be required for a good 'til canceled order to remain in force for more than six months?

A) Nothing; it stays on the books until the customer cancels it

B) The customer would need to reconfirm the order

C) The broker-dealer would need to reconfirm the order for it to remain in force

D) The specialist on the NYSE would need to reconfirm the order

54.

Which of the following best describes how a market order to buy would fill if placed when the market price of the stock was at 40?

A) The next available price

B) The next available price above 40

C) The next available price below 40

55.

Which of the following best describes how a buy stop at 39 would fill?

A) The next available price after the market price rises to 39

B) The next price above 39 after the market price rises to 39

C) The next price below 39 after the market price falls to 39

D) The next available price after the market price falls to 39

56.

A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following executions would the customer accept?

A) 21.25

B) 22.50

C) 22.90

D) 23.50

57.

Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend?

A) Sell ABC to open

B) Sell ABC to close

C) Buy ABC to open

D) Buy ABC to close

58.

If left unexecuted, a good til cancel (GTC) order will automatically be canceled when?

A) On the first business day of April and the first business day of October

B) On the cancel date specified by the customer at the time the order is entered

C) On the last business day of April and the last business day of October

D) On the last business day of June and the last business day of December

59.

"An order is entered by a customer to sell at 30 stop limit. Once the order is entered, the stock trades in the following sequence: 32, 29, 31, and 33. The order would be executed and the investor would receive a price of"

A) 29.

B) 30.

C) 32.

D) 31.

60.

A GTC order is left unexecuted at the end of the trading day on the last business day of April. Which of the following is true?

A) The order will be automatically canceled.

B) The order will only continue working through the opening of the next business day.

C) The customer must give specific instructions to cancel the order so that it will not continue as a good working order.

D) The order will be automatically renewed.

61.

A customer enters a market order. This type of order can be

A) a buy or sell order to be executed at a specified limit.

B) a sell order only to be executed at a specified price.

C) a buy or sell order to be executed at the next available price.

D) a buy order only to be executed at the next available price.

62.

How long can a good 'til canceled order remain in force without being reconfirmed by the customer?

A) 36 months

B) 6 months

C) 24 months

D) 12 months

63.

Who must reconfirm a good 'til canceled order for it to stay in force more than six months?

A) No one; they will remain in force until the customer cancels it

B) The specialist on the NYSE

C) The customer who placed the order

D) The broker-deaker who accepted the order

64.

Your client, Randall Stephens, has been bearish on LMN stock and sold it short several months ago. He now believes the company is in a good position for a turnaround and wants to change his strategy on LMN. What should he do to implement his new strategy?

A) Buy to close his existing position and open a new long position in the stock

B) Sell short QRS to close his existing position

C) Sell an equal number of shares to his existing position

D) Buy an equal number of shares to his existing short position

65.

A customer is given a quote for ABC as: 17.00 – 17.25 6 × 12. This quote indicates the customer can

A) purchase 1,800 shares at $17.25 per year.

B) sell 600 shares for $17 per share.

C) sell 1,200 shares at $17.25 per share.

D) purchase 1,200 shares for $17 per share.

66.

Which of the following best describes the size of a quote?

A) It tells the number of shares that were traded in the OTC market the prior day.

B) It tells the number of shares that were traded on the NYSE that day.

C) It tells the number of shares the broker-dealer is willing to buy or sell at that price.

D) It tells the number of shares the broker-dealer has in inventory.

67.

Unless otherwise specified, the size of a firm quote is

A) 500 shares.

B) 100 shares.

C) 10,000 shares.

D) 1,000 shares.

68.

The ask price represents

A) the price the broker-dealer is willing to sell for.

B) one of the prices set by FINRA.

C) one of the prices set by the SEC.

D) the price the broker-dealer is willing to buy for.

69.

An individual would most likely be statutorily disqualified from working in the securities industry for which of the following reasons?

A) Willful failure to disclose personal bankruptcy or unsatisfied liens

B) Charged with driving under the influence of alcohol resulting in personal injury—a felony

C) Conviction for misdemeanor assault

D) Willful failure to disclose motor vehicle fines in excess of $1,000

70.

An application for Financial Industry Regulatory Authority (FINRA) membership carries the applying firm's specific agreement to do which of the following?

A) Pay a fixed yearly sum to the Securities and Exchange Commission (SEC)

B) Comply with the association's rules and regulations

C) Attend FINRA's annual regulatory conference

D) Provide FINRA with periodic financial reports

71.

The U-4 form requires registered representatives to disclose all of the following except

A) 10-year residency history.

B) any aliases.

