SIE Exam Dumps - FINRA General Securities Representative Questions and Answers

Step by Step Explanation:

FINRA Rule 2210: Firms are prohibited from suggesting or implying FINRA's endorsement or approval in any advertising materials.

Approvals: Even if a principal or FINRA approves the content, such a statement remains impermissible.

Key Point: FINRA's role is to regulate, not to endorse firms or their marketing.

References:

FINRA Rule 2210 (Communications with the Public): FINRA Rule 2210.

Step by Step Explanation:

Dividend Reinvestment Plans (DRIPs): These allow investors to automatically reinvest income distributed by the mutual fund to purchase additional shares.

Dollar Cost Averaging: Refers to systematic investments over time, not directly tied to income distributions.

Capital Gains Reinvestment: Involves reinvesting profits from the sale of fund holdings, which is distinct from dividend reinvestment.

References:

FINRA Mutual Fund Features: FINRA Mutual Funds.

The announcement of negative regulatory changes introducesunsystematic risk, specific to the technology sector. Diversification into unrelated sectors can reduce exposure to this risk.

A is correctbecause uncorrelated holdings reduce portfolio risk.

Bis incorrect because adding more microchip companies increases exposure to sector-specific risk.

Cdoes not address the core issue of over-concentration.

Dis the opposite of mitigating risk.

Step by Step Explanation:

Low Liquidity: Hedge funds often impose lock-up periods and restrict redemptions, leading to low liquidity for investors.

Incorrect Options:

B: Hedge funds typically have high minimum investment requirements, often $1 million or more.

C: Hedge funds employ diverse strategies, not just fixed income.

D: Hedge funds are generally opaque about their strategies and holdings to protect their competitive advantage.

References:

SEC Investor Bulletin on Hedge Funds: SEC Hedge Funds.

The cooling-off period begins after the registration statement is filed with the SEC and lasts for at least 20 days. During this time, the issuer and underwriters can market the securities but cannot finalize sales.

D is correctbecause marketing (e.g., roadshows) is permitted during the cooling-off period.

Ais incorrect because the final prospectus is distributed after the offering is effective.

BandCare incorrect because sales and deliveries are prohibited until the registration becomes effective.

Purchasing power risk, also known as inflation risk, occurs when inflation reduces the real value of a fixed-income stream. Fixed payments (e.g., bond interest or annuity payments) lose buying power as inflation rises.

D is correctbecause inflation directly affects fixed income by eroding purchasing power.

Ais incorrect because market risk relates to fluctuations in market prices, not inflation.

Bis incorrect because economic risk generally refers to broader economic downturns.

Cis incorrect because interest rate risk involves changes in bond prices due to interest rate movements, not inflation.

Step by Step Explanation:

Variable Life Insurance: The cash value depends on the performance of the underlying investment options.

Fluctuating Market Conditions: Since the cash value is linked to market performance, fluctuations directly impact its value.

Beneficiary/Death Benefit Changes: These do not directly impact the cash value unless they involve additional costs or changes to premiums.

References:

SEC Bulletin on Variable Life Insurance: SEC Variable Insurance.

Step by Step Explanation:

Rule 144 Holding Period: Restricted securities held by affiliates require a six-month holding period before sale, provided the issuer is subject to SEC reporting requirements.

Other Options:

Notification to FINRA (C) is incorrect; Form 144 is submitted to the SEC, not FINRA.

The 10% ADTV limitation (D) applies to the volume of shares sold, not the conditions for sale.

References:

SEC Rule 144 (Selling Restricted Securities): SEC Rule 144.

Step by Step Explanation:

Equity Index Options: These are cash-settled because the underlying asset is not a physical security but a theoretical value representing the index.

Incorrect Options:

Preferred Stock, Master Limited Partnerships, and ETFs: These involve physical delivery of the underlying asset upon exercise.

References:

Options Clearing Corporation (OCC) Guidelines:OCC Cash-Settled Options.

Fundamental analysis focuses on evaluating a company’s financial health and potential for growth by analyzing its financial statements, such as the income statement, balance sheet, and cash flow statement.

C is correctbecause financial statements provide the data necessary for fundamental analysis.

AandBare incorrect because chart patterns and moving averages are tools of technical analysis, not fundamental analysis.

Dis incorrect because resistance and support levels are also part of technical analysis.