Pass the FINRA General Securities Representative SIE Questions and answers with ExamsMirror

Step by Step Explanation:

Debentures: Corporate bonds not backed by physical assets or collateral. They rely on the issuer’s creditworthiness.

Incorrect Options:

B: Trust certificates are a legacy term for bonds backed by a trust.

C: Collateral trust bonds are secured by financial assets.

D: GO bonds are issued by municipalities, not corporations.

References:

SEC Guide on Corporate Bonds:SEC Corporate Bonds.

Treasury bills (T-bills) are short-term debt securities issued at a discount to par value. The difference between the purchase price and the par value represents the investor’s interest income, which is realized when the T-bill matures.

C is correctbecause T-bills are issued at a discount and mature at par.

Ais incorrect because T-bills are not sold at par value.

BandDare incorrect because T-bills do not pay periodic interest; the return is based on the discount.

The quote indicates that the market maker is willing to buy 500 shares at $39.05 (bid) and sell 1,000 shares at $39.15 (ask). Market makers are required to honor their quoted size for orders that fall within their bid/ask prices.

D is correctbecause the market maker is obligated to sell at least 1,000 shares at $39.15 as it falls within the quoted size and price.

Bis incorrect because the bid is at $39.05, not $39.00.

Cis incorrect because $39.10 does not match the ask price.

Ais invalid as a stop order would not activate at $39.00.

Step by Step Explanation:

Temporary Hold Period: Under FINRA Rule 2165, a firm can initially place a hold on disbursements for up to 10 business days if financial exploitation is suspected.

Additional Holds: The period may be extended by an additional 10 business days if warranted and allowed by state law.

Incorrect Options:

A & B: These are shorter than the permissible period.

D: The initial hold period is capped at 10 business days.

References:

FINRA Rule 2165 (Financial Exploitation of Specified Adults): FINRA Rule 2165.

An option is considered "at the money" when the current price of the underlying asset (or index level) equals the option’s strike price.

B is correctbecause the index level equals the strike price.

Ais incorrect because "in the money" requires the option to have intrinsic value (e.g., for a call, the index level must be above the strike price).

Cis incorrect because "out of the money" applies when the index level is below the strike price (for calls) or above it (for puts).

Dis incorrect because "at the money" options have no intrinsic value.

A limit order to buy allows the investor to specify the maximum price he is willing to pay for the stock. The order will only execute if the stock price falls to or below the specified price.

B is correctbecause a limit order to buy aligns with the investor’s desire to secure a better price.

Ais incorrect because a limit order to sell is used when an investor wants to sell at a minimum price.

CandDare incorrect because market orders execute at the current market price, not at a preferred price.

Regulation S-P mandates that broker-dealers disclose how they collect, protect, and share customers’ nonpublic personal information. The privacy notice must include:

The categories of information collected.

The firm’s policies for safeguarding data.

Opt-out rights for sharing information with unaffiliated third parties.

D is correctbecause privacy notices must describe policies for protecting customer information.

A,B, andCare incorrect because they do not relate to the required elements of Regulation S-P privacy notices.

Step by Step Explanation:

SIPC Coverage Limits: Protects up to $500,000 per customer, including a maximum of $250,000 for cash.

In this case, $300,000 in cash exceeds the SIPC limit, so only $250,000 is protected.

Incorrect Options:

A: $150,000 understates the SIPC limit for cash.

C: The full $300,000 in cash is not protected.

D: Total coverage exceeds SIPC limits.

References:

SIPC Coverage Details:SIPC Protection.

A pass-through entity does not pay corporate income taxes; instead, income is passed to owners, who report it on their individual tax returns.

A is correctbecause C corporations are not pass-through entities; they pay corporate taxes.

B,C, andDare all pass-through entities for tax purposes.

Step by Step Explanation:

Call Option Writer: When writing (selling) a call option, the writer has the obligation to sell the underlying stock at the strike price if the buyer exercises the option.

Incorrect Options:

A & B: Only the option buyer has rights, not the writer.

D: Obligations to buy stock apply to put option writers, not call option writers.

References:

Options Clearing Corporation (OCC) Options Education:OCC Options Education.