C) information on any criminal charges, even if found innocent.

D) 10-year employment history.

72.

Which of the following is true regarding a registered person who wishes to move her registration from one broker-dealer to another?

A) A person who has been registered more than 25 years is grandfathered in and no filings need to be made.

B) If the registered person has taken and passed the Series 24 General Securities Principal Exam, no filings need be made.

C) Only Form U-5 need be filed, separating the registered person from the existing employer.

D) In no circumstances can a registration be transferred from one firm to another.

73.

Fingerprint records are required for each of the following employees of a registered broker-dealer except

A) a receptionist greeting customers and directing them to the appropriate registered representative within the office.

B) those whose duties are limited to supervising clerks who handle the books and records of the firm.

C) a clerk who handles customer physical securities.

D) a registered representative who sells or offers to sell municipal or government bonds.

74.

When a new associated person is hired at a broker-dealer firm, which of the following is responsible for seeing that Form U-4 is completed and filed?

A) The employing broker-dealer firm

B) The new employee

C) The local Financial Industry Regulatory Authority (FINRA) district office

D) The Securities and Exchange Commission (SEC).

75.

Before submitting an application to enroll, part of the process for an associated person to engage in the investment banking or securities business, is to have the member firm that sponsors them ascertain the individuals

A) past 5 years of business/employment history.

B) past 10 years of residential history.

C) business reputation, character, education, and experience.

D) highest level of education.

1 out of 75

Time is Up!

Time's up

SIE Practice Exam 2

Welcome to your SIE Practice Exam 2

This test is designed to prepare you mentally for the actual SIE Exam with the same number of (75 questions) and the same time allowed (105 minutes) as the actual exam.

The SIE Exam is breakdown into four (4) Parts.

Here are the Four (4) Domains of SIE Exam with the weightage and number of questions in this practice exam:

1. Understanding Products and their Risks [33 Questions] - 44%

2. Knowledge of Capital Markets [12 Questions] - 16%

3. Understanding Trading, Customer Accounts, and Prohibited Activities [23 Questions] - 31%

4. Overview of the Regulatory Framework[7 Questions] - 09%

Please click NEXT to start your Free SIE PRACTICE EXAM right away.

Best of Luck!

By electing a board of directors (BOD), stockholders have

A) a say in the company's management but are not involved in the day-to-day details of its operations.

B) neither a say in the company's management nor a say in any of the day-to-day details of its operations.

C) a say in the day-to-day details of its operations but no say in the management selected to carry out those operations.

D) a say in the company's management and all day-to-day details of its business operations.

Common shareholders have the right to receive an audited set of financial statements of the company's performance

A) each quarter.

B) monthly.

C) biannually.

D) annually.

In order to receive a declared dividend a shareholder must be an owner of record at the close of business on the

A) record date.

B) ex-dividend date.

C) payable date.

D) declaration date.

A common stock shareholder's residual right to corporate assets refers to which of the following?

A) During the dissolution of corporate assets, common shareholders will be paid first— before debtholders and preferred shareholders are paid.

B) During the dissolution of corporate assets, common shareholders will be paid if there are any funds left after debtholders and preferred shareholders are paid.

C) During the dissolution of corporate assets, common shareholders will be paid if any funds are left after preferred shareholders are paid but before debtholders are paid.

D) During the dissolution of corporate assets, common shareholders will be paid if any funds are left after debtholders are paid but before preferred shareholders are paid.

A shareholder feels strongly about some of the issues to be voted on at the next shareholder meeting but is unable to attend. Which of the following is true?

A) The shareholder will need to attend in person in order to vote.

B) The shareholder must relinquish the right to vote at this meeting.

C) The shareholder must deliver the vote in person but can do so before the date of the meeting.

D) The shareholder can vote by proxy.

The decision to pay a dividend rests with

A) shareholders, which is why it is guaranteed.

B) shareholders but is not guaranteed because they can vote against paying one.

C) the board of directors (BOD) but is not guaranteed.

D) the board of directors (BOD) and is guaranteed.

A penny stock is best described as

A) an exchange-listed stock valued at less than $5 per share.

B) an unlisted stock valued at less than $5 per share.

C) an unlisted stock valued at less than $2 per share.

D) an unlisted stock valued at less than $1 per share.

Transactions where the penny stock rules are applicable would be those that

A) are either solicited or unsolicited.

B) are neither solicited nor unsolicited transactions.

C) are solicited.

D) are unsolicited.

An investor interested in quarterly income should invest in

A) corporate bonds.

B) utility company stock.

C) STRIPS.

