SIE – EIGHTH SIMULATION

#1. Which of the following BEST describes the main function of an underwriting syndicate?

To provide margin loans to customers

To guarantee profits for retail investors

To set the issuer’s long-term dividend policy

To distribute the risk of selling a new issue among multiple firms

#2. Which of the following securities is typically quoted as a percentage of par value?

Common stock

Corporate bond

Option contract

Exchange-traded fund

#3. Which of the following best describes a bond trading at a discount?

Its coupon rate is above current market rates

It pays no interest until maturity

Its yield to maturity is lower than its coupon rate

Its market price is below its par value

#4. Which of the following securities generally has priority in a corporate liquidation?

Warrants

Common stock

Preferred stock

Corporate bonds

#5. Which of the following types of risk is MOST associated with long-term fixed-income securities?

Business risk

Interest-rate risk

Legislative risk only

Liquidity risk

#6. Which of the following describes the relationship between interest rates and bond prices?

They are unrelated

They move in opposite directions

Bond prices determine interest rates

They move in the same direction

#7. Which of the following municipal securities is typically exempt from federal income tax?

Capital gains on municipal bonds

Dividends from municipal bond funds

Interest on corporate bonds

Interest on a general obligation bond

#8. Which of the following BEST describes a call provision in a bond?

It prevents redemption before maturity

It increases the bond’s par value

It allows the issuer to redeem the bond before maturity

It allows investors to force early repayment

#9. Which of the following investments is MOST exposed to inflation risk?

Common stock of growth companies

Treasury Inflation-Protected Securities

Fixed annuity with level payments

Real estate investment trust

#10. Which of the following securities is considered equity rather than debt?

Preferred stock

Treasury note

Debenture

Commercial paper

#11. Which of the following best describes the purpose of diversification?

Eliminating market risk

Reducing unsystematic risk

Increasing leverage

Guaranteeing positive returns

#12. Which of the following investments is MOST suitable for a conservative investor?

Leveraged ETF

U.S. Treasury bill

Emerging markets equity fund

High-yield corporate bond

#13. Which of the following is a characteristic of money market instruments?

Long maturity and high volatility

Guaranteed above-market returns

Short maturity and high liquidity

Issued only by corporations

#14. Which of the following risks applies to virtually all investments?

Liquidity risk

Credit risk

Systematic risk

Business risk

#15. Which of the following securities pays interest semiannually?

Commercial paper

U.S. Treasury note

Money market fund

Treasury bill

#16. Which of the following investments is MOST likely to provide long-term capital appreciation?

Treasury bill

Short-term certificate of deposit

Common stock

Money market mutual fund

#17. Which of the following statements about preferred stock is TRUE?

It has higher voting rights than common stock

It generally pays a fixed dividend

It matures at a stated date

It is issued only by banks

#18. Which of the following is TRUE regarding exchange-traded funds (ETFs)?

They guarantee principal protection

They are priced once per day at NAV

They have no market risk

They trade intraday on an exchange

#19. Which of the following investment companies issues redeemable shares?

Closed-end fund

Exchange-traded note

Open-end mutual fund

Hedge fund

#20. Which of the following BEST describes a closed-end fund?

It issues and redeems shares at NAV

It guarantees dividend income

It only invests in government securities

Its shares trade in the secondary market at market prices

#21. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Corporate bond fund

Municipal bond fund

U.S. Treasury bond

Dividend-paying common stock

#22. Which of the following BEST describes liquidity?

The ability to convert an investment to cash quickly

The maturity of a bond

The potential for high returns

The level of credit risk

#23. Which of the following securities is most sensitive to changes in interest rates?

Short-term Treasury bill

Long-term bond

Money market fund

Floating-rate note

#24. Which of the following is TRUE regarding suitability?

Suitability applies only to options

Recommendations must match a customer’s investment profile

All customers should receive the same recommendations

Suitability guarantees profits

#25. Which of the following best describes a variable annuity?

It matures like a bond

It is insured by SIPC

Its value fluctuates based on investment performance

It guarantees a fixed return

#26. Which of the following securities is most sensitive to changes in interest rates?

Short-term Treasury bill

Floating-rate note

Long-term bond

Money market fund

#27. Which of the following BEST describes liquidity?

