A mutual fund breakpoint allows an investor to:

Lower their sales charge by investing more than a certain amount

Avoid a surrender charge by holding it past a certain point

Lower their sales charge by investing more than a certain amount

Lower their 12b-1 fees by investing more than a certain amount

To exchange one fund for a different kind of fund within the same mutual fund family

Stock that a company buys back on the secondary market or stock that a company issued but never sold to the public

Stock issued by the U.S. Treasury

Stock that is considered to be outstanding

Stock that a company buys back on the secondary market or stock that a company issued but never sold to the public

Stock that a company will never issue

An accredited investor could be defined by any of the following characteristics except:

At least $500,000 in liquid assets

Net worth of $1 million or more (excluding the primary residence)

Gross income of at least $200,000 for each of the last 2 years

At least $500,000 in liquid assets

Income from annuities is tax deferred. When income is received as a random withdrawal, it is taxed as ordinary income using:

When funds were deposited does not affect withdrawals

Which of the following is a violation of FINRA conduct rules?

A registered representative who purchases a security before he buys many shares of it for a customer's account, with advance knowledge of the customer's order.

A member firm fails to register a broker's assistant.

Using soft dollars to purchase investment research.

Neglecting to present a prospectus prior to selling an investment to a prospect.

All of the following are true of hedge funds except:

Classified as an investment company

Can be exempt from SEC registration

Classified as an investment company

May qualify as a hedge fund if sold only to qualified purchasers

A registered person must complete the continuing education regulatory element

as needed, determined by the person's supervisor

as directed by the firm's chief operating officer

Which of the following best fits the definition of churning?

Recommending or making trades in a client's account in order to generate commissions.

Entering offsetting buy and sell orders in a security in order to generate market interest

The use of trading commissions to obtain services for the benefit of the advisor

Painting the tape, or manipulating trading in order to obtain a better price for a security

A broker-dealer becomes aware of a non-public research report that warns of serious problems with company GHI. The broker-dealer buys several puts on GHI stock. This is:

Trading ahead of a research report

Johnny Jackson has a discretionary account with Big Brokerage. Which of the following is true about the account?

Each order ticket must be reviewed by a principal, and principal review must be done frequently

The securities in Johnny's account cannot be hypothecated

Each order placed in Johnny's account must be approved by a principal prior to execution

Each order ticket must be reviewed by a principal, and principal review must be done frequently

The securities in Johnny's account cannot be rehypothecated

Issued shares would be:

Outstanding shares + treasury shares

Authorized shares - treasury shares

Treasury shares + issued shares

Outstanding shares - authorized shares

A broker-dealer gives $1000 to a governor's reelection campaign in State A. The governor wins the race and keeps his position. One year later, the broker-dealer acts as an underwriter for an offering where State A is the issuer. Assuming that no violation has occurred, which of the following is true?

The issue is a competitive offering

The issue is a negotiated offering

The broker-dealer is located in State A

The broker-dealer is not located in State A

A customer of a broker-dealer, who holds her shares with the firm in street name, must do which of the following in order to receive corporate communications such as annual reports and proxy materials:

Pay the broker-dealer a forwarding fee

Pay the clearing agent a transmission fee

Which of the following is true of a mutual fund's investment adviser?

It manages the fund's investment portfolio by implementing the board's objectives and policies

It is the same entity as the transfer agent

It manages the fund's investment portfolio by implementing the board's objectives and policies

Municipal securities business, in the context of MSRB's “pay to play” rule, does NOT include which of the following?

The sale of municipal securities in the secondary market

The purchase of municipal securities in a primary offering from an issuer

The offer or sale of municipal securities in a private placement

The sale of municipal securities in the secondary market

The provision of remarketing agent services for a primary offering of municipal securities

The registration statement required by the Securities Act of 1933, requires all of the following, except:

An investment banker overseeing the process

Description of the security being offered

Financial information about the issuer

Information about the management of the company

An investment banker overseeing the process

Inflation can occur for all the following reasons, except:

An economy that has reached its production potential

Increases in wages and other production costs

Which of the following is least likely to be a revenue bond?

