CNA Domain 9: Member of the Healthcare Team (Quiz 1) Welcome to your SIE Practice Exam 4 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! 1. For those owning preferred classes of stocks, priority of asset dissolution refers to A) the order in which preferred shareholders receive dividend payments when declared. B) the order in which preferred shareholders are paid in the event of a bankruptcy liquidation. C) the order in which preferred shareholders receive dividend payments and the order in which preferred shareholders are paid in the event of a bankruptcy liquidation. D) the order in which the board of directors (BOD) declares dividend payments. None 2. When shareholders owning participating preferred shares receive the additional participating amount, this was determined by A) Securities and Exchange Commission (SEC) mandate. B) the vote of all other preferred class shareholders. C) common shareholders. D) the board of directors (BOD). None 3. MJS Corporation has called in its 6% preferred shares. Owners of these shares should expect that A) the shares will continue to trade in the open market. B) dividend payments will cease on the call date. C) dividend payments will continue until the owner chooses to turn in the shares. D) the shares will be resold to new investors. None 4. An investor owns 4% preferred stock participating to 6%. This means the investor A) must receive at least 6% each year. B) must receive an additional 4% in any year the board declares the 6% participating be paid. C) could receive an additional 6% over the stated 4% dividend if the board declares it. D) could receive an additional 2% over the stated 4% dividend if the board declares it. None 5. A preferred shareholder's priority claim on assets is the preferred shareholder's priority standing over A) bondholders. B) common shareholders only. C) employees of the corporation. D) creditors of the corporation. None 6. Which of the following features of preferred stock allows the holder to reduce the risk of inflation? A) Noncumulative B) Cumulative C) Callable D) Convertible None 7. A convertible feature for preferred shares allows the owner to exchange the shares A) for as many bonds as the issuer is willing to issue at that point in time. B) for the preferred shares of another issuer. C) for a fixed number of shares of the issuing corporation's common stock. D) for a fixed number of bonds issued by the corporation. None 8. A shareholder owns preferred shares that allow for the possibility of receiving more than the stated dividend. This type of preferred share would be known as A) callable preferred stock. B) participating. C) convertible. D) adjustable. None 9. The rate on an adjustable preferred stock would most likely be indexed to A) the Treasury bill (T-bill) rate. B) the Consumer Price Index (CPI). C) the Dow Jones Industrial Average (DJIA). D) the Producer Price Index (PPI). None 10. Different categories of preferred shares offered by an issuer A) must all be convertible shares. B) all have preference over the issuer's common shares. C) must all be callable shares. D) all must have the same fixed dividend rate. None 11. MMS Corporation has 7% callable preferred shares outstanding. Over the past few years, benchmark interest rates have declined and hovered close to 3%. Which of the following is true? A) The issuer is likely to reduce the fixed dividend to 3%. B) The 7% shares are likely to be called. C) More 7% callable shares should be issued. D) The issuer will covert these shares to common stock. None 12. A customer owns cumulative preferred stock (par value of $100) that pays an 8% dividend. The dividend has not been paid this year and was missed in the two previous years. If the company wants to pay a dividend to common shareholders, how much must the company pay this customer per share first? A) $16 B) $0 C) $24 D) $8 None 13. LMN Corporation has a $60 par, 4% preferred stock currently trading at $45 per share. Its annual dividend is A) $24.00. B) $1.80. C) $2.40. D) $4.00. None 14. Which of the following securities is the underlying asset used to create an American depositary receipt (ADR)? A) Preferred shares B) Bonds C) Common shares D) Warrants None 15. Which of the following statements is correct concerning currency risk when investing in an American depositary receipt (ADR)? A) Currency risk is eliminated because the securities are dollar denominated. B) Currency risk is still a factor when purchasing an ADR. C) U.S. investors are protected from currency risk by the depositary bank. D) U.S. investors are protected from currency risk by the underlying foreign corporation. None 16. Mr. Smith bought an American depositary receipt (ADR) in a French company at $13.03 and recently sold the shares for $24.88. How would this trading profit be taxed? A) The profit is taxed as income in France only. B) The profit is taxed as a capital gain in the United States only. C) The profit is taxed as income in the United States only. D) The profit is not taxed because ADRs are tax-exempt securities. None 17. A preferred stock dividend is stated as a percentage of A) current market value. B) the 52-week average share price. C) par value. D) the company’s net worth. None 18. Preferred shares have A) characteristics of both equity and debt securities. B) only the characteristics matching those of equity securities. C) characteristics of neither equity nor debt securities. D) only the characteristics matching those of debt securities. None 19. Regarding preferred stock, all of the following are true except A) the right to vote on corporate issues is not available for preferred shareholders. B) preferred shareholders