Securities Industry Essentials PASSED Actual Exam Questions and CORRECT Answers
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Securities Industry Essentials
Institution
Securities Industry Essentials
Securities Industry Essentials PASSED
Actual Exam Questions and CORRECT
Answers
Securities Act of 1933 - CORRECT ANSWER-Governs the new issuance (primary)
market, which involves the money-raising activities of issuers. Requires issuers to register
their securities when selling to the public...
Securities Industry Essentials PASSED
Actual Exam Questions and CORRECT
Answers
Securities Act of 1933 - CORRECT ANSWER✔✔-Governs the new issuance (primary)
market, which involves the money-raising activities of issuers. Requires issuers to register
their securities when selling to the public.
Securities Exchange Act of 1934 - CORRECT ANSWER✔✔-Governs trading markets for
existing securities and registration requirements of BDs, BD employees, and exchanges
Investment Company Act of 1940 - CORRECT ANSWER✔✔-Governs the regulation of
packaged products such as mutual funds, closed-end funds, and unit investment trusts
Long stock position requires a - CORRECT ANSWER✔✔-Put option
Short stock position requires a - CORRECT ANSWER✔✔-Call option
BE formula for a long stock and long put is - CORRECT ANSWER✔✔-stock price +
premium
BE formula for a short stock and long call is - CORRECT ANSWER✔✔-stock price -
premium
Included under the term, equity security, would be - CORRECT ANSWER✔✔-participating
preferred
In a statutory voting system, - CORRECT ANSWER✔✔-an owner may vote once per share
per open seat
In a cumulative voting system, - CORRECT ANSWER✔✔-the owner has a number of votes
equal to the shares they own multiplied by the number of open seats. May cast them any way
they choose among the open seats
,Which security would likely provide the greatest potential for capital appreciation? -
CORRECT ANSWER✔✔-Common stock
Control persons are - CORRECT ANSWER✔✔-always subject to volume limitations.
Nonaffiliates have no volume or any other restrictions in the sale of registered stock
New, rapidly growing companies tend to: - CORRECT ANSWER✔✔-pay little or no
dividends
Warrants are - CORRECT ANSWER✔✔-long term and normally attached to a fixed-income
offer.
The US Supreme Court decision that provided our current definition of a security is -
CORRECT ANSWER✔✔-SEC v. Howey
American Depository Receipts (ADRs) - CORRECT ANSWER✔✔-"Certificates" created by
organizations such as banks; represent ownership in stocks of foreign companies that are held
in trust by a bank located in the country where the stock is traded.
True of False: Penny stock rules apply to both solicited and unsolicited transactions -
CORRECT ANSWER✔✔-False: They only apply to solicited transactions
The ex-dividend date: - CORRECT ANSWER✔✔-is declared by the regulator that controls
the trading location
Form 144 - CORRECT ANSWER✔✔-A company can issue securities to certain qualified
buyers without registering the securities with the SEC, but must notify the SEC that it intends
to do so.
Default Risk - CORRECT ANSWER✔✔-occurs when the issuer of the bond is unable or
unwilling to make interest payments when promised or pay off the face value when the bond
matures
, 20 bonds at 100 means - CORRECT ANSWER✔✔-They paid 100% of par ($1000) per bond,
so it would be $20,000
A secured bond backed by real estate is called a - CORRECT ANSWER✔✔-mortgage bond
A 6% corporate bond trading on a 7% basis is trading - CORRECT ANSWER✔✔-a discount.
7% basis means that the YTM is 7%. Since it's higher than the coupon rate (6%), so the bond
trades at a discount. Current yield must be between the coupon rate and the YTM
Governmental National Mortgage Association (GNMA) interest is - CORRECT
ANSWER✔✔-fully taxable
Treasury bills are - CORRECT ANSWER✔✔-the only type of Treasury security issued
without a stated interest rate
A bond's rating is used primarily as a measure of its - CORRECT ANSWER✔✔-default risk
Current Yield formula: - CORRECT ANSWER✔✔-Bonds annual interest divided by the
price
Years to Maturity is higher than - CORRECT ANSWER✔✔-current yield
A zero-coupon bond interest pays - CORRECT ANSWER✔✔-at maturity and is taxed
annually
After-tax yield formula - CORRECT ANSWER✔✔-Corporate rate x tax bracket
Three types of debt-security-maturity schedules - CORRECT ANSWER✔✔-Term, serial, and
balloon
The interest from a T-Bond - CORRECT ANSWER✔✔-Is exempt at the state and local level,
but still owes taxes at the federal level
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