FINRA FINRA-SIE Online Practice Questions and Exam Preparation

FINRA FINRA-SIE Online Questions & Answers

• Question 1:

  The formation of an asset-backed security or debt obligation that represents a claim on the cash flows from mortgage loans is known as:

  A. Securitization
  B. Hypothecation
  C. Loan processing
  D. Claim processing
  A. Securitization

• Question 2:

  Which of the following statements is a characteristic of a government bond fund?

  A. Government bond funds are diversified.
  B. Dividend/interest payments will be the same each month.
  C. If interest rates fall, the net asset value (NAV) of the fund will likely drop as well.
  D. The value of the fund is not guaranteed by the government or any federal agency.
  D. The value of the fund is not guaranteed by the government or any federal agency.

• Question 3:

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

  A. Projected return
  B. Investment objectives
  C. Fund's portfolio holdings
  D. Control persons and principal owners of the fund
  B. Investment objectives

• Question 4:

  Under which of the following circumstances, if any, is a registered representative (RR) permitted to share in the profits and losses of security interests that the RR has purchased jointly with a customer?

  A. Only when the customer is an accredited investor
  B. Only if the RR's firm is also a participant in the sharing arrangement
  C. When the profits and losses are proportionate to the amount contributed by the RR
  D. Under no circumstances
  C. When the profits and losses are proportionate to the amount contributed by the RR

• Question 5:

  If a company with a single outstanding bond issue chooses to extinguish this debt through refunding, which of the following actions will occur?

  A. The company will issue stock to replace the bonds.
  B. The company will retire one debt with the proceeds from another issue.
  C. The company will buy back the bonds, at a discount, from the bondholders.
  D. The company will establish a sinking fund for use in making regular open-market purchases of the bonds.
  B. The company will retire one debt with the proceeds from another issue.

• Question 6:

  What is the sales load of an open-end investment company with a net asset value (NAV) of $14.35 and a public offering price (POP) of $15.50?

  A. 7.40%
  B. 8.00%
  C. 8.50%
  D. 9.25%
  C. 8.50%

• Question 7:

  Which of the following responses describes a common feature of a hedge fund?

  A. Low liquidity for investors
  B. Low minimum investment requirement
  C. Primarily focused on fixed income investments
  D. Transparent as to the underlying investments and strategies
  A. Low liquidity for investors

• Question 8:

  A market maker quotes the market on an NMS equity security as 39.05 - 39.15 [5x10]. Which of the following orders is the market maker required to fill?

  A. A sell stop order for 500 shares at $39.00
  B. A sell order for 300 shares at $39.05
  C. A buy order for 1,000 shares at $39.10
  D. A buy order for 2,000 shares at $39.15
  D. A buy order for 2,000 shares at $39.15

• Question 9:

  A broker-dealer (BD) is underwriting an initial public offering (IPO). According to industry rules, which of the following customers is eligible to participate in the IPO?

  A. An unregistered sales assistant employed by the BD
  B. The BD's branch office manager's unemployed spouse
  C. A customer of the BD who is the president of a local bank
  D. The chief financial officer of a fast-food chain, whose brother is a registered representative employed by the BD
  C. A customer of the BD who is the president of a local bank

• Question 10:

  Which of the following types of securities is an equity?

  A. Preferred stock
  B. Commercial paper
  C. Certificate of deposit (CD)
  D. Exchange-traded note (ETN)
  A. Preferred stock