TEAS Practice Exam 1 Welcome to your SIE Practice Exam 5 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. When interest rates in the marketplace move up, what happens to the coupon rate on existing bond? A) The coupon rate moves in the opposite direction. B) Nothing; it does not change. C) The coupon rate moves in the same direction. D) The movement depends on the duration of the bond. None 2. A bond that is structured so that the principal of the whole issue matures at once is A) a balloon bond. B) a term bond. C) a series bond. D) a serial bond. None 3. If a bond is trading at a premium, rank the following rates from low to high. A) Nominal yield, yield to maturity, current yield, coupon rate B) Yield to call, current yield, nominal yield, coupon rate C) Yield to call, yield to maturity, current yield, nominal yield D) Coupon rate, current yield, yield to maturity, yield to call None 4. Which of the following statements regarding bond interest is true? A) Bond prices have an inverse relationship to interest rates. B) The par value of a bond will decrease as market interest rates fall. C) The par value of a bond will increase as market interest rates fall. D) Bond prices have a direct relationship to interest rates. None 5. Bonds can typically be issued with A) term, series, or balloon maturities. B) term, serial, or balloon maturities. C) term or balloon maturities only. D) term or series maturities only. None 6. Which of the following statements is most accurate about feature benefits? A) The put feature benefits both the issuer and investor. B) The put feature benefits the issuer; the call feature benefits the investor. C) The call feature benefits the issuer; the put feature benefits the investor. D) The call feature benefits both the issuer and investor. None 7. The market forces that typically drive the price of a bond trading in the secondary market would include all of the following except A) the price of the issuer's stock. B) supply or availability of the bond. C) interest rates. D) investors' demand for the bond. None 8. At the time of maturity, an investor realizes that the overall return on the investment was actually greater than the coupon rate stated on the bond when purchased. This most likely would have occurred because the bond had initially been purchased A) at a discount. B) as a callable bond. C) at a premium. D) at par. None 9. The time to maturity for debt instruments A) can be any length of time. B) can never be longer than 30 years. C) must always be between 5 and 30 years. D) can never be shorter than 5 years. None 10. A bond has been structured so that the principal of the entire issue matures on a single date. This is what type of bond? A) Balloon B) Serial C) Term D) Single maturity None 11. Which of the following would be least likely to directly impact a bonds yield? A) Time to maturity B) Number of bonds in the issue C) Current interest rates D) Issuer's credit quality None 12. A certificate stating a borrower's obligation to pay back a specific amount of money on a specific date to an investor is A) an ownership certification. B) a bond. C) a stock certificate. D) a bond or stock power. None 13. The coupon rate on a debt security represents A) the principal amount loaned to the issuer. B) the principal amount due to the investor at maturity. C) the interest rate the investor has agreed to pay the issuer. D) the interest rate the issuer has agreed to pay the investor. None 14. Bonds can be issued with additional features attached, making them more attractive to investors. All of the following can be considered such features except A) puttable. B) callable. C) convertible. D) maturity. None 15. For a callable bond priced at a discount, A) yield to maturity (YTM) will be lower than the yield to call (YTC). B) yield to maturity (YTM) will equal yield to call (YTC). C) yield to call (YTC) will be lower than the coupon. D) yield to call (YTC) will be lower than the current yield (CY). None 16. Two benefits of owning preferred stock over common stock are A) priority for payment of dividends ahead of wages and taxes and liquidation priority over wages. B) priority over subordinate bonds at liquidation and of dividends. C) priority at liquidation and payment of dividends. D) rising interest rates are a positive for market value and dividends are guaranteed. None 17. The coupon payable on a bond may also be referred to A) the stated or principal yield. B) the nominal or principal yield. C) the term or serial yield. D) the stated or nominal yield. None 18. If a callable bond is priced at par, which of the following is true? A) Current yield (CY) is greater than yield to maturity (YTM). B) Current yield (CY) is less than yield to maturity (YTM). C) Current yield (CY) equals yield to call (YTC). D) Yield to maturity (YTM) is less than yield to call (YTC). None 19. Which of the following expressions describes the current yield of a bond? A) Yield to maturity divided by current market price B) Yield to maturity divided by par value C) Annual interest (coupon) payment divided by par value D) Annual interest (coupon) payment divided by current market price None 20. A serial bond is best described as A) debt structured so that the principal of the whole issue matures at one time. B) the issuer repaying part of the bond's principal