D) Treasury bonds.

10.

How long must customer complaints be kept on file by the broker-dealer?

A) Two years

B) Four years

C) As long as the firm is in business

D) Three years

11.

Common dividends may be

A) declared, increased, reduced, or suspended by the shareholders.

B) declared or suspended by the board of directors (BOD), with increases and reductions decided by the shareholders.

C) declared or increased only by the board of directors (BOD).

D) declared, increased, reduced, or suspended by the board of directors (BOD).

12.

Under penny stock rules, what is required for a broker-dealer to consider an investor an established customer?

A) Open cash account for six months or more

B) Signed transaction agreement

C) At least three separate penny stock purchases

D) Signed risk disclosure statement

13.

A preemptive right for existing shareholders is best described as

A) the right to purchase shares in an amount that would keep a shareholder's proportionate ownership in the corporation unchanged when a company issues additional shares.

B) the right for the board of directors (BOD) to preempt existing shareholders and only allow them to purchase the newly issued additional shares after the board has purchased the shares they want.

C) the right that allows new investors to purchase shares before existing shareholders when a company issues additional shares.

D) the right for the board of directors (BOD) to preempt existing shareholders from purchasing additional shares so that they may be used for paying stock dividends by the corporation.

14.

Once a dividend is initially declared by the board of directors (BODs), any future dividend payments

A) are not guaranteed to be paid, but if they are paid, they must be at least equal to the initial declaration.

B) carry no guarantee of payment in any amount.

C) are guaranteed to be paid in at least the same amount as the initial declaration.

D) are guaranteed to be paid, but no amount is stipulated.

15.

Purchasers of common stock may generally look to all of the following risks associated with that investment except

A) reduction in dividend payout.

B) low priority.

C) market risk.

D) interest rate risk.

16.

List the dates associated with dividend payment in their proper order.

A) Record date, declaration date, ex-dividend date, pay date

B) Declaration date, ex-dividend date, record date, pay date

C) Declaration date, pay date, ex-dividend date, record date

D) Declaration date, record date, ex-dividend date, pay date

17.

An investor looking to speculate in penny stocks would be exempt from the suitability statement requirement under which of the following circumstances?

A) The investor is already exempt from the risk disclosure requirements.

B) The investor is an established customer.

C) The investor's account is approved for margin purchases.

D) The investor has already received the risk disclosure statement.

18.

All of the following are possible actions of an investor who has received stock rights except

A) sell the rights for a short-term capital gain or loss.

B) hold the rights for a possible long-term capital gain.

C) exercise the rights to purchase the new stock at a discount.

D) allow the rights to expire unexercised.

19.

For registered shares held by an affiliate (known as control stock), which of the following applies?

A) No holding period or any volume restrictions

B) No holding period, but volume limits always apply

C) Six-month holding period, with sales allowed freely thereafter

D) Six-month holding period, with volume limits thereafter

20.

Securities acquired through some means other than a registered public offering are known as

A) convertible.

B) control.

C) restricted.

D) affiliate's stock.

21.

Which of the following sell transactions is not subject to the holding period restriction specified in SEC Rule 144?

A) Stock acquired by a corporate affiliate in a private placement

B) Stock acquired in the OTC market by a corporate affiliate

C) Unregistered stock acquired by a nonaffiliate under an investment letter

D) Unregistered stock acquired by a corporate affiliate in a stock option program

22.

Mr. Smith purchases 2% of MES Corporation's common stock. Four years later Mrs. Smith purchases 9% for her own account. Which of the following is true?

A) Only Mr. Smith, as the initial shareholder, would be considered a control person.

B) Neither Mr. or Mrs. Smith is considered a control person.

C) Because she owns more shares, only Mrs. Smith is considered a control person.

D) Both Mr. and Mrs. Smith are considered control persons.

23.

Restricted securities may not be sold until they have been held fully paid for

A) one year.

B) six months.

C) two years.

D) one month.

24.

An officer of a public company buys 1,000 shares of the company's registered stock in the open market. Regarding the sale of these shares, the officer may sell

A) immediately, subject to Rule 144 volume limitations.

B) immediately, with no volume restrictions.

C) under Rule 144 only after a six-month holding period.

D) only after leaving (becoming unaffiliated with) the company.

25.

An investor having no affiliation with CDS Company has just purchased shares that were sold subject to Rule 144. This investor

A) must wait six months before any sales can be made.

B) can only sell subject to volume limits.

C) must wait six months before selling shares subject to volume limits.

D) can sell the shares unrestricted at any time.

26.