are paid before common shareholders in the event of a corporate bankruptcy. C) preferred shareholders have no preemptive rights that precede the preemptive rights of common shareholders. D) a corporation issuing common shares must issue at least one class of preferred shares. None 20. Which of the following preferred issues is most likely to fluctuate in line with the issuer's common shares? A) Callable preferred stock. B) Participating. C) Adjustable rate D) Convertible None 21. A corporation that has issued cumulative preferred stock A) pays the preferred dividend before paying the interest payments due on its outstanding bonds. B) pays past and current preferred dividends before paying dividends on common stock. C) pays only current dividends with no liability for missed or past-due dividends. D) pays only the current dividends on the preferred, before paying a dividend on the common and then pays any past-due dividends. None 22. Which of the following statements is correct concerning the pricing of American depositary receipts (ADRs)? A) ADRs are priced in foreign currency. B) ADR pricing is dollar-based using an end of day net asset value (NAV). C) ADR pricing is dollar-based and fluctuates throughout the day. D) ADR pricing is dollar-based using an end of day public offering price (POP). None 23. An investor would expect which type of preferred stock to pay the highest stated dividend rate? A) Straight B) Callable C) Cumulative preferred stock. D) Convertible None 24. The growth potential in the price of preferred shares is generally considered to be A) less than that of the issuer's common shares. B) greater than that of the issuer's common shares. C) unrelated to the financial well-being of the issuer. D) no different than that of the issuer's common shares. None 25. Interest-rate sensitivity for preferred shareholders should be understood to mean that A) when interest rates rise, so do the prices of preferred shares. B) when interest rates rise, the prices for preferred shares can fall. C) preferred share prices are not impacted by (insensitive to) changes in interest rates. D) when interest rates fall, so do the prices of preferred shares. None 26. Past-due dividends on cumulative preferred shares A) must be reallocated to common shareholders. B) can never be paid until common shareholders receive a dividend. C) are written off as nonpayable. D) accumulate on the company's books until paid. None 27. During times when interest rates are rising, which of the following preferred are likely to pay a higher annual dividend? A) Adjustable rate B) Callable C) Participating D) Convertible None 28. An investor owns a bond carrying a 4% coupon. Interest rates in the marketplace have been moving downward and are currently at 2.5%. Given the current interest rates in the marketplace, this investor should see A) the price of the bond move higher. B) the price of the bond be unchanged. C) the coupon of the bond adjusted downward. D) the price of the bond move lower. None 29. When selling a bond, the issuer is taking A) a borrower's position. B) a loaners position. C) an equity position. D) a creditors position. None 30. Assuming $1,000 par value, a bond priced at $1,200 is trading at A) par. B) discount to premium. C) a premium. D) a discount. None 31. An investor holds a 4% bond, callable in 8 years, and maturing in 12 years. The bond's current yield (CY) measures its annual coupon payment relative to A) its value at maturity. B) its value when callable. C) par value. D) its market price. None 32. An investor purchases a bond at $900 with a 5% coupon and a 5-year maturity. The bond has a current yield of A) 7.8%. B) 4.5%. C) 7.4%. D) 5.6%. None 33. Which of the following would all be considered the same regarding yields on debt instruments? A) Stated, nominal, and yield to maturity B) Nominal, yield to call, and yield to maturity C) Nominal, coupon, and yield to call D) Stated, nominal, and coupon yields None 34. In a combination (or split) offering, A) new shares are issued from the corporation and existing shares are sold by shareholders. B) shares are issued from existing shareholders only. C) all shares are issued from existing shareholders to the public. D) shares are issued to existing shareholders only. None 35. A member firm receives an order to purchase shares in a common stock initial public offering (IPO) from another broker-dealer for a customer. Regarding restricted persons, the member must A) refuse to accept the order. B) obtain a statement witnessed by a notary representing that the buyer is not restricted. C) obtain a list of all of the broker-dealer clients to determine eligibility. D) obtain a written representation that the buyer is not a restricted person. None 36. Underwriters acting as principals and committing to purchase any unsold shares for the syndicate account would best be described as being engaged in A) an initial public offering (IPO). B) a primary. C) a best efforts. D) a firm commitment. None 37. A company that offers sales of another company's securities would best be described as A) a transfer agent. B) an underwriter. C) a market maker. D) an issuer. None 38. Which type of underwriting is characterized by the broker-dealer buying the entire issue from the issuer and then reoffering it to the public? A) Best efforts B) Mini max C) Firm commitment D) All-or-none None 39. A select pair or group of companies organized to underwrite corporate or municipal securities is best known as A) a syndicate. B) an investment club. C) a market maker. D) an introducing broker-dealer. None 40. In an underwriting where fixing a minimum dollar amount to be sold in order