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WorksheetsSIE Set 2
Total questions: 50
Worksheet time: 25mins
Which of the following is part of a financial institution's AML program?
Maintaining a record of all transactions
Maintaining a record of checks in excess of $3,000
Maintaining a record of cash deposits and withdrawals that are not in excess of $3,000
Maintaining a record of wire transfers in excess of $3,000
When opening a new customer account, who's required to sign the new account form?
The customer only
The registered representative only
The principal only
The customer, the registered representative, and the principal
An older investor has an brokerage account with a firm and her registered representative (RR) is concerned that a person is exploiting her financially. What step should be taken by the RR?
Obtain information on the fiduciary of the account.
Obtain information on a trusted contact person.
Refuse any incoming orders from the investor.
Take no action since exploitation is unlikely.
A customer has just moved and notified her firm of her new address. The firm must send a copy of the revised information to the customer within what period?
Immediately
Within 15 days
Within 30 days
There's no need to send this to the client since the client provided the information.
FINRA's requirement for maintaining a written business continuity plan includes all of the following, EXCEPT:
The plan must be filed with FINRA.
The plan must cover regulatory reporting in an emergency.
A description of the plan must be available to customers.
The plan must cover backing up and restoring data in an emergency.
Under Regulation S-P, when is a firm required to provide a privacy notice to a consumer?
If the consumer is part of a call list or other record that's maintained by the firm
If the firm intends to disclose information about the consumer
At the time the account is opened
Annually
For how long must a broker-dealer maintain customer account records after an account is closed?
Two years
Three years
Six years
The life of the firm
If a broker-dealer is acting as a trustee for a corporation, is it able to use shareholder information to prospect for customers?
If approved by FINRA
If approved by the SEC
If approved by the corporation
Without any approval
An individual is considered to have an established business relationship if a transaction occurred no longer ago than:
Within the last six months
Within the last 12 months
Within the last 18 months
Within the last 24 months
Which of the three FINRA suitability obligations apply to institutional customers?
The reasonable basis obligation only
The reasonable basis and customer-specific obligations
The reasonable basis and quantitative obligations only
The reasonable basis, customer-specific, and quantitative obligations
If a broker-dealer sends a brochure that describes its services to 100 banks and insurance companies, the brochure is considered:
Correspondence
Retail communication
Retail and institutional communication
Institutional communication
How frequently must a broker-dealer compute the fully paid and excess margin securities in its possession?
Daily
Weekly
Bi-weekly
Monthly
What customer information is protected under SEC Regulation S-P?
Non-public personal information
Public personal information
All public and non-public personal information
Only customer information that can be found online
Which of the following BEST describes insider trading?
Sharing material, non-public information with a client.
Trading on the basis of material, non-public information.
Trading on the basis of material, public information.
Trading on any information that has not been publicly disseminated.
A CPA has indicated his willingness to instruct some of his clients to open accounts with a registered representative of a broker-dealer in return for a portion of the commissions generated in these accounts. The registered representative:
Cannot share any commissions with the CPA
Is permitted to share commissions if a bona fide contract is in place
Is permitted to share commissions in proportion to the business generated in the accounts
Cannot share commissions, but can agree to a fee for the referrals
What are the requirements if a registered representative intends to contribute to and share in the profits in an account with an unrelated client?
The representative must share in profits that are in proportion to his contributions, but the contributions are not required to be equal.
Representatives cannot contribute to or share in the profits in an account with an unrelated client.
The representative must share profits in proportion to his contributions and the contributions must be equal.
The representative must take profits that exceed his contributions and the contributions are not required to be equal.
A trader at a brokerage firm has gradually increased her firm's quote for a security at the end of the trading day. This is referred to as:
Pattern day trading
Marking-the-close
Matched trades
Churning
A new stock issue for XYZ Corporation is in its initial offering period and is selling very slowly. Due to fears that the price may fall below the initial offering price, what option is available to the managing underwriter?
Place a stabilizing bid above the public offering price.
Place a stabilizing bid at the public offering price.
Place a stabilizing bid when the issue is at a value of 50% or less than its initial offering price.
Placing a stabilizing bid is not allowed.
A FINRA member firm must be notified if a registered representative is engaged in all of the following activities, EXCEPT:
Starting a landscaping service
Selling commercial real estate
Entering triathlons
Acting as a marketing consultant for a trade organization
A firm reports a disciplinary action against one of its registered representatives (RRs) through which of the following?
CRD
Form U4
Form U5
BrokerCheck
A registered representative (RR) of a broker-dealer just informed her branch office manager that she intends to begin part-time employment in her friend's landscaping business. The RR explains that the work is seasonal and should not interfere with her full-time job. According to SRO regulations:
The RR must notify her employer at least one month before initiating any outside employment
Without the prior written notification to her employing broker-dealer, this activity is prohibited
The firm must record this activity on its books; however, if the business is unrelated to the securities industry, employer consent is NOT required
This type of activity is strictly prohibited
A broker-dealer just received notification that a registered representative of the firm is terminating his employment. As a result, the firm:
Must promptly notify the representative's clients that his accounts will be handled by another registered representative of the firm who will be contacting them
Must notify FINRA within 10 days with the details of the representative's employment termination
Must provide the representative with a copy of the termination notification (Form U5) that it files with FINRA
Should have the representative sign the Form U5 attesting to the accuracy of the details regarding his resignation from the firm, which will then be filed with FINRA
A registered representative (RR) owns real estate from which she receives rental income. If the income received by the RR is classified as passive income:
It's not considered an outside business activity, but the RR is required to update her Form U4
It's considered an outside business activity, but the RR is not required to update her Form U4
It's not considered an outside business activity, and the RR is not required to update her Form U4
It's considered an outside business activity and the RR is required to update her Form U4
A broker-dealer intends to hire a salesperson who has never worked for a member firm. During the interview, the candidate discloses that he was arrested and charged with a misdemeanor for forgery. Which of the following statements is TRUE?
