Free FINRA SIE practice exam
Question 1
A 28 year, 12% bond is callable in 10 years at 108, 14 years at 105, and 18 years at 103. How many years of call protection does this bond have?
A.
10 years
B.
14 years
C.
18 years
D.
28 years
Question 2
Which of the following statements related to preferred stock are true?
- I. The typical par value is $100
- II. The typical par value is $1,000
- III. It is suitable for investors seeking capital appreciation
- IV. It is suitable for investors seeking income
A.
I and IV
B.
II and III
C.
I and III
D.
II and IV
Question 3
The ex-date for a mutual fund distribution is set by which of the following parties?
A.
SEC
B.
NYSE
C.
FINRA
D.
Board of Directors
Question 4
Which of the following may the firm choose on behalf of a customer without needing POA?
A.
Number of shares and time of trade
B.
Type of security and price
C.
Type of security and number of shares
D.
Price and time of trade
Question 5
An investor establishes a margin account at their broker-dealer. What are the minimum maintenance margin requirements they must abide by?
A.
25% equity for long accounts; 25% equity for short accounts
B.
25% equity for long accounts; 30% equity for short accounts
C.
70% equity for long accounts; 30% equity for short accounts
D.
70% equity for long accounts; 40% equity for short accounts
Question 6
A cash account requires customers to do which of the following?
A.
Pay 25% of any security purchase
B.
Pay 50% of any security purchase
C.
Pay 75% of any security purchase
D.
Pay fully for any securities purchases
Question 7
Calls gain intrinsic value as the market:
A.
Falls
B.
Is neutral
C.
Rises
D.
Is volatile
Question 8
An investor holds a security of an issuer that just declared a cash dividend to be paid. According to IRS tax code, which of the following dates related to the recently declared dividend will be reported for tax purposes?
A.
Record date
B.
Declaration date
C.
Ex-date
D.
Payable date
Question 9
A 16 year, 3.20% bond is quoted at a 15 point premium. What is the correct order of yields, from highest to lowest?
A.
Current, stated, yield to maturity, yield to call
B.
Stated, current, yield to maturity, yield to call
C.
Yield to call, yield to maturity, current, stated
D.
Yield to call, yield to maturity, stated, current
Question 10
A best efforts commitment underwriting would best be described by which of the following choices?
A.
The underwriter keeps unsold securities
B.
If all securities are not sold, the issuance is cancelled
C.
The issuer keeps unsold securities
D.
If a minimum number of securities are not sold, the issuance is cancelled
Question 11
If insider information is passed between parties and a trade occurs, who is subject to criminal prosecution?
A.
Neither the tipper or the tippee
B.
Only the tipper
C.
Both the tipper and tippee
D.
Only the tippee
Question 12
If a customer believes the market will fall, which of the following investments fits their expectations?
A.
Go long stock
B.
Sell a put option
C.
Buy a call option
D.
Sell a call option
Question 13
Which of the following is an exempt issue?
A.
Warrants
B.
Convention center revenue bond
C.
Rights
D.
Guaranteed bond
Question 14
All of the following terms apply to a real estate limited partnership, EXCEPT:
A.
Deductible interest
B.
Pass through of losses
C.
Depletion
D.
Depreciation
Question 15
A hedge fund is considering a significant investment in a publicly traded company in hopes of a hostile takeover. Which of the following actions will they likely pursue?
A.
Exercise the call feature
B.
Secretly obtain a significant position in the open market
C.
Request a vote of confidence
D.
Extension of a tender offer
Question 16
From lowest to highest, what are the order of the yields for a bond purchased at 102?
A.
Nominal, current, YTC, YTM
B.
YTM, YTC, current, nominal
C.
Nominal, current, YTM, YTC
D.
YTC, YTM, current, nominal
Question 17
Karter withdraws $14,000 from their traditional IRA at age 32 to pay for expenses related to their disability. What is the tax consequence?
A.
Ordinary income taxes + 10% early withdrawal penalty
B.
Capital gains taxes + 10% early withdrawal penalty
C.
Ordinary income taxes
D.
Capital gains taxes
Question 18
The maximum maturity for a banker's acceptance is:
A.
1 year
B.
2 years
C.
180 days
D.
270 days
Question 19
Communications sent to large organizations only is likely to be categorized as what according to FINRA rules?
A.
Institutional communications
B.
Correspondence
C.
Retail communications
D.