A corporation is issuing a bond with an interest rate below that which is commonly being offered for this type of bond. To improve the bond's marketability without reducing the capital to be obtained, which of the following actions might the corporation take?

A) Offer a warrant on the stock with each bond

B) Offer the bond at a discount

C) Offer a stock dividend to the current shareholders

D) Conduct a rights offering for potential bond buyers

27.

For restricted stock (unregistered) held by a nonaffiliated, which of the following applies?

A) Six-month holding period, with volume limits thereafter

B) No holding period, but volume limits always apply

C) No holding period or any volume restrictions

D) Six-month holding period, with sales allowed freely thereafter

28.

Securities and Exchange Commission Rule 144 regulates

A) the sale of new issue securities in the primary market.

B) state-level (blue-sky) registration of securities.

C) communications with public retail investors.

D) the sale of control and restricted securities.

29.

A corporation with 1 million shares of stock outstanding wishes to sell another 250,000 shares. When management conducts a rights offering, a shareholder owning 100 shares will be given stock rights to purchase how many additional shares?

A) 125 shares

B) 25 shares

C) 250 shares

D) 100 shares

30.

A nonaffiliated owns 3% of an issuer's common stock. This person will be considered a control person if a spouse owns

A) 2% of the issuer's common stock.

B) 5% of the issuer's common stock.

C) 8% of the issuer's common stock.

D) any shares of the issuer's common stock.

31.

Restricted shares, those that are unregistered, meaning that they were not attained in a public offering, may be sold by a nonaffiliate

A) after holding them for six months but then subject to volume restrictions.

B) freely, with no holding period or volume restrictions.

C) at any time but with volume restrictions.

D) after holding them for six months and freely thereafter.

32.

All of the following are considered control persons (owning control stock) except

A) a director on the board of directors (BOD) owning 2% of the outstanding shares.

B) an unaffiliated shareholder owning 8% of the outstanding shares.

C) the corporation's CFO owning 1% of the outstanding shares.

D) an officer of the corporation owning less than 1% the outstanding shares.

33.

For restricted stock (unregistered) held by an affiliate (insider), which of the following applies?

A) No holding period or any volume restrictions

B) Six-month holding period, with volume limits thereafter

C) No holding period, but volume limits always apply

D) Six-month holding period, with sales allowed freely thereafter

34.

If an officer of a bank with the authority to purchase and sell securities on behalf of the bank wants to purchase new issues, which of the following statements is true?

A) The officer may not purchase a new issue unless the amount he wishes to purchase is considered small in relation to the total offering.

B) The officer may purchase a new issue because anyone is allowed to purchase new issues.

C) The officer may not purchase a new issue because he is considered a restricted person.

D) The officer may purchase a new issue because no banking rules prohibit it.

35.

For primary and secondary markets, which of the following is true?

A) In the secondary market, securities transactions cannot take place on an exchange.

B) In the primary market, securities are purchased from and sold to individual investors.

C) In the secondary market, all sales proceeds go to the issuer.V

D) In the primary market, securities are sold to the public and the issuer receives the sale proceeds.

36.

Public offerings of securities are regulated under

A) the Securities Act of 1934.

B) Financial Industry Regulatory Authority (FINRA)'s communications with the public rules.

C) the Securities Act of 1933.

D) the Consumer Protection Act.

37.

The XYZ Company is looking to offer shares of its common stock to the public. Which of the following laws enacted by Congress would have the most relevance to the issuance of these securities?

A) The Securities Investors Protection Act of 1970

B) The Investment Company Act of 1940

C) The Securities Act of 1933.

D) The Trust Indenture Act of 1939

38.

For the primary market, which of the following is true?

A) All U.S. exchanges are primary markets where price is determined by supply and demand.

B) All U.S. exchanges are primary markets where securities are offered at a public offering price.

C) Issuer transactions occur in the primary market, and securities are offered at a public offering price.

D) Issuer transactions occur in the primary market, and price is determined by supply and demand.

39.

A prospectus displays which of the following?

A) A guarantee insuring against loss

B) Performance predictions for a minimum of three years

C) The Securities and Exchange Commission (SEC) endorsement

D) Description of how the proceeds will be used

40.

In the capital markets, securities such as stocks and bonds can be

A) offered by both public and private sectors.

B) purchased and sold by individuals only.

C) purchased and sold by institutions only.

D) offered by the public sector only.

41.

All of the following are restricted persons except

A) finders and fiduciaries acting on behalf of the underwriters.

B) individual owning 5% of a member firm.

C) employees of members.

D) portfolio managers.

42.

