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QUESTION 13
A customer wants to establish an account for the benefit of his grandchildren. He states to his registered representative that he wants to be able to control the distribution of the assets and direct how the account will be invested. Which of the following account types is most appropriate?

Trust

UTMA

529 savings plan

Certificate of deposit (CD)

QUESTION 14
A customer purchases 100 shares of stock on Thursday, August 2. This transaction must settle regular way no later than:

Friday, August 3

Monday, August 6

Tuesday, August 7

Wednesday, August 8

QUESTION 15
Which of the following statements describes a characteristic of exchange-traded funds (ETFs)?

ETFs are offered with front-end or back-end loads.

ETFs are not permitted to be purchased on margin.

ETFs are purchased and sold daily at net asset value (NAV).

ETF expense ratios are generally lower than those of mutual funds.

QUESTION 16
A registered representative (RR) opens a new account for a customer whose investment objectives are growth and income. She makes an initial deposit of $5,500 using a series of money orders drawn from different sources, and she makes no investments for the first 30 days the account is open. At the end of that time, the customer asks to have the funds wired to an account at a different firm as her needs have changed. The RR’s first course of action should be to:

Deny the request.

Freeze the account.

Report internally as a suspicious activity.

Accept the instructions and wire the funds.

QUESTION 17
Which of the following statements is true regarding the SEC’s characterization of a registration statement that has just been made effective?

The SEC has approved the security being offered for sale.

The SEC has found the information presented to be true and accurate.

The SEC has determined that no material information has been omitted.

The SEC has not passed judgment on the merits of the security being offered for sale.

QUESTION 18
Which of the following rates is the interest rate at which banks borrow and lend to each other on an overnight basis?

Prime rate

Discount rate

Federal funds rate

LIBOR

QUESTION 19
Corporate bonds unsecured by any pledge of property are called:

Debentures

Trust certificates

Collateral trust bonds

General obligation (GO) bonds

QUESTION 20
The cash value of a variable life insurance policy is affected by which of the following factors?

Changes in the beneficiary

Changes in the death benefit

Fluctuating market conditions

Contingent deferred sales charges

QUESTION 21
A retail investor owns shares of Mutual Fund ABC that paid a $0.25 dividend on September 1 and closed at
$10.00. What is the opening price once this fund trades on the ex-dividend date?

$9.25

$9.75

$10.00

$10.25

QUESTION 22
A customer will be out of the country for the next two months on business and asks his firm to hold his mail until he returns. Which of the following statements is true regarding this request?

The firm is prohibited from holding the customer’s mail under FINRA rules due to the personal information contained.

The firm must receive written instructions from the customer that include the time period for the requested mail hold.

The firm is permitted to hold the mail as long as the registered representative (RR) complies with the customer’s oral instructions.

At the discretion of the RR, the firm is permitted to hold the customer’s mail provided it takes reasonable actions to ensure no tampering occurs with this mail.

QUESTION 23
An investor holds 1,000 shares of a stock with a total cost basis of $5,000 in his account when a 1-for-5 reverse stock split is announced. What will be the investor’s total cost basis after the payable date of the reverse split?

$1,000

$2,500

$5,000

$25,000

QUESTION 24
A broker-dealer (BD) creates a marketing postcard that includes a statement regarding FINRA’s endorsement of the BD. Which of the following responses is true?

The statement regarding FINRA’s endorsement is not permissible.

The statement is permissible if a principal of the BD approves it in writing prior to use.

The statement is permissible if the statement is approved in writing by FINRA prior to use.

The statement is permissible if the postcard does not discuss specific investment opportunities.

QUESTION 25
Class A and Class C shares of a mutual fund differ in which of the following ways?

The expense ratio

The net asset value (NAV)

The underlying investments

When the customer is permitted to purchase

QUESTION 26
A registered representative who is terminated from a broker-dealer must notify FINRA of a residential address change for what period of time after termination?

One year

Two years

Three years

Six years

QUESTION 27
Which of the following statements is true of the writer of a listed equity call option?

They have the right to sell stock at a fixed strike price.

They have the right to buy stock at a fixed strike price.

They have the obligation to sell stock at a fixed strike price.

They have the obligation to buy stock at a fixed strike price.

QUESTION 28
At a prospecting event, a registered representative (RR) provides cards for attendees to write down their contact information if they want to have a follow-up meeting with her. Which of the following actions should the RR take in this situation to comply with telemarketing rules?

Obtain the broker-dealer’s approval before making a call

Limit contact with prospects to between 9 a.m. and 9 p.m.

Contact the prospects at will since they provided express written consent

Prior to contacting the prospects, check all of the names on the cards to make sure they are not on the National Do Not Call Registry

QUESTION 29
Which of the following terms describes failure to honor a firm quote?

Freeriding

Backing away

Interpositioning

Market manipulation

QUESTION 30
A customer purchased $80,000 of Fund XYZ two years ago. He now wants to buy $50,000 of Fund LMN offered within the same fund family, which offers a $100,000 breakpoint under right of accumulation. Which of the following statements is true?

The additional investment qualifies for a $100,000 breakpoint.

Each fund requires contributions of $100,000 to qualify for a breakpoint.

The customer must sign a new letter of intent to receive the $100,000 breakpoint on the additional purchase.

The customer will receive a sales charge discount on his next purchase after the account balance of the fund reaches $100,000.

QUESTION 31
A customer buys 100 ABC at $50 and at the same time sells an ABC April 50 call at $8. At expiration, ABC must be at what market price for the customer to break even?

$42

$44

$50

$58

QUESTION 32
Which of the following statements best describes the permissibility of a borrowing arrangement between a registered representative (RR) and a customer who is also the RR’s grandfather?

It is permissible subject to FINRA approval.

It is permissible if the grandfather agrees in writing.

It is permissible if the loan was made on commercially reasonable terms.

It is permissible provided that the loan was made in accordance with the firm’s policies.

QUESTION 33
Under which of the following circumstances, if any, is it permissible for an individual without a Power of Attorney (POA) to sign a customer’s name on their behalf?

Upon approval by a firm principal

Upon receipt of verbal authorization provided that written authorization is subsequently provided

When accounts are fully discretionary

Never permissible to sign a customer’s name on their behalf

QUESTION 34
Which of the following is a reportable obligation with respect to an individual’s Form U4?

A speeding ticket

A change of residential address

A change of business telephone number

A gambling-related misdemeanor charge

QUESTION 35
A bond with a par value of $1,000 that is backed by the taxing power of a local government is known as:

A revenue bond

A Treasury bond

A corporate bond

A general obligation (GO) bond

QUESTION 36
According to FINRA rules, under which of the following circumstances, if any, is a member firm permitted to send gifts to a registered representative of another member firm?

Under no circumstances

When the value of all gifts during a period of one year does not exceed $100

When no single gift exceeds $100 and there is no limit on the number of gifts

When no single gift exceeds $100 in value and the maximum value of all gifts per year equals $250

Category SIE

Get Prepared for Your SIE Exam With Actual 87 Questions [Q13-Q36]