Organizational communications
Question 20
What is the maximum contribution to a Coverdell ESA?
A.
$2,000 per person, per year
B.
$4,000 per person, per year
C.
$7,000 per person, per year
D.
$8,000 per person, per year
Question 21
An investor is provided with an offering memorandum while purchasing a security. What type of offering is this document most likely associated with?
A.
Regulation A offerings
B.
initial public offerings
C.
Regulation D offerings
D.
intrastate offerings
Question 22
All of the following terms are synonymous, EXCEPT:
A.
Stated rate
B.
Yield to maturity
C.
Nominal yield
D.
Coupon
Question 23
A registered representative recommends a purchase of 750 shares of ABC stock at $100 to a customer. Hoping to make the customer happy, the representative offers to personally repurchase the shares if they drop below $90. This offer is:
A.
Permitted because the customer can still lose
B.
Permitted because it benefits the customer
C.
Prohibited due to the personal offer
D.
Prohibited due to the performance guarantee
Question 24
Which of the following representatives is NOT considered a Municipal Finance Professional?
A.
An RR soliciting business from municipal issuers
B.
An RR soliciting business from retail clients seeking municipal securities
C.
An RR involved in creating research reports on municipal securities
D.
An RR involved in underwriting municipal securities
Question 25
An investor annuitizes their variable annuity and opts for a life with 5 year period certain. What best describes the length of time payments will be received?
A.
Payments made until annuitant dies or for a 5 year period, whichever is longer
B.
Payments made for annuitant's life plus an additional 5 years to beneficiary after death
C.
Payments made for 5 years regardless of circumstance
D.
Payments made until annuitant dies or for a 5 year period, whichever occurs first
Question 26
A representative submits a letter of resignation to their employing broker-dealer in order to pursue a job in another industry. Which of the following statements is false?
A.
A U-5 will be filed with FINRA
B.
The employee's SIE license will lapse after 4 years if they don't rejoin the industry
C.
The employee's records must be kept on file for 6 years after their resignation
D.
None of these choices
Question 27
An investor goes short 100 shares of MU stock at $52 and long 1 MU Jul $55 call @ $3.00. What is the investor's maximum gain?
A.
$300
B.
$4,900
C.
$5,200
D.
Unlimited
Question 28
In order to open a new account for a customer, which of the following pieces of information is NOT needed?
A.
Health status
B.
Social security number
C.
Date of birth
D.
Physical address
Question 29
A 5 year, 6 3/4% Treasury Note is quoted at 106-12 - 106-16. The security pays interest on February 15th and August 15th annually. What is the purchase price?
A.
$1,062.15
B.
$1,062.85
C.
$1,063.75
D.
$1,065.00
Question 30
Which of the following is one of the critical pieces of information needed from a client?
A.
Risk tolerance
B.
Tax status
C.
Phone number
D.
Name
Question 31
Your customer is considering the addition of POA to their account in order to give their daughter authority over their assets. They are currently contemplating whether to enact a full or limited POA. What statement regarding both forms of POA are a commonality between the two?
A.
Both allow trading authority and withdrawal of funds
B.
Both allow withdrawal of funds
C.
Both continue after death of the customer
D.
Both allow trading authority
Question 32
A municipality will be issuing a bond in 9 months to finance the construction of a new public school. To immediately gain access to funds prior to the issuance of the upcoming security, the municipality should issue:
A.
RANs
B.
GANs
C.
BANs
D.
TRANs
Question 33
Which of the following underwriting commitments is done on a principal basis?
A.
All or none underwriting
B.
Firm underwriting
C.
Mini-max underwriting
D.
Best efforts underwriting
Question 34
The Securities and Exchange Commission enforces the rules and regulations of each of the following laws, EXCEPT:
A.
Securities Act of 1933
B.
Securities Exchange Act of 1934
C.
Investment Company Act of 1940
D.
Uniform Securities Act
Question 35
Raleigh Distributions Co. performs a 2:1 forward stock split on its outstanding stock. Just prior to the split, the shares were trading for $100. Which of the following statements is true?
A.
The price per share will fall to $50.00
B.
An investor owning 400 shares pre-split will own 200 shares post-split
C.
The shares are more likely to be purchased by institutional investors post-split
D.
This action requires approval from the Board of Directors only
Question 36
An investor obtains a derivative security with less than three months to expiration. The security maintains intrinsic value at issuance. The investor may exercise the security, trade it in the secondary market, or allow it to expire. What security is being referenced?
