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FINRA
General Securities Representative
SIE
Securities Industry Essentials Exam (SIE) Questions and Answers

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Viewing page 13 out of 13 pages

Viewing questions 121-130 out of questions

Questions # 121:

A currency devaluation impacts a country's economic activity in which of the following ways?

Options:

Decreases inflation

Decreases gross domestic product (GDP)

Increases imports from merchandise trade countries

Makes exports cost less in merchandise trade countries

Answer

Explanation

Currency devaluation reduces the value of a country’s currency relative to others, making its exports cheaper and more competitive internationally. This stimulates demand for the country’s goods and services.

D is correct because devaluation reduces export costs, encouraging foreign buyers.

A is incorrect because devaluation can increase inflation by raising the cost of imported goods.

B is incorrect because GDP often rises due to increased export demand.

C is incorrect because imports become more expensive after devaluation, reducing demand.

[Reference: SIE Study Guide, Chapter 2: International Trade and Currency, , ]

Questions # 122:

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?

Options:

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

Answer

Explanation

Step by Step Explanation:

Telemarketing Rules (FINRA Rule 3230): Require firms to check the National Do Not Call Registry before contacting individuals, even if those individuals provide their contact information voluntarily.

Incorrect Options:

A: Approval isn’t required for individual follow-ups; compliance with the registry is.

B: While calls must be limited to appropriate hours, the registry check is still mandatory.

C: Written consent does not override the registry requirement.

[:, FINRA Rule 3230 (Telemarketing): FINRA Rule 3230., ]

Questions # 123:

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

Options:

A speeding ticket

A change of residential address

A change of business telephone number

A gambling-related misdemeanor charge

Answer

Explanation

Step by Step Explanation:

Form U4 Reporting Requirements: Registered persons must disclose criminal charges (excluding minor traffic violations) and material changes such as residential address changes. Gambling-related misdemeanors are considered reportable.

Incorrect Options:

Speeding Ticket: Typically not reportable unless it involves a felony.

Business Telephone Number: Not material for Form U4.

[:, FINRA Form U4 Instructions: FINRA Form U4., ]

Questions # 124:

Which of the following statements is true of the comparison between penny stocks and blue-chip stocks?

Options:

Penny stocks are generally less liquid than blue-chip stocks.

Penny stocks are more likely to pay dividends than blue-chip stocks.

Penny stock prices are generally more stable than blue-chip stock prices.

Penny stock issuers are generally better capitalized than issuers of blue-chip stocks.

Answer

Explanation

Step by Step Explanation:

Penny Stocks: These are low-priced, highly speculative stocks often issued by small or distressed companies. They generally have low liquidity, meaning they can be difficult to buy or sell without significantly impacting the price.

Incorrect Options:

Dividends: Penny stocks rarely pay dividends, unlike blue-chip stocks.

Price Stability: Penny stocks are highly volatile compared to blue-chip stocks.

Capitalization: Blue-chip companies are far better capitalized.

[:, SEC Bulletin on Penny Stocks: SEC Penny Stocks., ]

Questions # 125:

Which of the following listed securities carries voting rights?

Options:

Common stock

Preferred stock

Corporate bond

Convertible bond

Answer

Explanation

Step by Step Explanation:

Common Stock: Holders of common stock typically have voting rights, which allow them to participate in decisions like electing the board of directors or approving major corporate actions.

Other Securities:

Preferred Stock: Usually does not carry voting rights.

Corporate and Convertible Bonds: Debt instruments, so they do not confer voting rights.

[:, SEC Guide on Stock Voting Rights: SEC Voting Rights., ]

Questions # 126:

An investor generally purchases an open-end mutual fund from which of the following parties?

Options:

The NYSE

The fund's custodian

The fund's underwriter

An existing shareholder

Answer

Explanation

Step by Step Explanation:

Open-End Mutual Funds: Shares are purchased directly from the fund or its underwriter at the current Net Asset Value (NAV), plus any applicable sales charges.

Custodian: Holds the fund's assets but does not sell shares.

NYSE and Shareholders: Open-end funds do not trade on exchanges or between individual shareholders.

[:, SEC Mutual Fund Basics: SEC Mutual Funds., ]

Questions # 127:

Pursuant to FINRA rules, which of the following content is inappropriate to link to from a business-related social media site?

Options:

A link to the firm's website discussing its products and services

A link to an investment's website stating the investment's performance over the next five years

A link to information on a mutual fund that discusses previous performance over the last five years

A link to a company's filing on EDGAR that contains information on a press release about the company

Answer

Explanation

Under FINRA Rule 2210, firms must avoid making predictions or projections of future investment performance.

B is correct because it involves prohibited predictive statements.

A, C, and D are acceptable under FINRA guidelines, as they do not involve prohibited content.

[Reference: FINRA Rule 2210 (Communications with the Public), , ]

Questions # 128:

Which of the following statements concerning nonqualified deferred compensation plans is true?

Options:

They are governed by ERISA rules.

Such plans must be reviewed with the IRS.

The deferred compensation must be held in escrow at a bank.

A failure of the business could lead to nonpayment of the deferred compensation.

Answer

Explanation

Nonqualified deferred compensation (NQDC) plans allow employees to defer income until a future date.

D is correct because NQDC funds remain part of the company’s general assets, which creditors may claim if the company goes bankrupt.

A is incorrect as NQDC plans are not subject to ERISA rules.

B is incorrect because these plans do not require IRS review.

C is incorrect as NQDC assets are not required to be held in escrow.

[Reference: IRS Code Section 409A, , ]

Questions # 129:

When is a newly registered person subject to the Continuing Education Regulatory Element requirement?

Options:

The calendar year following initial registration

On the anniversary date of initial registration

Every three years after the date of registration

Every five years

Answer

Explanation

Step by Step Explanation:

Regulatory Element Requirement: Newly registered persons must complete the Continuing Education (CE) Regulatory Element on the second anniversary of their initial registration and every three years thereafter.

Incorrect Options:

A: The requirement begins on the second anniversary, not the following calendar year.

D: The cycle is every three years, not five.

[:, FINRA Rule 1240 (Continuing Education): FINRA Rule 1240.]

Questions # 130:

Which of the following agencies publishes the list used by broker-dealers to verify that customers are not known money launderers, terrorists or others deemed ineligible to open an account at a financial institution?