SIE Exam Dumps - FINRA General Securities Representative Questions and Answers

Step by Step Explanation:

Breakeven Calculation: For covered call writing, breakeven is the stock purchase price minus the premium received.

Purchase Price = $50

Premium Received = $8

Breakeven = $50 - $8 = $42.

Other Options:

B, C, and D: Incorrect because they do not reflect the proper calculation of stock price minus the premium.

References:

Options Clearing Corporation (OCC) Education:OCC Options Guidance.

Step by Step Explanation:

Blue-Chip Stock Mutual Funds: Invest in large, established companies that typically provide stable dividend income and potential for capital appreciation.

Incorrect Options:

A: Growth stocks prioritize capital appreciation, not income.

B: Money market accounts focus on safety and liquidity, not capital gains.

D: STRIPS provide fixed income without capital gains potential.

References:

FINRA Investment Product Education: FINRA Investment Guidance.

Step by Step Explanation:

Publicly Traded Limited Partnerships (PTPs): Represent ownership stakes, which categorize them as equity securities. PTPs often involve sectors like real estate or energy.

Incorrect Options:

A: Mutual funds are pooled investment vehicles, not partnerships.

C: Fixed-income securities are debt instruments like bonds.

D: Derivatives include options or futures, not ownership stakes.

References:

SEC Guidance on Publicly Traded Partnerships: SEC PTPs.

Step by Step Explanation:

Front Running Definition: Occurs when a broker executes a personal trade ahead of a customer’s order to profit from the anticipated market movement.

Thinly Traded Security: Front running is particularly impactful in low-liquidity securities.

Other Options:

Selling Away: Involves unapproved securities transactions outside the employing firm.

Insider Trading: Involves trading on material non-public information.

Market Manipulation: Encompasses activities like wash trading or spoofing, not specific to this scenario.

References:

FINRA Rule 5270 (Front Running of Block Transactions): FINRA Rule 5270.

FINRA Rule 5130 restricts participation in IPOs for certain individuals (e.g., restricted persons) to prevent potential conflicts of interest. Restricted persons include employees of broker-dealers and their immediate family members.

C is correctbecause the president of a local bank is not considered a restricted person under FINRA Rule 5130.

Ais incorrect because employees (registered or not) of broker-dealers are restricted.

Bis incorrect because immediate family members of broker-dealer employees are restricted,even if unemployed.

Dis incorrect because the immediate family of a registered representative is restricted.

Step by Step Explanation:

Short Sale Definition: Involves selling borrowed securities with the expectation of repurchasing them at a lower price.

Investor Ownership: Short sales do not involve securities already owned by the seller.

Other Options: None of the other choices accurately define a short sale.

References:

SEC Regulation SHO (Short Selling): SEC Short Sales.

In cumulative voting, shareholders can allocate all their votes to a single candidate. The total number of votes is calculated by multiplying the number of shares owned by the number of seats available:

Total votes = 100 shares × 10 seats =1,000 votes.

The investor can allocate all votes to one candidate.

C is correctbecause cumulative voting allows all votes to be concentrated.

Step by Step Explanation:

Government Bond Funds: Invest in government-backed securities, but the value of the fund itself is not guaranteed by the government, as these funds are subject to market risks.

Incorrect Options:

A: Diversification depends on the fund’s investment strategy.

B: Interest/dividend payments may fluctuate.

C: If interest rates fall, NAVs typically rise, not drop.

References:

SEC Guidance on Mutual Funds: SEC Government Bond Funds.

Mutual funds are traded based on forward pricing. Orders received after the market closes are executed at the NAV calculated at the next market close.

A is correctbecause it aligns with forward pricing rules.

B,C, andDare incorrect as they do not follow mutual fund trade practices.

American Depositary Receipts (ADRs) allow U.S. investors to efficiently invest in foreign corporations without the need to trade on foreign exchanges. ADRs are traded on U.S. exchanges and represent shares of foreign companies.

D is correctbecause ADRs are designed for this purpose, simplifying currency exchange and reporting requirements for U.S. investors.

Ais incorrect because directly purchasing an ETF on a foreign exchange requires additional steps, such as foreign account setup.

Bis incorrect because options are derivative products, not direct investments in the stock.

Cis less efficient because mutual funds may not provide direct exposure to the specific corporation.