A.
Rights
B.
Call options
C.
Warrants
D.
Put options
Question 37
Treasury bills are associated with which of the following terms?
A.
Funded debt
B.
Secured debt
C.
Money market debt
D.
Municipal debt
Question 38
Class B shares are suitable for which of the following types of investors?
A.
Long-term investors with smaller purchases
B.
Short-term investors with larger purchases
C.
Long-term investors with larger purchases
D.
Short-term investors with smaller purchases
Question 39
A corporate bond is quoted at 86 5/8. What is its price?
A.
$865.21
B.
$866.25
C.
$866.86
D.
$868.69
Question 40
All of the following can purchase an IPO, EXCEPT:
A.
The father of a broker-dealer employee
B.
The cousin of a broker-dealer employee
C.
The grandson of a broker-dealer employee
D.
The grandfather of a broker-dealer employee
Question 41
A single vendor within an industry, which offers no consumer alternative and is likely to be heavily regulated, is most likely to be described as:
A.
Monopoly
B.
Perfect competition
C.
Monopolistic competition
D.
Oligopoly
Question 42
Which of the following contribution and payout structures NOT allowed with a variable annuity?
A.
Regular payments in; immediate payouts out
B.
Lump sum in; deferred payments out
C.
Regular payments in; deferred payments out
D.
Lump sum in; immediate payouts out
Question 43
An investor places a trade, which is executed in the second market. What statement made by a representative confirming the trade to a customer is misleading or incorrect?
A.
None of these choices
B.
Second market trades occur OTC
C.
The second market is considered part of the secondary market
D.
Only unlisted stocks trade in the second market
Question 44
A mortgage bond is most likely to utilize which of the following as its collateral?
A.
Single-family homes
B.
Fleet of airplanes
C.
Retail stores
D.
A subsidiary
Question 45
Which of the following tools would not be utilized by the Federal Reserve while implementing monetary policy?
A.
Increasing federal budgetary spending
B.
Updating reserve requirements for lending institutions
C.
Engaging in open market operations
D.
Changing margin deposit requirements
Question 46
A registered representative resigns from their position in order to pursue a career in another industry. What statement is false?
A.
FINRA Form U-6 is filed
B.
FINRA retains jurisdiction over the representative for 2 years following the resignation
C.
The firm must notify FINRA within 30 days of the employee's resignation
D.
All of these choices
Question 47
An investor seeks growth potential and income from a variety of asset classes for their portfolio. If you can only recommend one security, which of the following is the best choice?
A.
Growth and income fund
B.
Balanced fund
C.
Money market fund
D.
US Government bond fund
Question 48
A registered representative resigns from their position in order to pursue a career in another industry. What statement is true regarding their licenses?
A.
They will lapse after 1 year if they do not re-join the industry
B.
They will lapse after 2 years if they do not re-join the industry
C.
The former employer can hold the person's licenses indefinitely
D.
They must retake their licensing exams
Question 49
What statement related to the relationship between interest rates and inflation is correct?
A.
Interest rates primarily maintain a positive correlation with inflation
B.
Interest rates primarily maintain a negative correlation with inflation
C.
The relationship between interest rates and inflation cannot be determined
D.
Interest rates maintain no correlation with inflation
Question 50
Which of the following types of bonds are typically quoted in terms of yield?
A.
Municipal G.O. bonds
B.
US Government bonds
C.
Corporate bonds
D.
Municipal "dollar" bonds
Question 51
Proxies are provided to shareholders in which of the following circumstances?
A.
Shareholders that own at least 100 shares
B.
Shareholders that own a large percentage of shares
C.
Shareholders that attend a company roadshow
D.
Shareholders that do not attend the issuer's annual meeting
Question 52
Which of the following bonds is least subject to interest rate risk?
A.
T-bill with 80 days to maturity
B.
STRIPS with 8 years to maturity
C.
16 year B corporate bond
D.
26 year AA municipal bond
Question 53
A corporate bond fund would be considered which of the following types of funds?
A.
Income fund
B.
Balanced fund
C.
Specialized fund
D.
Growth fund
Question 54
CVX corporation declares a $0.55 per share dividend on November 15, 2020 to owners on record as of December 11, 2020. The dividend is payable on January 8, 2021. When is the tax event for the dividend?
A.
January 8, 2021
B.
December 10, 2020
C.
December 11, 2020
D.