A bond backed by pre-existing ad valorem taxes

A bond backed by lease payments

A bond backed by pre-existing ad valorem taxes

A bond that was issued without voter approval

When you put money into one state's prepaid tuition plan, which of the following is true?

The money you deposit can only be used for instate colleges

The money can only be used for private colleges

Which of the following would not be permitted in a retail communication sent to clients from a broker-dealer?

Comparisons between different types of investments that mention most material differences

The results of third-party research reports when the relationship between the firm and the researcher is disclosed

Comparisons between different types of investments that mention most material differences

Testimonials that include technical aspects related to investments

Which of the following is true of limited partnerships?

Limited partnerships pass through their gains and losses directly to investors.

Limited partnerships offer high returns with relatively little risk to investors.

Limited partnerships offer tax-free income to investors.

Limited partnerships pass through their gains and losses directly to investors.

Limited partnerships offer limited liability to the general partner.

Which of the following is a technique that can be useful in protecting against systematic risk?

Investing in uncorrelated securities

There is no way to protect against systematic risk

Janice has been one of your clients for three years. Her investment strategy is speculative and she is willing to take high levels of risk. Recently, she has been talking to other investors who have sung the praises of bonds. Since she has very few bonds in her portfolio, she now tells you that she would like to add some while trying to maintain her original investment goals. Which of the following should you suggest?

That she invest primarily in bonds rated BB+ or lower

That she drop the idea of investing in bonds, since they are relatively low-risk and low-reward forms of investment

That she invest only in short-term corporate bonds

That she invest primarily in bonds that are rated Aa or higher

That she invest primarily in bonds rated BB+ or lower

Betty and Mick are friends who met in an investment club 25 years ago. They have made many of the same investments over the years and have formed a bond over some of those investments. An identical purchase that each of them made was for 500 shares of PROL when it was trading at $1/share. The stock really took off after they made their respective purchases, and when Betty dies it is priced at $150/share. Mick knows that Betty has made a provision in her will to pass on her PROL shares to her grandson Steve. On the day of Betty’s death, Mick decides to pass on his shares of PROL to Jane, his oldest grandchild. Two days later, he turns his 500 shares of PROL over to Jane. At that time the stock is trading at $153/share. Later that week when Steve takes possession of Betty’s 500 shares of PROL, the stock is trading at $152/share. Which of the following is true of Jane and Steve’s respective cost bases for the PROL shares?

Steve’s cost basis is $150/share, while Jane’s is $1/share

Steve’s cost basis is $150/share, while Jane’s is $153/share

Steve’s cost basis is $152/share, while Jane’s is $153/share

Both Steve and Jane have a cost basis of $1/share

Steve’s cost basis is $150/share, while Jane’s is $1/share

A delayed offering of registered stock is commonly referred to as:

A forward offering or forward registration

What information is not required in the preliminary prospectus of a new issue?

The public offering price of the new issue

A description of the company’s properties and business

A description of the security to be offered for sale

The public offering price of the new issue

Financial statements certified by independent accountants

In international trade, goods are generally priced in:

The currency of their country of origin

The currency of the country to which they are imported

The stronger of the currency of the country of origin or the currency of the importing country

The international currency that is the strongest at the time the trade is made

Which of the following is true of cyclical stocks?

They generally track the ups and downs of the business cycle

Their performance generally fluctuates based on the time of year and thus is somewhat easy to predict

They generally track the performance of the overall market

They generally track the ups and downs of the business cycle

They are not directly impacted by changes in the overall economy

SIE Sample Exam

FINRA Securities Industry Essentials Exam

Number of Questions	75
Time Duration	Untimed
Answer Feedback Instant validation and rationale
Percentage required to pass	70%

Start Test

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