FREE SIE Knowledge Questions and Answers

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FINRA would compel an investment manager to report on every activity listed below, with the exception of:

Correct! Wrong!

The right response is that a firm employee was taken into custody on a misdemeanor DUI charge. There is no reporting obligation because this is not a financial offense or criminal.

FINRA's Rule 3220 was created primarily to:

Correct! Wrong!

By Rule 3220, the Financial Industry Regulatory Authority (FINRA) forbids businesses from providing gifts or gratuities to businesses that belong to other businesses.

Which of these describes an Exchange-traded fund's (ETF) drawback?

Correct! Wrong!

Comparing trading costs to stock prices is the right response. Compared to other assets, such as equities, EFTs typically have greater trading expenses.

Which answer accurately sums up a margin account?

Correct! Wrong!

Investors who trade options through margin accounts borrow brokerage funds. These accounts occasionally have minimums, and the investor can be required to pay brokerage and interest costs.

The following are some of the main reasons why investors engage in passive ETF investing:

Correct! Wrong!

Investments linked to exchange-traded funds are referred to as ETF investing. Over time, long-term gains are what passive investors aim for. They avoid the expenses that come with more active trading strategies by doing this.

What is the name of a stock order that won't be filled unless a stock hits or drops below a specific market price?

Correct! Wrong!

A limit order is the right response. The stock won't be filled until it hits the predetermined price, if at all. Unlike a stop order, which turns into a market order when that price is reached, a limit order won't be executed at a price that is lower than the designated price.

Which of the following factors largely affects an option contract's price?

Correct! Wrong!

Contracts for options are categorized as derivatives. The price of the financial instrument that a derivative is formed from determines its value. The price of an option contract is mostly determined by the contract's portion of stock.

JCB Company owns 5000 shares of issued stock in addition to 1000 shares of treasury stock. The right amount of common stock is represented by which of the following?

Correct! Wrong!

The number of common stock is equal to the sum of the number of issued common stock shares and the number of treasury stock shares. In this instance, the corporation has issued 5000 shares of stock, of which 1000 are held in treasury stock; so, there are 4000 shares of common stock.

An organization makes $100,000 a year, but it also spends $75,000. The corporation has 10,000 issued shares and owes $7,000 to preferred shareholders. Regarding the value of each share, which of the following assertions is true?

Correct! Wrong!

In the case, the price per share would be $1.80. Net Income - Net Liabilities = $25,000 would be the formula used to calculate the shareholder's equity. The preferred stock payments are then deducted, totaling $18,000. After dividing this amount by the total number of shares issued (10,000), the price per share is $1.80.

Which of the above scenarios demonstrates an unsystematic risk?

Correct! Wrong!

The right response is that stock prices dropped when American Airlines announced route cancellations owing to low demand. Since this risk solely affects American Airlines, it is an example of an unsystematic risk. Because they have an effect on numerous companies and the market as a whole, the other options are instances of systematic risk.

Which of the following describes the risk of losing money on an investment as a result of changes in the economy?

Correct! Wrong!

The right response is "market risk." Natural disasters, recessions, and the state of politics are some of the variables that might affect market risk. All of these risks would have an effect on investment values and the economy.

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