An officer of a broker-dealer firm would be categorized as a restricted person if that individual attempted to purchase

A) a municipal bond in a state where the officer does not reside.

B) closed-end funds on the secondary market.

C) call or put options on a stock in the secondary market.

D) a new issue initial public offering (IPO) at the public offering price.

43.

An offering is defined as the sale of a security. Regarding offerings, all of the following are true except

A) offerings of stocks can be made to the investing public.

B) offerings of bonds can be made to the investing public.

C) offerings can be identified by who is selling the securities issuer or investor.

D) corporate securities can only be offered in public securities offerings.

44.

The ATOP Company is planning to offer shares of both common and preferred stock to the investing public in order to raise operating capital intended to be used for expansion. Which of the following laws enacted by Congress would be the most relevant when issuing these equity securities to the public?

A) The Trust Indenture Act of 1939

B) The Investment Company Act of 1940

C) The Securities Investors Protection Act of 1970

D) The Securities Act of 1933

45.

Ensuring that the investing public is fully informed about a security and its issuing company when shares are first sold in the primary market is covered under which of the following federal acts?

A) Securities Exchange Act of 1934

B) Uniform Securities Act

C) Securities Act of 1933

D) Investment Company Act of 1940

46.

The spread a dealer makes is best described as

A) the total commission.

B) the ask plus the bid.

C) none of these.

D) the ask minus the bid.

47.

What is the spread on a stock quote?

A) The range of prices the stock has shown over the course of one trading day

B) The profit margin for an individual trade

C) The broker-dealer's commission charges for the transaction

D) The difference between the bid price and the ask price or offer

48.

Subject to market liquidity, which of the following orders is most likely to be executed immediately?

A) All-or-none (AON) order

B) Fill-or-kill order

C) Market order

D) Limit order

49.

Shares must be borrowed in order to

A) buy to open a position.

B) sell short to open a position.

C) buy to close a position.

D) sell short to close a position.

50.

Which of the following transactions has the most risk?

A) Selling short

B) Short against the box

C) Buying to open

D) Selling to close

51.

An opening transaction can be

A) a short sale only.

B) either a buy or a sell.

C) a buy only.

D) a sell only.

52.

Selling shares not yet borrowed or located to be borrowed is

A) known as closing a short sale with a purchase.

B) known as a short sale and is prohibited.

C) known as a naked short sale and is prohibited.

D) known as closing a position with a sale and is prohibited.

53.

When investors open a position by going long the security, they can close the position by

A) opening a new position in the security.

B) buying the security.

C) selling the security short.

D) selling the security.

54.

Which of the following transactions has the least risk?

A) Selling to open

B) Buying to open

C) Short against the box

D) Selling short

55.

A customer who is bullish on ABC would most likely

A) sell ABC long.

B) buy ABC long.

C) sell ABC short.

D) buy ABC short.

56.

Which of the following is true regarding short sales?

A) Selling short involves purchasing the shares first.

B) Selling short involves selling shares not yet owned.

C) Selling shares not yet owned is prohibited.

D) Selling short means selling less shares than were purchased.

57.

An investor with no existing positions in MMS stock sells 100 shares. This is

A) a long bearish position.

B) a short bearish position.

C) a short bullish position.

D) a long bullish position.

58.

A closing transaction can be

A) either a buy or a sell.

B) a sell only.

C) a short sale.

D) a buy only.

59.

Short sellers have

A) unlimited profit and loss potential.

B) unlimited profit potential and limited loss potential.

C) limited profit and loss potential.

D) limited profit potential and an unlimited loss potential.

60.

Shares to sell short have been located in order to be borrowed. Once sold short, these shares will be known as

A) covered.

B) uncovered.

C) naked.

D) closed.

61.

Potential risks of owning common stock include all of the following except

A) unlimited liability.

B) business risk.

C) market risk.

D) low priority in liquidation.

62.

Ownership of a security indicates that one is

A) short the position and bearish.

B) short the position and bullish.

C) long the position and bullish.

D) long the position and bearish.

63.

All of the following are bullish positions except

A) long warrants.

B) long stock.

C) long calls.

D) short stock.

64.

A customer who is short against the box may close the position by all the following except

A) depositing the fair market value of the shorted stock into his account.

B) combining purchases of stock with stock already owned by the customer.

C) covering the short with the stock in his account.

D) purchasing twice the stock in the open market.

65.

Meeting the location requirements and the borrowing of securities when a customer wants to sell short is done by

A) the customer or entity that the shares will be borrowed from.

B) the broker-dealer on behalf of the short-selling customer.

C) the purchaser of the securities being sold short.

