SIE Knowledge 2

Question 1

Which regulatory body oversees the securities markets and has broad authority to enforce federal securities laws?

Accepted Answer

SEC

Answer

The SEC (Securities and Exchange Commission) is the primary federal regulator with broad authority to enforce securities laws.

Question 2

A bond that pays no periodic interest but is issued at a discount to face value is called a:

Accepted Answer

Zero-coupon bond

Answer

Zero-coupon bonds make no periodic interest payments and are sold at a discount, with the investor earning the difference at maturity.

Question 3

Which of the following is considered a money market instrument?

Accepted Answer

Commercial paper

Answer

Commercial paper is a short-term unsecured debt instrument issued by corporations, making it a money market instrument.

Question 4

The process by which a company first sells shares to the public is known as a(n):

Accepted Answer

Initial public offering (IPO)

Answer

An IPO is when a company sells its shares to the public for the first time, transitioning from a private to a public company.

Question 5

When interest rates rise, what happens to the price of existing bonds?

Accepted Answer

Bond prices fall

Answer

Bond prices and interest rates have an inverse relationship; when rates rise, existing bonds with lower rates become less attractive, so their prices fall.

SIE - Securities Industry Essentials Practice Test

SIE - Securities Industry Essentials Practice Test

SIE Knowledge 2