November 15, 2020
Question 55
A rule 147 offering of securities takes place with a limited number of investors. Which answer best describes the attributes of this offering?
A.
Interstate offering
B.
Private placement
C.
Intrastate offering
D.
Small dollar offering
Question 56
All distributions from a Coverdell ESA must be taken by what age?
A.
18
B.
21
C.
25
D.
30
Question 57
Which of the following parties recordkeeps and holds the assets of a mutual fund?
A.
Investment adviser
B.
Custodian bank
C.
Fund sponsor
D.
Selling group
Question 58
Hybrid REITs invest directly into
A.
Individual households
B.
Mortgages and individual households
C.
Commercial properties
D.
Commercial properties and mortgages
Question 59
ABC Company declares a $1.60 per share dividend for stockholders on record Thursday. When is the cash settlement ex-date for the dividend?
A.
Friday
B.
Thursday
C.
Wednesday
D.
Monday
Question 60
Which of the following scenarios best represents an example of regulatory risk?
A.
Government agency regulating a sector imposes cost-intensive rules impacting an issuer
B.
A bill approved by Congress and signed by the President results in a corporation's operating expenses increasing
C.
An economic recession forces general market decline
D.
An inefficient business model results in an issuer's lower profit margins
Question 61
Typical investors of commercial paper include all of the following, EXCEPT:
A.
Retail investors
B.
Mutual funds
C.
Insurance companies
D.
Institutions
Question 62
Which of the following orders guarantee a specific price or better?
A.
Buy limits and sell limits
B.
Buy limits and sell stops
C.
Buy stops and sell stops
D.
Buy stops and sell limits
Question 63
What is interpositioning?
A.
Selling short stock
B.
Creating an unnecessary middleman
C.
Making an unethical recommendation
D.
Purchasing shares prior to a customer order
Question 64
Which of the following best describes an OTC trade?
A.
A trade taking place outside of an exchange
B.
A trade taking place on the NYSE
C.
A trade taking place outside of normal hours
D.
A trade taking place outside of the US
Question 65
Which of the following is most likely to earn a commission?
A.
Brokers
B.
Market makers
C.
Dealers
D.
Syndicates
Question 66
Which of the following bonds is most subject to interest rate risk?
A.
T-bill with 30 days to maturity
B.
7 year Treasury note
C.
15 year B municipal bond
D.
25 year AAA corporate bond
Question 67
All of the following accounts could utilize margin, EXCEPT:
A.
Trust accounts
B.
Individual accounts
C.
Custodial accounts
D.
Discretionary accounts
Question 68
An investor reads in a financial magazine about the benefits of investing in stocks listed on exchanges. What statement made to the investor would be considered misleading or incorrect?
A.
Trades of listed stock in the OTC markets is a third market trade
B.
Exchange trades are considered part of the primary market
C.
Only issuers meeting certain listing requirements may list their stock on exchanges
D.
Trades of listed stock at exchanges is a first market trade
Question 69
If a company wants to sell stock to the public, they will hire a(n):
A.
Mutual fund company
B.
Commercial bank
C.
Credit union
D.
Investment bank
Question 70
Broker-dealers must maintain certain books and records according to financial rules and regulations. Which of the following records requires a lifetime retention period?
A.
Employee records
B.
Trade confirmations
C.
Account statements
D.
Meeting minutes
Question 71
Broker-dealers must maintain certain books and records according to financial rules and regulations. Which of the following records requires a 6 year retention period?
A.
Meeting minutes
B.
POA forms
C.
Correspondence
D.
CIP information
Question 72
Which of the following statements regarding pre-emptive rights are incorrect?
A.
One right is received per share of stock owned
B.
Rights maintain significant time value at issuance
C.
Rights maintain intrinsic value at issuance
D.
Rights offerings are typically connected to additional offerings
Question 73
Poet purchases a 30 year, 4% corporate bond at 116. The bond is callable in 10 years at 105. What is the call premium?
A.
$40
B.
$50
C.
$60
D.
$70
Question 74
Which of the following would appear on an order ticket?
A.
Time constraints of order
B.
Market order price
C.
Customer's TIN
D.
Commission due
Question 75
Standard equity options contracts expire at what time?
A.
10:59pm CT on the third Friday of the expiration month
B.
10:59pm CT on the second Friday of the expiration month
C.
11:59pm CT on the third Friday of the expiration month
D.
11:59pm CT on the second Friday of the expiration month
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