D) the customer who wants to sell short.

66.

A customer wishes to sell short 1,000 shares of ABC. Prior to executing the order, the registered representative must

A) receive permission from the customer to borrow shares.

B) receive principal permission to execute the trade.

C) locate shares that can be lent to effect the sale.

D) have the customer pledge personal collateral to cover the sale.

67.

An investor who has a short position in 500 shares of JKH common stock would eliminate that position by

A) entering an opening purchase order for 500 shares of JKH.

B) entering a closing purchase order for 500 shares of JKH.

C) entering a closing purchase order for 500 shares of ABC.

D) entering a closing sale order for 500 shares of JJK.

68.

Selling long is equivalent to which of the following?

A) Selling to close

B) Selling short

C) Selling to open

D) Selling to open then buying to close

69.

Information on the Form U-4 is extensive and includes names (aliases) and addresses in addition to which of the following?

A) 2 years employment and 3 years of residency history

B) 10 years of residency and 5 years of employment history

C) 3 years of employment and 3 years of residency history

D) 5 years of residency and 10 years of employment history

70.

Members and non-members alike can look into a broker's service and qualifications record by accessing which of the following services?

A) The Central Registration Depository

B) Municipal Securities Rule Board (MSRB)

C) BrokerCheck

D) Form U-4

71.

Registered broker-dealers must have fingerprint records for most of their employees and for which of the following?

A) Drivers

B) Doorman

C) Receptionist

D) Partners

72.

Updates to the Form U4 such as a change in address, and that do not point to disciplinary action must be made promptly but no later than

A) 10 business days.

B) 90 days.

C) 60 days.

D) 30 days.

73.

FINRA firms must employee at least how many principals?

A) Two

B) Three

C) Four years.

D) Five

74.

Those persons employed by a Financial Industry Regulatory Authority (FINRA)-registered broker-dealer to do nothing other than provide training for its associated persons

A) need not be registered.

B) must be registered as a representative.

C) must be registered as a principal.

D) are exempt from the firm element of the firm's continuing education requirement.

75.

After receiving a written complaint letter from a client, a registered representative should.

A) forward copies immediately to Financial Industry Regulatory Authority (FINRA) or the appropriate self-regulatory organization (SRO).

B) contact the client immediately to attempt reaching a resolution to the issue.

C) employ a thorough investigation and provide a report to the Securities and Exchange Commission (SEC).

D) turn the complaint over to the appropriate supervisor or principal.

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Which of the following statements about rights and warrants is true?

A) Rights are short term; warrants are long term.

B) Rights are long term; warrants are short term.

C) Rights and warrants are both long term.

D) Rights and warrants are both short term.

An investor has just received stock rights in the mail allowing the purchase of 250 shares of a stock offering at a discount. With these rights, the investor may take any of the following actions except

A) purchase 125 shares at double the discount.

B) exercise some rights and sell the rest.

C) sell some rights and let the rest expire unexercised.

D) sell the rights for a portion of their value.

The primary purpose of American depositary receipts (ADRs) is to facilitate the trading of

A) U.S. stocks in foreign markets.

B) foreign stocks in U.S. markets.

C) foreign stocks in both domestic and foreign markets.

D) domestic stocks in both foreign and domestic markets.

An investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place?

A) Warrants will be distributed to existing stockholders and they will have two to five years to decide whether or not to buy the stock at the strike price.

B) Warrants will be distributed to existing stockholders with an exercise price equal to the current market value.

C) Rights will be distributed to existing stockholders with an exercise price lower than the current market value.

D) Rights will be distributed to existing stockholders; they have only two options: exercise the rights or let them expire.

Which of the following sell transactions is not subject to the holding period restriction specified in SEC Rule 144?

A) Unregistered stock acquired by a corporate affiliate in a stock option program

B) Unregistered stock acquired by a nonaffiliate under an investment letter

C) Stock acquired by a corporate affiliate in a private placement

D) Stock acquired on the NYSE by a corporate affiliate

A certificate issued by a company granting its owner the right to purchase securities from the issuer at some specified price years into the future would best be described as

A) a proxy.

B) a warrant.

C) a rights certificate.

D) a call option.

An affiliate holding unregistered shares can sell under Rule 144

A) as often as wished.

B) one time a year.

C) two times a year.

D) four times a year.

Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares

A) subject to volume restrictions within any 90-day period.

B) completely unrestricted.

C) subject to the volume restrictions on any single day.

D) at the discretion of the issuer's board of directors (BOD).