before the final maturity date, but paying off the largest portion of the bond at maturity. C) bonds in which the principal is secured by food-quality grains. D) portions of bond principal scheduled to mature at intervals over a period of years until the entire balance has been repaid. None 21. All of the following are corporate secured bonds except A) equipment trust certificates. B) debentures. C) mortgage bonds. D) collateral trust certificates. None 22. Par value for a bond is also known as A) stated or coupon yield payable annually. B) principal value or the amount of interest the bond pays annually. C) face value or the amount a bond will be redeemed for at maturity. D) face value or the amount of interest the bond pays annually. None 23. Interest is best described as A) the amount the borrower receives from a lender. B) the amount that an investor lends to a borrower. C) a specific rate of return the lender pays the borrower over the life of the loan. D) a specific rate of return the borrower pays the investor for use of the funds. None 24. An investor lending money to an entity receives back the principal amount of the loan on A) the record date. B) the payable date. C) the maturity date. D) the interest payment date. None 25. The coupon for a bond is calculated as a percentage of A) current market value for a bond. B) par value, usually $10 for a bond. C) par value, usually $100 for a bond. D) par value, usually $1,000 for a bond. None 26. An investor holds a 6% callable bond purchased at 105. If the issuer calls the bond before maturity, the yield to call (YTC) realized by the investor would be A) greater the current yield (CY). B) less than the coupon. C) greater than the yield to maturity (YTM). D) equal to the yield to maturity (YTM). None 27. A bond has a 7% coupon and is currently offered at a price of 102. Which of the following yields could be the yield to maturity (YTM) for this bond? A) 7.02% B) 7.07% C) 7.09% D) 6.55% None 28. If the dollar price of a municipal bond is 101 and the basis is 6.10, the nominal yield is A) equal to the yield to maturity (YTM). B) 6.10. C) greater than 6.10. D) less than 6.10. None 29. With a balloon maturity, A) only interest is paid on the final maturity date with principal paid on the serial dates. B) the major portion of the principal debt is paid over scheduled seral maturity dates. C) interest only is paid on the serial dates with all principal paid on the final maturity date. D) the major portion of the principal debt is paid on the final maturity date. None 30. An investor holds a 5% bond callable in six years and maturing in eight years. The bond's current yield (CY) measures its annual coupon payment relative to A) its market price. B) its value at maturity. C) its value when callable. D) par value. None 31. The relationship between fixed-income prices and prevailing interest rates is A) inverse. B) adverse. C) reverse. D) coterminous. None 32. An investor owns a bond with a 3.5% nominal yield making semiannual interest payments. On each interest payable date, the investor can expect to receive how much? A) $17.50 B) $350.00 C) $35.00 D) $175.00 None 33. Certain investors are deemed accredited when they have a net worth of A) $1 million, not including net equity in the primary residence. B) $200,000. C) $1 million. D) $500,000, not including net equity in the primary residence. None 34. Which of the following would take place in the primary market? A) Securities bought and sold on the NYSE B) Securities sold on both the OTC and NYSE C) Securities sold to the public by the issuer D) Securities bought and sold on the OTC None 35. Primary market transactions would include which of the following? A) Sale of $10 million of corporate stock by a broker-dealer acting as a market maker B) Sale of $10 million of corporate bond by a broker-dealer acting as an underwriter C) Sale of $10 million of U.S. Treasury bonds by a broker-dealer acting as a market maker D) Sale of $10 million of municipal bonds by a broker-dealer acting as a market maker None 36. The access equals delivery rule applies to A) the final prospectus and aftermarket delivery obligations. B) the final prospectus delivery requirements during the cooling-off period. C) all prospectuses delivered before the registration date. D) the preliminary prospectus delivery requirements during the cooling-off period. None 37. Tombstone ads A) must be placed in all new offerings. B) are offers to sell securities to the public. C) are permitted before the effective date. D) are disclosures detailing all the information shown in a prospectus. None 38. When the Securities and Exchange Commission (SEC) clears securities for sale to the investing public, this is A) the time upon which the SEC approves the securities. B) the due date. C) the effective date. D) the exudate. None 39. The federal law requiring companies offering public equity or debt securities to provide a prospectus to investors is known as A) the Securities Exchange Act of 1934. B) the Securities Investors Protection Act of 1970. C) the Securities Act of 1933. D) the Trust Indenture Act of 1939. None 40. Which of the following best describes a final prospectus? A) Meets the full and fair disclosure requirements of the Securities Act of 1933 B) Filed with the Securities and Exchange