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SIE Practice Exam 3

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SIE Practice Exam 3

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Question 1 of 10

1. Question

One of your option account customers has just gone long an LMN Aug 110 put at 4. Their breakeven point will occur when LMN trades at:

106
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114
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110
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Insufficient data to solve
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Correct

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Question 2 of 10

2. Question

An investor with both common stock and bonds in their portfolio will experience which of the following if both the stock and the bonds drop in value by ½ point.

The stock will increase by $5.00 and the bonds will increase by $50
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The stock will decrease by $5.00 and the bonds will decrease by $50
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The stock will increase by 50 cents per share; the bonds will increase by $5.00 per bond
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The stock will decrease by 50 cents per share; the bond will decrease by $5.00 per bond
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Question 3 of 10

3. Question

When a put option is exercised:

The writer will receive the premium
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The writer will purchase the underlying stock at the exercise price
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The writer will enter into a regular way purchase with the investor who paid the writer the premium.
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All of the above
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Question 4 of 10

4. Question

Under what circumstances may an employee of a publicly-traded corporation trade on non-public information without violating federal securities laws?

Under no circumstances
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When permission is granted by the CEO
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When an independent analyst publishes a research report that earnings for the upcoming quarter will be below Wall Street expectations.
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When a neighbor informs the employee they’ve heard rumors of a take-over bid which will be forthcoming
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Question 5 of 10

5. Question

Regarding annuities;

The type of annuity chosen will have an impact on the dollar amount of the payout.
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The age and gender of the annuitant will not impact the dollar amount of payout.
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Payments will always cease upon the death of the annuitant.
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The investment results of the insurance company’s general account will dictate the dollar amount of the payout.
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Correct

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Question 6 of 10

6. Question

Among the differences between a Clearing broker/dealer and a Non-clearing B/D include:

Non-clearing firms do not hold customer cash and securities
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Both firms must maintain a minimum amount of Net Capital
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Both firms must be registered with the SEC as broker/dealers
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All of the above
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Question 7 of 10

7. Question

The Board of Directors of a publicly traded corporation has declared a 5 for 4 stock split. Which of the following are true regarding the impact on shareholders?

Each stockholder will own 25% more shares at 80% of the previous market price per share
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Each stockholder will 25% more shares with no change in the market price of the stock
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Each stockholder is given the option to accept the stock split or take the distribution in cash.
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None of the above
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Question 8 of 10

8. Question

All of the following risks are inherent in foreign debt as well as domestic debt securities, except:

Credit risk
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Political risk
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Exchange risk
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Interest rate risk
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Question 9 of 10

9. Question

JKL, Inc. stock is listed on the NASDAQ system. It’s being quoted by your firm at 34.25 – 34.75 20 by 25. Your firm is:

Offering to sell 2000 shares at 34.75 and offering to buy 2500 shares at 34.25
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Offering to buy 200 shares at 34.25 and to sell 250 shares at 34.75
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Offering to sell 200 shares at 34.25 and to buy 250 shares at 34.75
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Offering to buy 2000 shares at 34.25 and to sell 2500 shares at 34.75
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Question 10 of 10

10. Question

The greatest exposure to inflation risk is found in which of the following instruments?

T-bills
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T-bonds
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Preferred stock
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Public utility stock
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