An affiliate has held restricted shares fully paid for six months. In anticipation of the desire to divest the shares, the affiliate should know that

A) no limit on the number of shares that can be sold will be imposed.

B) while no longer restricted, all sales of these shares must be approved by the issuer's board of directors (BOD).

C) any shares sold will be subject to volume restrictions if still an affiliate.

D) the shares are no longer restricted, having been held fully paid for six months.

10.

Under the provisions of Rule 144, what percentage of outstanding stock may a control person sell every 90 days?

A) 1%

B) 3%

C) 6%

D) 4%

11.

Each of the following is considered a control person under Securities and Exchange Commission (SEC) Rule 144 except

A) corporate officers and directors.

B) those persons who own 5% or more of the total beneficial interest of a company's common stock.

C) those persons who own 10% or more of the total beneficial interest of a company's common stock.

D) another company that owns 10% or more of the company's equity securities.

12.

Which statement describes rights and warrants?

A) Rights are short term; warrants are long term.

B) Both rights and warrants are long term.

C) Both rights and warrants are short term.

D) Rights are long term; warrants are short term.

13.

A Japanese computer chip manufacturer wants to attract U.S equity investors. Which of the following securities would help the issuer to accomplish this goal?

A) Foreign depositary receipts

B) American depositary receipts (ADRs)

C) Global stocks

D) Yen-based stocks

14.

Preferred shareholders who expect missed dividend payments to be eventually paid are most likely to own

A) callable preferred stock.

B) convertible preferred stock.

C) cumulative preferred stock.

D) straight preferred stock.

15.

As interest rates rise, prices of preferred stock will

A) rise.

B) remain unaffected.

C) fall.

D) become volatile.

16.

All else being equal, which of the following preferred would pay the highest dividend?

A) Cumulative preferred

B) Straight preferred

C) Callable preferred

D) Participating preferred

17.

When the board of directors (BOD) declares a dividend,

A) owners of preferred shares must be paid before any payment is made to common shareholders.

B) owners of preferred shares must be paid at least the same amount as any payment made to common shareholders.

C) owners of preferred shares are paid only after any payment is made to common shareholders.

D) owners of common shares must be paid at least the same amount as any payment made to preferred shareholders.

18.

While preferred shares tend to be less volatile than common shares, one type of preferred is noted as being even more stable in price than the others. This would be

A) convertible.

B) participating.

C) callable.

D) adjustable rate.

19.

Which of the following preferred stocks' price would remain most stable in an environment of changing interest rates?

A) Participating preferred

B) Straight preferred

C) Nocumulative preferred

D) Adjustable rate preferred

20.

MAS Corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of

A) 6%.

B) 4%

C) 2%.

D) 10%

21.

Which of the following best describes the trade execution of American depositary receipts (ADRs)?

A) Trades are executed domestically in a foreign currency.'

B) Trades are executed overseas in a foreign currency.

C) Trades are executed overseas in U.S dollars.

D) Trades are executed domestically in U.S. dollars.

22.

Preferred shareholders have

A) no voting or preemptive rights.

B) voting rights only.

C) preemptive rights only.

D) both voting and preemptive rights.

23.

What is the primary purpose of an issuer sponsoring an American depositary receipt (ADR)?

A) These securities are created to facilitate foreign investment in U.S. companies.

B) These securities are created to provide tax relief for U.S. investors.

C) These securities are created to attract a U.S. investor base.

D) These securities permit the issuer to avoid Securities and Exchange Commission (SEC) jurisdiction.

24.

The potential that inflation will devalue the fixed dividend income payments received by preferred shareholders is known as

A) interest-rate risk.

B) market risk.

C) purchasing power risk.

D) decreased dividend risk.

25.

What is the tax status of a dividend paid to a U.S.-based American depositary receipts (ADR) investor?

A) These dividends are only taxable to foreign buyers.

B) These dividends are tax free.

C) These dividends may be taxed by both the foreign country and the United States.

D) These dividends are tax deferred.

26.

Callable preferred stock is advantageous to the issuing company because it allows the company to

A) replace a higher, fixed-rate issue with a lower issue after the call date.

B) take advantage of higher interest rates.

C) issue fixed-rate securities at a yield lower than usual.

D) call in the stock at less than par value and capture the difference as income.

27.

If a preferred shareholder received a $3.50 annual dividend each year, it could be assumed that

A) these shares are trading at $35.00.

B) this is a 3.5% preferred class.

C) the common shareholders receive the same $3.50 annual dividend.

D) the shares had increased by 3.5% each year.

28.

What is the primary benefit for an American investor when purchasing an American depositary receipt (ADR)?

