FINRA SIE Practice Test Exam Latest Update

FINRA SIE Practice Test Exam Latest Update - with 450 Questions and Verified Correct Answers Golden Ticket to Guaranteed A+ Verified by Professor A corporate bond which is backed solely by full faith and credit of the issuer.. -

CORRECT ANSWER: Debenture

A corporation has issued 9%, $1,000 par convertible debenture which convert at $50.The common stock is currently trading at $60. If the bond and the common stock are

trading at parity a customer purchasing 5M of the bonds will pay: - CORRECT

ANSWER: Answer $6,000.

The bonds are convertible at $50, based on a $1,000 par value therefore each bond convert into 20 shares at $50. If the common stock is trading at $60 the bond must be trading at $60 x 20 = $1,200 Since they are buying 5M that means that are paying 5 x $1,200 = $6,000

A corporation has issued bonds at 8%. Three years later similar issues are being offered in the primary market at 7% which of the following statements will be true about the current yield and the nominal yield? - CORRECT ANSWER: The current yield will be lower than the nominal yield. The dollar price of the bond will be at a premium.

Nominal (stated) = .08

Market price of bond = .08/.07 = 1,143

Current Yield = 80 / 1143 = .06999

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A corporation issued a 7% AA sinking fund debenture at par. Three years later, similar issues are being issues at 8%. Which of the following is true about the outstanding 7%

issue? How does the current yield relate to the nominal yield - CORRECT ANSWER:

The current yield will be higher than the nominal yield.

The nominal yield (stated yield) will be 7%

The market price of the yield will drop when the new issues are at a higher yield.

Current yield = annual interest $/ current market price

market price = .07 / .08 = 875

Current yield = 70 / 875

Current yield = .08

Current yield > Nominal

A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 15 rights a shareholder may purchase one additional share.at $24 a share. Any fractional rights may be rounded up to buy an additional share.

How many shares may the customer buy with these right? - CORRECT ANSWER: A

share holder can buy a maximum of 18 shares with these rights paying $432 for them.

The 17.06 shares may be rounded up to 18.

A customer places an to buy bonds. The order reads "Buy 5M ABC 9s M'35 @ 90 GTC"

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At which of the following will the price be executed

I 89

II 90

III 91

IV 92 - CORRECT ANSWER: I and II

The order is a Limit Buy so the purchase will only be initiated at or below 90

A middle age woman widowed customer has an investment objective of stable income and wants minimal market and liquidity risk. What type of preferred stock would be the best recommendation

I Participating

II Convertible

III Straight Preferred Stock

IV Variable rate preferred - CORRECT ANSWER: IV Variable Rate preferred

A municipality wishes to sell a bond issue that is NOT backed by taxing power. Which of the following bonds can be issued?

I Revenue Bond 3 / 4

II Industrial Revenue Bond III General obligation Bond

IV Lease rental bond - CORRECT ANSWER: I , II, and IV

Only General obligation bonds are required by taxing power. The rest are revenue backed

A Sell Stop order is executed when?

I In falling markets

II In rising markets

III at the price specified

IV At the market price - CORRECT ANSWER: In falling markets

at the market price

Sell stop = Stop loss to prevent further losses it becomes a market order and must fill

Buy stop = protects short sellers it becomes a market order once triggered

Think of stop as a bomb going off

Limit = doesn't trigger if not tripped over.

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