Commission (SEC) but is never made available to the general public C) Must be refiled with the SEC on an annual basis D) Used to solicit indications of interest in a new issue during the cooling-off period None 41. A preliminary prospectus (red herring) A) will show the final offering price. B) may be used to gather indications of interest. C) may not be distributed during the cooling-off period. D) if requested by an investor serves as a binding order to purchase shares. None 42. Securities regulations that are called blue-sky laws refer to those at A) both the state and the federal level. B) the state level. C) neither the state nor the federal level. D) the federal level. None 43. Sales for new issues of securities may be solicited A) after the cooling-off period. B) before, during, or after the cooling-off period, if done with a final prospectus. C) before the cooling-off period. D) during the cooling-off period. None 44. A tombstone advertisement placed before the effective date can A) only be placed by those assisting the issuing company in the underwriting. B) be placed by the issuer directly or by the underwriters. C) always be deemed to be an offer to sell the securities. D) only be placed by the issuing company. None 45. When a bond is purchased at a discount the current yield will be A) the same as the nominal rate. B) lower that the stated rate. C) lower than the fixed rate. D) higher than the coupon rate. None 46. Your client, Dana McCann, just purchased a 20-year City of Salt Lake School District bond for $800. The bond has a stated rate of 4%. The current yield is A) 6%. B) 3%. C) 5%. D) 2%. None 47. An investor purchased 100 shares of Acme Shoelace stock for $20 per share. Four years later, the investor sold the stock for $28 per share. This investor would report these transactions, on a per share basis, as A) $20 return of capital, $28 return on investment. B) $20 cost base, $8 capital gain. C) $28 capital gain. D) $28 return on investment. None 48. When a bond is purchased at a premium, the current yield will be A) higher than the stated rate. B) lower than the coupon rate. C) the same as the nominal rate. D) higher than the fixed rate. None 49. An investor notices that a bond purchased several years ago at 95 is now priced at 90. The investor sells the bond for 90, then immediately repurchases it for 90. This action is known as A) matched orders. B) pegging. C) marking the close. D) a wash sale. None 50. Which of the following is a benchmark for small cap stocks? A) Dow Jones Industrial Average B) Wilshire 5000 C) Standard and Poor's 500 Index D) Russell 2000® Index None 51. Which of the following would be considered earned income? A) Interest received from a bond investment B) The premium kept from an unexercised short put C) Dividends received from a stock investment D) Bonus received from employment None 52. All of the following are investment income except A) dividends from ADRs. B) dividends from a mutual fund. C) running a business. D) interest from a bond. None 53. What are the two basic types of return on an investment? A) Interest and principal B) Capital gains and income C) Dividends and interest D) Short term and long term None 54. Which of the following is a benchmark for large cap stocks? A) Standard and Poor's 500 Index B) Dow Jones Utilities Index C) Russell 2000® Index D) Wilshire 5000 None 55. An investor has a long position in OMQ stock. After selling the stock at a loss, the investor could purchase which of the following and not violate the wash sale rule? A) OMQ warrants B) OMQ call options C) OMQ put options D) OMQ convertible bonds None 56. All of the following are true regarding market indexes except A) they are performance standards investors can monitor. B) they track single stocks rather than hypothetical portfolios. C) they can be used to compare against the performance of one's portfolio. D) they can demonstrate the overall direction of the market. None 57. Earned income would include all the following except A) year-end bonuses. B) dividends earned on mutual funds. C) commission on sales for a real estate agent. D) tips. None 58. The MSCI-EAFE Index tracks which of the following? A) Mid-cap stocks B) Foreign equities C) Municipal bonds D) Corporate bonds None 59. An investor notices that a bond originally bought at 95 some years ago is now trading at a price of 88. The investor sells the bond, then buys it back the next day for 88.5 with the intention of declaring a loss from the original purchase and sale on this year's tax return. This would be known as A) supporting, and taking the loss is allowed. B) a wash sale, and taking the loss is prohibited. C) pegging and is taking the loss allowed. D) matched orders, and taking the loss is prohibited. None 60. Which of the following would not be considered ordinary income for tax purposes? A) Gains gotten from the sale of securities B) Salary and commissions C) Rents from income properties D) Dividends on common stock None 61. Which of the following regarding income is true? A) Salary, bonuses, interest, and dividends are all investment income. B) Salary or bonuses are portfolio income; interest and dividends are investment income. C) Salary, bonuses, interest, and dividends are all portfolio income. D) Salary or bonuses are earned income; interest and dividends