to move forward with the entire offering is most commonly referred to as A) all or none (AON). B) de minimis. C) firm commitment. D) mini-max. None 41. Capital markets can be characterized by all of the following except A) they would include stock and bond markets. B) securities traded in them can be bought and sold by both individuals and institutions. C) entities can utilize them to finance both long- and short-term capital needs. D) they are utilized by the public sector only. None 42. A municipal advisor does which of the following activities? A) Advises municipalities on selling securities B) Advises institutions on selling municipal bonds C) Advises municipalities on buying securities D) Advises institutions on buying municipal bonds None 43. A person who looks to provide advice to a city government concerning the issuance of municipal debt securities would best be described as A) a market maker. B) an investment adviser. C) a municipal securities representative. D) a municipal advisor. None 44. Which of the following calls for the underwriters to buy securities from the issuer acting as an agent, not as principal? A) Initial public offering B) Firm commitment underwriting C) Follow-on offering D) Best efforts underwriting None 45. A corporate issuer of common stock has decided that it wants an agreement that its underwriter must either raise all of the capital needed or cancel the underwriting. To best accommodate this the underwriting should be A) a firm commitment. B) a mini-max. C) an immediate of cancel. D) an all or none (AON). None 46. When shares are held in street name, this refers to the shares being A) held in the name of the broker-dealer for the beneficial owner. B) restricted, and thus, nontransferable. C) held at the transfer agent for the beneficial owner. D) allowed to be sold only on the exchange where they were initially purchased. None 47. A stock trade took place on Tuesday, July 2. When would regular way settlement normally take place? A) Tuesday, July 2 B) Wednesday, July 3 C) Monday, July 8 D) Friday, July 5 None 48. A corporate stock is purchased on Friday, April 2, regular way. When will the trade settle? A) Wednesday, April 7 B) Tuesday, April 6 C) Monday, April 5 D) Friday, April 2 None 49. Isaac James has some call options in his account that he would like to exercise. He wants to know when the resulting purchase of the stock would settle. You would tell him A) trade date plus 3 business days. B) trade date. C) trade date plus 1 business day. D) trade date plus 2 business days. None 50. Your client, Teresa Jenson, calls and wants to purchase T-bills and wants to know when payment is due. You should tell her A) trade date plus 1 business day. B) trade date plus 2 business days. C) trade date plus 3 business days. D) trade date. None 51. Your customer has purchased $10,000 in U. S. Treasury bonds. These securities A) will have evidence of ownership recorded in book-entry form. B) are required to be delivered in the form of physical paper certificates. C) cannot be delivered in physical certificates because they exceed the amount for paper certificate delivery. D) can be transferred in either physical or book-entry form in accordance with the purchasers request. None 52. Your client is purchasing XYZ corporate bonds and wants to know when regular way settlement is. You should tell her A) trade date plus 2 business days. B) trade date plus 1 business day. C) trade date. D) trade date plus 3 business days. None 53. Your client, Alice Tate, lives in Irvine, California, and wishes to purchase some bonds that would be both state- and federal-tax free for her. You recommend some school district bonds from Costa Mesa. She then asks when she would need to pay for the bonds. You should tell her A) trade date plus 1 business day. B) trade date plus 2 business days. C) trade date. D) trade date plus 3 business days. None 54. Josie Reese, one of your clients with an option account, calls and asks you to remind her when she is required to settle if she bought a call today. You would tell her A) trade date plus 2 business days. B) trade date. C) trade date plus 1 business day. D) trade date plus 3 business days. None 55. Your client is buying municipal bonds and wants to know when payment is due. You should tell him A) trade date. B) trade date plus 1 business day. C) trade date plus 2 business days. D) trade date plus 3 business days. None 56. An investor purchased and then sold a security eight months later for a gain. This gain A) is considered to be a short-term gain, and it will be taxed at a more favorable rate than long-term gains. B) is considered to be a long-term gain, and it will be taxed at the same rate as the taxpayer's other ordinary income. C) is considered to be a long-term gain, and it will be taxed at a more favorable rate than short-term gains. D) is considered to be a short-term gain, and it will be taxed at the same rate as the taxpayer's other ordinary income. None 57. Regarding capital gains, which of the following is true? A) Short-term gains are those realized on positions held for 9 months or less. B) Long-term gains are those realized on positions held for 2 years or more. C) Short-term gains are those realized on positions held for 12 months or less. D) Long-term gains are those realized on positions held for 10 years or more. None 58. All of the following are taxable to the investor except A) capital gains distributions. B) cash dividends. C) stock dividends. D) semiannual interest payments. None 59. Current yield equals A) the annual income divided by the market price. B) the stated rate divided by the par value. C) the market priced divided