This is not required to be disclosed on the person's Form U4.
This must be disclosed on the person's Form U4.
This only needs to be disclosed on the person's Form U4 if he's convicted.
This only needs to be disclosed to the person's firm; it's not required to be disclosed on his Form U4.
A close friend of an MFP is running for election as treasurer in the MFP's city. If the MFP contributes $450 to his friend's election campaign, for how long is the MFP's broker-dealer restricted from engaging in negotiated underwritings with the city?
Two years
Three years
Five years
There's no restriction
Selling away occurs when a registered representative:
Sells his firm's client list to non-affiliated broker-dealers without his firm's permission
Engages in private securities transactions outside his regular scope of employment and without his firm's permission
Sells securities through his firm even though they're not created by his firm
Purchases speculative securities for his own account
Under FINRA rules, which of the following choices is NOT considered of material value if given by a mutual fund underwriter to a registered representative?
A gift of $100
A gift of $200
Overrides in excess of commissions as stated in the prospectus
A gift of $500
Under FINRA’s BrokerCheck® program:
Member firms are required to notify their clients when any self-regulatory organization (SRO) imposes penalties against that member firm
Records of securities professionals, including certain criminal convictions as well as pending disciplinary actions, are available for the personal use of private investors
FINRA must be notified promptly at the time a customer complaint is received by the firm
FINRA must report all disciplinary actions involving member firms and their associated persons in most industry publications
Which of the following employees of a municipal securities firm is considered a municipal finance professional?
A municipal bond trader
An investment banker who specializes in corporate bonds
A retail representative who recommends municipal securities
A file clerk who works in the firm's municipal finance library
A registered representative decides to take an extended leave of absence to care for an elderly parent. Which of the following statements is TRUE?
The registered representative may freeze her status during the leave.
A notice of termination must be filed with the SEC.
The individual may return to the broker-dealer as a registered representative without being required to requalify by exam if done within a three-year period.
The individual must receive a copy of Form U5.
A municipal finance professional (MFP) who resides in New Jersey is permitted to make which of the following political contributions?
A $350 contribution to a New Jersey gubernatorial candidate
A $200 contribution to a Philadelphia, Pennsylvania mayoral fund-raiser
A $400 contribution to the mayor's reelection committee in her hometown
A $600 payment to help repay a loan to a candidate who lost the election for governor of New Jersey
Which of the following companies is MOST affected by a recession?
A health management organization
A utility
A brewery
A mobile home manufacturer
Which of the following rates is the MOST volatile?
The prime rate
The discount rate
The call rate
The federal funds rate
Which of the following scenarios will have a negative impact on the U.S. balance of payments?
An increase in U.S. exports to foreign countries
Foreign purchases of U.S. securities
New U.S. investments abroad
New foreign investments in the U.S.
An announcement on a financial news website states that the money supply (M1) has dropped for the week. This means that:
Demand deposits and currency in circulation in the banking system have declined
Savings deposits and currency in circulation in the banking system have declined
Stock transactions have declined
U.S. government bond sales have declined
An investor is reading a newspaper and sees that Wednesday's effective federal funds rate was 3.47%. On Tuesday, the rate was 3.41%. This information indicates that:
The average rate charged on overnight loans throughout the country increased
The Federal Reserve took measures to inject money into the banking system
The Federal Reserve increased the federal funds rate
Member banks needing to obtain overnight loans from the Federal Reserve paid more than the previous day
Which of the following is NOT a leading economic indicator?
Building permits
The money supply
The prime rate
Stock prices
A 1% increase in the federal funds rate will NOT have an effect on:
Short-term bond prices
Long-term bond prices
The discount rate
Treasury bill prices
The tool that's most commonly used by the FRB to regulate the amount of money and credit in the banking system is:
Open market operations
The discount rate
Moral suasion
Reserve requirements
A reverse repurchase agreement may also be referred to as a(n):
Repo
Arbitrage
Matched sale
Treasury sale
The FRB will most likely sell securities if it's attempting to:
Ease credit
Increase the money supply
Stop an inflationary trend
Reduce interest rates
Which of the following is a coincident economic indicator?
Expenditures for capital goods
The S&P 500 Index
Housing starts
The industrial production index
The interest rate that fluctuates the most is the:
Prime rate
Broker loan rate
Discount rate
Federal funds rate
Which of the following is NOT included in an income statement?
Operating expenses
Revenue
Interest expense
Long-term liabilities
When interest rates are trending upward, the economy will normally be in which phase of the business cycle?
Expansion
Contraction
Trough
Peak
The Consumer Price Index:
Measures the average level of food and utility prices over a given period
Measures the average prices paid by U.S. consumers over a six-month period
Measures the average change in prices for specific goods and services purchased by consumers in certain cities
Measures the total amount of dollars paid by consumers in the U.S. for goods and services
If the Federal Open Market Committee (FOMC) enters into a repurchase agreement, what's the immediate effect on the amount of money in the banking system?
It has no effect on the amount
It decreases the amount
It increases the amount
It may increase or decrease the amount
The market price of which of the following types of stock is most affected by fluctuating interest rates?
Software companies
Financial service companies
Clothing retailing companies
Soft drink companies
Which of the following rates is the MOST volatile?
The prime rate
The discount rate
The call rate
The federal funds rate
Which of the following is NOT included in an income statement?
The amount of goodwill
Selling and administrative expenses
Interest expense
The amount of income taxes paid