are investment income. None 62. Earned income includes which of the following? A) Child support paid to a divorced spouse B) Interest income earned on a bond C) Dividends earned on a mutual fund D) A year-end bonus None 63. For tax purposes, investment income is A) always taxed at the capital gains tax rate. B) normally taxed as ordinary income. C) always taxed at the highest ordinary income tax rate. D) never taxable at ordinary income tax rates. None 64. An investor owning 400 shares of stock receives notice that the stock will be split. When the split is complete, the customer owns 1,200 shares of stock. The split must have been A) a forward, even split. B) a reverse, even split. C) a reverse, uneven split. D) a forward, uneven split. None 65. An investor has some stock held in street name and has just received proxy statements forwarded by the broker-dealer for an upcoming shareholders' meeting. If the investor wishes the shares to be voted as recommended by the issuer's management, which of the following must the investor do? A) Nothing in this case B) Inform the broker-dealer by letter or phone call how the shares are to be voted C) Sign and return the proxy statements by the tenth day before the meeting D) Sign and return the proxy statements by the fifth day before the meeting None 66. Which of the following would lead to a standardized cost-base adjustment for stockholders? A) Spin-off B) Dividend C) Takeover D) Merger None 67. If a shareholder does not wish to attend an annual stockholders' meeting, but still wishes to vote, the shareholder may confer a limited power of attorney on another party to vote the shares. This power is known as A) a stand-in. B) a proxy. C) a voting power. D) a substitute. None 68. A registered representative has a customer who is interested in using options strategies such as spreads and straddles. The registered representative's firm does not offer options transactions as part of their existing business model. As such, the registered representative directs the customer to another broker-dealer that allows for option trading. This is A) an example of selling away. B) an acceptable practice. C) a private securities transaction. D) an example of placing away. None 69. Regarding registered representatives working from their residence, commonly known as their home office, all of the following would be true except A) home office address and telephone numbers may be used for normal advertising purposes. B) the office is subject to a premise visit by Financial Industry Regulatory Authority (FINRA) examiners as often as they see fit. C) prospects would not be allowed to visit and be on the premises at this location. D) the office would be subject to a premise visit and review by a principal of the firm. None 70. An associated person of a Financial Industry Regulatory Authority (FINRA) member firm would not be considered a municipal finance professional (MFP) if involved solely in which of the following? A) Underwriting municipal securities for the firm B) Research involving municipal securities for the firm C) Municipal securities sales to customers D) Municipal securities communications with customers None 71. A broker-dealer may allow a registered representative to work from home – that is, to have a home office. If this is the case, the registered representative must A) not specify the office as a place of business in advertising. B) use the office only to perform clerical functions. C) expect the office to be treated like any branch office. D) carry out sales presentations in some other location. None 72. A representative of a dealer who solicits municipal securities business from an official of an issuer contributes $275 to the official's city council reelection campaign during the general election. Under what circumstance would the contribution invoke a ban on the dealer's municipal securities business with that issuer? A) The dealer seeks to engage in a negotiated underwriting with the issuer. B) The dealer seeks to engage in a competitive underwriting with the issuer. C) The representative resides in the official's city. D) The representative contributed $250 during the primary election. None 73. To keep up with recent developments in the industry regarding regulatory changes and other requirements imposed by Financial Industry Regulatory Authority (FINRA), as well as needs identified by the broker-dealer firm, registered persons must fulfill the firm's A) yearly sales development (SD) requirement. B) regulatory development (RD) requirement. C) continuing education (CE) requirement. D) requirement to hold yearly meetings of all office personnel. None 74. A broker-dealer wants to give an employee of another firm a gift. This is permitted provided all of the following conditions are met except A) the gift or compensation doesn't exceed the annual $100 limit. B) the gift or compensation is not conditional on sales. C) the gift or compensation is preapproved by the firm's self-regulatory organization (SRO). D) the gift or compensation has the employing member firm's prior approval. None 75. 6% XYZ debentures are trading for $1,200 while similarly rated bonds are being offered at 4.5%. What is the current yield on the 6% XYZ debentures? A) 1.5% B) 7.5% C) 6% D) 5% None 1 out of 75 Time is Up! Time's upTime is Up!