A) Exemption from U.S. taxation

B) Hedging currency risk

C) Diversification

D) Tax-deferred dividends

29.

An investor owns 3% preferred stock participating to 6%. This means the investor

A) must receive a total of 9% in any year the board declares the 6% participating be paid.

B) could receive an additional 3% over the stated 3% dividend if the board declares it.

C) must receive at least 6% each year.

D) could receive an additional 6% over the stated 3% dividend.

30.

DEF Corporation has 4% noncumulative preferred stock outstanding. The company eliminated its dividend payments for the past three years but now is in a position to resume paying them again. Before paying common shareholders a dividend, the company would be required to pay the preferred shareholders

A) nothing.

B) $1.00.

C) $2.50.

D) $4.00.

31.

Which of the following securities provides U.S. investors with a way to gain exposure to the common stock of a foreign issuer?

A) ADR

B) CMO

C) STRIPS.

D) GNMA

32.

Which of the following preferred stocks allows the issuer to pay the shareholders par and cease dividend payments following a stated period?

A) Adjustable

B) Callable

C) Puttable

D) Redeemable

33.

CDT Corporation has issued 4.5% callable preferred shares. If these shares are ever called in, stockholders should expect that the shares would be called in at

A) current market value.

B) par value.

C) par value or lower.

D) par value or higher.

34.

The Securities Act of 1933 protects investors who buy new issues by doing all of the following except

A) regulating the underwriting and distribution of primary and secondary issues.

B) requiring an issuer to provide full and fair disclosure.

C) requiring the licensing of persons affiliated with broker-dealers.

D) providing criminal penalties for fraud in the issuance of new securities.

35.

Regarding the purchase of a new equity issue, an account where a restricted person has a beneficial interest would be allowed to purchase the new shares at the public offering price

A) without restriction.

B) never.

C) only if the interest exceeds 15%.

D) only if the interest does not exceed 10%.

36.

Which of the following choices would best describe a follow-on offering?

A) An initial public offering (IPO) that has additional shares added by the issuer on the effective date

B) An offering to the employees of the issuing company

C) The common stock that is issued attached to a rights offering

D) An issue of shares by a public company that is already listed on an exchange

37.

When choosing to issue additional bonds to the general public in order to raise more capital, a corporate issuer is engaging in

A) a secondary offering.

B) an initial public offering.

C) a primary offering.

D) a private securities offering.

38.

Restricted persons are not allowed to purchase an IPO of common stock. All of the following are restricted persons except

A) broker-dealers.

B) any person owning 10% or more of a member firm.

C) registered representatives.

D) the grandparent of a restricted person.

39.

Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933?

A) Additional public offerings (APOs)

B) Private (nonpublic) securities offerings

C) Shelf offerings

D) Initial public offerings (IPOs)

40.

Mrs. Jones is an employee of a member firm and as such is a restricted person regarding the purchase of new issues. She belongs to an investment club and has a 1% interest in the club's brokerage account. The investment club

A) is a restricted account and will not be allowed to purchase equity shares of an IPO.

B) is a restricted account but will be allowed to purchase equity shares of an IPO.

C) is not a restricted account but will not be allowed to purchase equity shares of an IPO.

D) is not a restricted account and will be allowed to purchase equity shares of an initial public offering (IPO).

41.

A corporation increases capitalization by selling shares of stock which can either come from a new issue or previously authorized but unissued shares. Total stock outstanding must

A) never equal the number of shares issued.

B) always equal the number shares authorized.

C) always be greater than the number of shares issued.

D) never exceed the number of shares authorized.

42.

Rules regarding restricted persons state that each of the following is considered immediate family except

A) parents.

B) a brother or a sister.

C) a mother-in-law or a father-in-law.

D) an aunt or an uncle.

43.

In a split offering,

A) shares are issued from the corporation and sold by existing shareholders.

B) shares are issued to existing shareholders only.

C) shares are sold by existing shareholders only.

D) all shares are issued to the public from existing shareholders.

44.

Under the de minimis exemption, an initial public offering of common stock may be sold to an account where restricted persons have a beneficial interest as long as their interest in the account does not exceed

A) 20%.

B) 10%.

C) 25%.

D) 5%.

45.

Raising funds is generally accomplished by corporations through the issuance of stock (equity) or bonds (debt). This is done in

A) the funding market.

B) the secondary market.

C) the currency market.

D) the capital market.

46.

Which of the following orders can be used to close a short position in CDT stock that consists of 1,000 shares?

A) Buy 1,000 shares of CDT

B) Write 10 CDT call options

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