SIE Mock Exam 1 – 70 FREE MCQ Questions

ABLE accounts provide tax-advantaged savings for individuals with disabilities.

A felony conviction, especially for financial crimes, can lead to disqualification from registration.

A 4-for-1 split multiplies shares by 4 (40×4=160) and divides the price by 4 ($100÷4=$25 per share).

ADRs allow U.S. investors to buy shares in foreign companies in U.S. dollars.

Unaddressed customer complaints are red flags that may signal deeper compliance or conduct issues.

Raising interest rates helps reduce the money supply and curb excessive spending, which can help control inflation.

A joint account is registered in the names of two or more individuals who share ownership and decision-making responsibilities.

Quantitative easing involves buying long-term securities to boost liquidity and lower long-term interest rates.

The premium includes both intrinsic value (if any) and time value.

Under best efforts, the issuer bears the risk if the underwriters cannot sell all the offered securities.

“Direct sold” indicates that the funds are offered directly by the issuer, usually resulting in lower costs.

Underwriters guarantee the sale and help price new securities issues during the offering process.

“Painting the tape” involves making trades to create a misleading picture of market activity, deceiving other market participants.

Under a best efforts arrangement, the underwriter does not commit to buying the entire issue, leaving the issuer exposed to unsold shares.

Rule 144 sets conditions for the public resale of restricted and control securities.

A joint account with a registered representative allows sharing in proportion to each party’s contribution.

Secondary offerings involve the resale of already-issued securities, often by existing shareholders.

Direct-sold funds are offered directly to investors by the issuer and often feature lower costs compared to adviser-sold funds.

Public offerings require SEC registration and are open to all investors, unlike private placements which are limited to qualified buyers.

ABLE accounts provide tax-advantaged savings specifically for individuals with disabilities and their families.

Basis points are used to quantify changes in interest rates or yields (1 basis point = 0.01%).

“Backing away” involves canceling or reducing orders after influencing the market to create a false impression.

Direct sold funds are marketed and sold directly by the issuer, usually resulting in lower costs.

Diversification reduces unsystematic or specific risk by spreading investments across various assets.

“In-the-money” means that exercising the option would be profitable.

The strike price is the fixed price at which the option holder can buy (call) or sell (put) the underlying asset.

“Signatures of convenience” are obtained merely to comply with regulations without proper verification, undermining document integrity.

Benchmark indices provide a standard to evaluate investment performance.

DPPs allow investors to participate directly in the income, gains, losses, and tax benefits of an underlying business venture.

DPPs offer pass-through tax treatment and are generally illiquid because they are not traded on public markets.

LGIPs are pooled funds from local governments invested in short-term, low-risk securities.

DPPs are typically illiquid and not traded on public exchanges, making them long-term investments.

FINRA regulates brokerage firms and protects investors by ensuring compliance with industry rules and standards.

The SEC’s authority covers the securities markets, including public companies, market participants, and securities offerings.

American options may be exercised at any time before expiration, while European options can only be exercised at expiration.

Clear public communications ensure that investors receive accurate and transparent information about financial products, aiding in informed decision-making.

The maximum loss for a call option buyer is limited to the premium paid for the option.

Rights give existing shareholders the opportunity to buy additional shares, usually at a discount.

SIPC protects customers by covering losses if a member brokerage fails, though it does not insure against market losses.

A BCP is designed to maintain essential functions during emergencies or disruptions, ensuring continuity of operations.

Form U4 is used to register individuals and update personal, employment, and disciplinary history.

The ODD is designed to inform investors of the risks and features of options trading before they invest.

Leverage can amplify both gains and losses, increasing overall volatility.

A do-not-call list protects consumers by preventing unsolicited telemarketing calls from companies.

Limits are set to prevent gifts from influencing professional conduct or creating conflicts of interest.

Blue-sky laws are intended to protect investors by ensuring that securities offerings comply with state-specific registration and disclosure requirements.

The regulatory element of continuing education is focused on keeping registered persons informed about changes in the legal and regulatory landscape.

ROA allows investors to combine past and current purchases to reach a breakpoint for lower sales charges.

Benchmarks and indices serve as a reference point to evaluate the performance of an investment portfolio.

Disclosures provide investors with essential information about fees, risks, and strategies, ensuring informed decisions.

NASAA works at the state level to ensure that securities offerings and practices are fair and transparent for investors.

As a principal, the broker-dealer buys or sells securities for its own account rather than for a client.

Any material change in information must be reported via an updated Form U4.

A joint account is held by two or more individuals who share equal ownership and responsibilities.

Defensive stocks typically belong to sectors like utilities or consumer staples, which remain in demand regardless of the economic cycle.

Short-term debt instruments generally have lower yields due to their lower risk and shorter maturities.

Capital gains, whether realized or unrealized, represent the increase or decrease in an investment’s value over time.

A stock split increases the number of shares while proportionally reducing the share price, leaving market capitalization unchanged.

Regulation D provides exemptions that allow companies to raise capital without full SEC registration, primarily for private placements.

Implied volatility is a major determinant of an option’s premium as it reflects the market’s expectations of future price fluctuations.

Most bonds pay periodic interest (coupons) and return the par value at maturity.

Retirement accounts typically allow tax-deferred growth and require minimum distributions after reaching a specified age.

Commercial paper is a common short-term debt instrument issued by corporations.

REITs distribute most of their income to shareholders and avoid double taxation, making them tax-advantaged investments.

Retail investors are individual investors who generally have less experience and face greater risks compared to institutional investors.

Interest rate risk is the potential for investment value to decline due to rising interest rates

Quantitative tightening involves the Fed selling securities to reduce liquidity and shrink its balance sheet, often to counteract inflation.

The interest rate on a bond is primarily determined by the issuer’s credit rating and prevailing market interest rates.

FINRA is a well-known SRO that regulates brokerage firms and exchange markets.

Public offerings are registered with the SEC and available to all investors.