Securities Industry Essentials v1.0

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Exam contains 85 questions
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Interest income from which of the following securities is fully taxable by federal, state and local governments?

  • A. Municipal bonds
  • B. U.S. government bonds
  • C. Municipal fund securities
  • D. Government agency securities


Answer : D

Mutual fund share classes are used to help investors identify information related to which of the following features?

  • A. Credit rating
  • B. Fee structure
  • C. Expected profit
  • D. Quality of the fund manager


Answer : B

Interest accrued in a municipal fund security is subject to which of the following federal taxes, if any, at the time of a qualified distribution?

  • A. Capital gains tax
  • B. Ordinary income tax
  • C. Alternative minimum tax
  • D. Exempt from taxation


Answer : D

Which of the following statements best describes the risk of a stop-limit sell order?

  • A. The price of the stock may rise above the limit price after the stop price has been reached, so the sell order will not be executed.
  • B. The price of the stock may rise above the limit price after the stop price has been reached, so the sell order will be executed at a price above the investor's desired price.
  • C. The price of the stock may decline below the limit price after the stop price has been reached, so the sell order will not be executed.
  • D. The price of the stock may decline below the limit price after the stop price has been reached, so the sell order will be executed at a price below the investor's desired price.


Answer : C

Excessive trading for the purpose of generating additional commissions is a prohibited act known as:

  • A. churning.
  • B. freeriding.
  • C. front running.
  • D. market manipulation.


Answer : A

Which of the following underwriting arrangements guarantees that the company will sell all of the stock being offered?

  • A. Mini-max
  • B. All-or-none
  • C. Best effort
  • D. Firm commitment


Answer : D

Which of the following responses is an illustration of record date?

  • A. The date the dividend is paid
  • B. The date on which a securities transaction (buy or sell) took place
  • C. The date on which a new securities issue is first offered for public sale
  • D. The date a corporation sets to identify the stockholders entitled to receive dividends


Answer : D

Which of the following bonds are redeemable prior to the maturity date by the issuer at a specified price at or above par?

  • A. Callable
  • B. Treasury
  • C. Escrowed
  • D. Convertible


Answer : A

A mutual fund prospectus must contain fund information for which of the following topics?

  • A. Peer rankings
  • B. Manager tenure
  • C. Fees and expenses
  • D. Top 10 portfolio holdings


Answer : C

Which of the following risks is unique when comparing U.S. municipal bonds against U.S. government bonds as an investment?

  • A. Credit risk
  • B. Currency risk
  • C. Inflationary risk
  • D. Interest rate risk


Answer : A

Under FINRA rules, which of the following activities must a registered representative (RR) report to his broker-dealer as an outside business activity (OBA)?

  • A. Fixed insurance product sales
  • B. Volunteering at a charity food drive
  • C. Maintenance of an unused real estate license
  • D. Trading of speculative securities in the RR's own account


Answer : A

Which of the following terms describes a firm that delegates execution and clearing services to another firm?

  • A. Carrying firm
  • B. Market maker
  • C. Transfer agent
  • D. Introducing firm


Answer : D

Two individuals have a joint account registered as tenants in common. Upon the death of one holder, which of the following statements describes the ownership interest of the decedent?

  • A. It becomes the property of the other joint tenant.
  • B. It becomes the property of the decedent's estate.
  • C. It becomes the property of the decedent's closest surviving relative.
  • D. It is frozen until a court determines who will receive it.


Answer : B

Which of the following responses describes a type of municipal bond?

  • A. Series EE bonds
  • B. Convertible bonds
  • C. Industrial revenue bonds
  • D. Collateralized mortgage obligations (CMOs)


Answer : C

A customer purchases 10 ABC Jun 100 puts for a premium of $5, while ABC stock is trading at $104. ABC must reach which of the following prices in order for the customer to break even if they exercise the option?

  • A. $95
  • B. $99
  • C. $104
  • D. $105


Answer : A

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Exam contains 85 questions
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