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Question: 1
Fiscal policy:
A. Determines how to manage the budget and governmental spending
B. May change levels of interest, taxation, and spending
C. All of the choices listed
D. Is controlled by the President and the Executive branch
Explanation:
Answer: A
Fiscal policy is controlled by the President and Congress, and it may change levels of Federal spending and Federal taxation. The federal budget determines how the government allocates money for various projects.
Question: 2
An investor is looking at the price book ratio when considering which stocks to purchase. What type of analysis are they are employing?
A. Financial analysis
B. Technical Analysis
C. Price Earnings / Growth analysis
D. Fundamental analysis
Explanation:
Answer: D
When an investor is looking at the price to book ratio of various equities, they are employing fundamental analysis.
Under MSRB rules, if/when opening a margin account for a new customer, a registered rep discovers that the customer is employed at another broker dealer, the rep must do which of the following?
Question: 3
Notify the customer's employer in writing
A. Notify the MSRB
B. Receive permission from the regulators to open the account
C. Receive permission from the customer's employer to open the account Visit us athttps://www.certschief.com/sie/
Answer: A
Explanation:
Under MSRB rules, if a registered rep wants to open a margin account with another broker dealer, then the opening firm must contact the rep's employer in writing advising them of the customer's intent.
Question: 4
Which of the following options is 'in the money'?
I. Call at 55 Stock at 55
II. Call at 60 Stock at 63
III. Put at 55 Stock at 53
IV. Put at 60 Stock at 60.10
A. III and IV
B. II and III
C. I and II
D. I and IV
Explanation:
Answer: B
A call is in the money when the stock price exceeds the strike price. A put is in the money when the strike price exceeds the stock price.
Question: 5
An investor holding an S&P 500 Index 240 call decides to exercise when the index is at 240.12. The index closes at 241.35. What will the customer receive?
A. $135.00
B. $12.00
C. He will be forced to pay $135.00 upon settlement.
D. $123.00
Explanation:
Answer: A
The investor will receive the in the money amount at the close in this case $135.
Question: 6
Mr. Jones, an investor in a high tax bracket, has just placed an order for $25,000 worth of municipal bonds with his registered representative. All of the following will appear on the confirmation, except:
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A. Call provisions
B. Trade date
C. Paying agent
D. Settlement date
Explanation:
Answer: C
All of the choices listed would appear on the confirmation for a municipal bond purchase except the paying agent. The paying agent is a bank, trust company, or broker dealer who is responsible for distributing the interest payments to bondholders on behalf of the issuer.
Question: 7
If investors have priced in the expectation for generally increasing prices in the marketplace, the yield curve most likely to reflect that expectation would be:
A. Correlated B. Ascending C. Inverted
D. Flat
Explanation:
Answer: B
An ascending or upward sloping yield curve is one which displays higher interest rates for longer term maturities. The increase in interest rates over time reflect investor's expectations for inflation (increase in prices).
Question: 8
The price of bonds in the secondary market depends on all of the following except:
A. Interest rates
B. Supply & demand C. The Trustee
D. Issuer
Explanation:
Answer: C
All of the factors listed will have a significant impact on the price of bonds in the secondary market except who the trustee is. It is highly unlikely that the trustee would have any impact at all on the price of a bond. Visit us athttps://www.certschief.com/sie/
Question: 9
FINRA's interpretation regarding "continuing commissions" states that:
A. A registered representative may continue to receive commissions on the purchase of investment company contractual plans that he sold prior to his retirement
B. A representative may not receive commissions on their business
C. A registered representative may continue to receive commissions on the purchase of stocks by customers whom he serviced prior to his retirement, if he actively solicits orders
D. A registered representative may continue to solicit orders and receive commissions from new customers after his retirement
Answer: A
Explanation:
A representative may continue to receive commissions from their business if it is on old business only, and there is a contract in place prior to retirement.
Question: 10
When must a current Options Disclosure Document be given to a new client?
A. No later than settlement date
B. Prior to account approval
C. Within fifteen days
D. Five days prior to any transaction
Explanation:
Answer: B
The OCC disclosure must be given to a new client at or prior to the account's approval to trade options.