by the annual income. D) the par value divided by the stated rate. None 60. Benjamin Jackson bought 100 shares of XYZ two years ago at $10 per share. The stock paid a $0.50 dividend each year and he sold the stock for $11. What percent was his total return? A) 20% B) 15% C) 10% D) 5% None 61. An investor purchased an MJS Corporation 6% 20-year bond at issue for $950. Two years later, the investor sold the bond for $925. This investor experienced A) a $25 interest loss. B) a $25 capital loss. C) a $925 return on investment. D) a $25 return on investment. None 62. Which of the following best describes the calculation for gains or losses for tax purposes? A) Proceeds minus dividend, plus cost basis B) Proceeds minus cost basis C) Proceeds plus cost basis D) Proceeds plus dividends, minus cost basis None 63. Which of the following are true of long-term or short-term gains or losses? A) Holding a stock and selling above its cost basis if over 12 months later would be a long-term gain. B) Holding a stock and selling below its cost basis if held for over a year would be a short-term loss. C) Holding a stock and selling it above its cost basis if held for one year would be a long-term gain. D) Holding a stock and selling below its cost basis if held for one year would be a long-term loss. None 64. Betsy Bingham asks you what her current yield will be if she buys a 6% corporate bond at $1,200. The answer is A) 5%. B) 6%. C) 3%. D) 2%. None 65. Your client, Soren Aland, buys a 4% XYZ corporate bond. If his current yield is 5%, he bought the bond at A) above par. B) par. C) a discount. D) a premium. None 66. Regarding the taxation of gains on securities, all of the following are true except A) long-term gains are taxed at more favorable long-term rates. B) capital gains are associated with the sale of securities and other real assets. C) short-term gains are taxed at less favorable ordinary income tax rates. D) gains on securities for a position held at least 12 months are not taxable. None 67. Two years ago Lisa Smith sold short 100 shares at $50 per share and two years later bought them back for $55 per share. The stock paid a $2.50 dividend each year. How much did Smith gain or lose per share for tax purposes? A) A $5 loss B) A $5 gain C) A $10 gain D) No gain or loss None 68. 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. None 69. In order for a registered representative of a member firm to receive any form of compensation, such as commissions, after terminating employment, all of the following statements are correct except A) earnings from referred business from existing clients would be eligible for payment. B) it would be permissible to pay continuing commissions to a surviving spouse. C) the agreement must be entered into before the termination of employment. D) there must be a contract in effect calling for these continuing commissions. None 70. When an employee is either terminated from, or willfully leaves, a member firm, Form U-5 must be filed. Under these circumstances, which of the following is true? A) Under either circumstance, the employee is responsible for filing Form U-5. B) The employee is responsible for filing Form U-5 only when leaving the firm willfully. C) The employing firm is responsible for filing Form U-5 only if it has terminated the employee. D) Under either circumstance, the employing firm is responsible for filing Form U-5. None 71. If after a registered representative terminates the firm learns of something that should have been reported to the Central Registration Depository, how long does the firm have to make an amendment if that information would cause statutory disqualification? A) 45 days B) 20 days C) 10 days D) 30 days None 72. A registered representative was guilty of an undetected minor rule violation during the last year of employment at a broker-dealer firm. The representative has now decided to leave the industry. For how long might the representative still be subject to fines or other sanctions by Financial Industry Regulatory Authority (FINRA) if the violation is belatedly detected? A) 6 months B) 30 calendar days C) 2 years D) FINRA no longer has jurisdiction None 73. A U-5 form should be filed with the Central Registration Depository within how many days after termination of a registered representative? A) 30 days B) Next business day C) 10 business days D) 15 business days None 74. Financial Industry Regulatory Authority (FINRA) is concerned about potential conflicts of interest in providing incentives or rewards for selling a sponsor's product. Which of the following situations regarding a product sponsors product training or education for outside RRs would FINRA disallow? A) A member firm's permission for its registered representatives to attend is required. B) A training location is chosen based on its being convenient for attendees to get to and its proximity to the main office. C) Spouses are included in the invitation with travel expenses paid for. D) Separate outings are planned in conjunction with the training at the expense of the attendees if they wish to participate. None 75. A broker-dealer firm managing an initial public offering (IPO) wishes to give a gift to an associated person of one of the selling group members. Which of the following would be an unacceptable gift under the rules? A) A $150 leather briefcase with the broker-dealer's name and logo on it B) A dinner at an expensive restaurant with a representative of the broker-dealer C) A ticket to a major league ball game to attend with a principal of the broker-dealer D) A $125 designer edition fountain pen and desk holder None 1 out of 75 Time is Up! Time's upTime is Up!
