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

Step by Step Explanation:

Tenants in Common: In this arrangement, each tenant owns a fractional interest in the account's assets, which can be unequal depending on the agreement.

Income Distribution: Income is distributed based on ownership percentage, not necessarily equally.

Redemption Requests: Only the owner of the fractional interest has authority to request redemption for their portion.

Estate Taxation: Upon the death of a tenant, only their fractional interest is taxable in their estate.

References:

FINRA Guidelines on Joint Accounts: FINRA Joint Accounts.

Step by Step Explanation:

403(b) Accounts: These tax-advantaged retirement plans are specifically for employees of public schools, tax-exempt organizations, and certain other nonprofit employers, such ashospitals.

Incorrect Options:

Volunteer Workers: Ineligible unless they are also employees.

Small Business Owners and Military Personnel: These groups typically qualify for other retirement plans, not 403(b).

References:

IRS Publication 571 (403(b) Plans): IRS 403(b) Guidance.

Step by Step Explanation:

Trust Accounts: Provide the account owner (trustee) full control over distributions and investment decisions. Suitable for complex estate planning needs.

Incorrect Options:

UTMA: Transfers control to the minor upon reaching the age of majority.

529 Plan: Used for educational savings, with limited control over distributions.

CD: A fixed-term deposit, not an account type for managing distributions.

References:

SEC and FINRA Guidelines on Trusts: FINRA Trust Accounts.

Step by Step Explanation:

Prohibition on Signing Customer Names: It is never permissible to sign a customer's name without written authorization (POA) due to legal and ethical concerns. Unauthorized signing constitutes forgery and violates FINRA rules.

Incorrect Options:

A: Firm principal approval does not override this prohibition.

B: Verbal authorization is insufficient.

C: Discretionary authority does not allow unauthorized signing.

References:

FINRA Rule 4512 (Customer Account Information): FINRA Rule 4512.

Federal Reserve Regulation T mandates that customers must pay for purchases in a cash account within two business days of settlement (T+4). If payment is not made, the brokerage firm must liquidate the securities and place the account on a 90-day restriction.

C is correctbecause the customer’s account is frozen for 90 days, during which all trades must be paid for in advance.

Ais incorrect as closing transactions are still permitted but require prepayment.

Bis incorrect because the restriction lasts for 90 days, not 30.

Dis incorrect as only the delinquent account, not related accounts, is frozen.

Step by Step Explanation:

Bullish Position: Buying ABC stock aligns with the expectation that the stock’s price will rise, allowing the investor to profit.

Incorrect Options:

A: Buying puts is a bearish strategy.

C: Selling calls benefits from stable or declining prices.

D: Selling short is a bearish strategy anticipating a price drop.

References:

FINRA Guidance on Market Strategies: FINRA Trading Basics.

Step by Step Explanation:

FINRA Rule 1122: Requires that registered representatives update their residential address with FINRA for two years post-termination.

Purpose: This ensures accurate records for potential regulatory inquiries during the statutory two-year period when a terminated individual remains subject to FINRA’s jurisdiction.

References:

FINRA Rule 1122 (Filing False or Misleading Information): FINRA Rule 1122.

A transfer agent is responsible for maintaining accurate records of shareholder purchases, redemptions, and account balances. They also handle the issuance and cancellation of shares and ensure shareholders receive appropriate distributions.

D is correctbecause maintaining shareholder records is a core duty of a transfer agent.

Ais incorrect because underwriting is the responsibility of a broker-dealer.

Bis incorrect because distributing the prospectus is handled by the fund’s distributor.

Cis incorrect because custody of securities is the role of a custodian, not the transfer agent.

Redeemable securities are those that can be sold back to the issuer.

D is correctbecause unit investment trusts (UITs) issue redeemable securities.

Cis incorrect because closed-end fund shares are traded on secondary markets, not redeemable.

AandBdo not meet the definition of redeemable securities.