The ability to convert an investment to cash quickly

The level of credit risk

The potential for high returns

The maturity of a bond

#28. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

U.S. Treasury bond

Corporate bond fund

Municipal bond fund

Dividend-paying common stock

#29. Which of the following market participants buys and sells securities for its own account?

Underwriter only

Transfer agent

Dealer

Agent

#30. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Corporate bond fund

Municipal bond fund

U.S. Treasury bond

Dividend-paying common stock

#31. Which of the following is a primary benefit of investing in mutual funds?

Guaranteed returns

Professional management and diversification

Intraday trading only

Exemption from market risk

#32. Which of the following customers would MOST likely benefit from a 529 savings plan?

Retirees seeking immediate income

Day traders using margin

Parents saving for a child’s future education

Investors seeking short-term trading profits

#33. Which of the following is TRUE regarding suitability?

Suitability applies only to options

All customers should receive the same recommendations

Recommendations must match a customer’s investment profile

Suitability guarantees profits

#34. Which of the following BEST describes liquidity?

The maturity of a bond

The potential for high returns

The level of credit risk

The ability to convert an investment to cash quickly

#35. Which of the following securities is most sensitive to changes in interest rates?

Short-term Treasury bill

Money market fund

Long-term bond

Floating-rate note

#36. Which of the following customers would MOST likely benefit from a 529 savings plan?

Retirees seeking immediate income

Parents saving for a child’s future education

Day traders using margin

Investors seeking short-term trading profits

#37. Which of the following customers would MOST likely benefit from a 529 savings plan?

Parents saving for a child’s future education

Day traders using margin

Retirees seeking immediate income

Investors seeking short-term trading profits

#38. Which of the following investment objectives focuses on minimizing risk?

Speculation

Maximum income

Capital preservation

Aggressive growth

#39. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

U.S. Treasury bond

Corporate bond fund

Municipal bond fund

Dividend-paying common stock

#40. Which of the following securities is most sensitive to changes in interest rates?

Money market fund

Floating-rate note

Short-term Treasury bill

Long-term bond

#41. Which of the following is TRUE regarding suitability?

Suitability guarantees profits

Suitability applies only to options

All customers should receive the same recommendations

Recommendations must match a customer’s investment profile

#42. Which of the following investment objectives focuses on minimizing risk?

Aggressive growth

Speculation

Capital preservation

Maximum income

#43. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Municipal bond fund

Dividend-paying common stock

U.S. Treasury bond

Corporate bond fund

#44. Which of the following investment objectives focuses on minimizing risk?

Aggressive growth

Capital preservation

Maximum income

Speculation

#45. Which of the following market participants buys and sells securities for its own account?

Transfer agent

Dealer

Agent

Underwriter only

#46. Which of the following market participants buys and sells securities for its own account?

Agent

Dealer

Transfer agent

Underwriter only

#47. Which of the following securities is most sensitive to changes in interest rates?

Money market fund

Short-term Treasury bill

Floating-rate note

Long-term bond

#48. Which of the following securities is most sensitive to changes in interest rates?

Short-term Treasury bill

Money market fund

Long-term bond

Floating-rate note

#49. Which of the following customers would MOST likely benefit from a 529 savings plan?

Retirees seeking immediate income

Investors seeking short-term trading profits

Parents saving for a child’s future education

Day traders using margin

#50. Which of the following is a primary benefit of investing in mutual funds?

Professional management and diversification

Guaranteed returns

Exemption from market risk

Intraday trading only

#51. Which of the following is TRUE regarding suitability?

All customers should receive the same recommendations

Recommendations must match a customer’s investment profile

Suitability guarantees profits

Suitability applies only to options

#52. Which of the following market participants buys and sells securities for its own account?

Transfer agent

Dealer

Underwriter only

Agent

#53. Which of the following best describes a variable annuity?

Its value fluctuates based on investment performance

It is insured by SIPC

It matures like a bond

It guarantees a fixed return

#54. Which of the following BEST describes liquidity?

The ability to convert an investment to cash quickly

The level of credit risk

The potential for high returns

The maturity of a bond

#55. Which of the following is a primary benefit of investing in mutual funds?

Exemption from market risk

Guaranteed returns

Professional management and diversification

Intraday trading only

#56. Which of the following securities is most sensitive to changes in interest rates?

Long-term bond

Short-term Treasury bill

Floating-rate note

Money market fund

#57. Which of the following securities is most sensitive to changes in interest rates?

Short-term Treasury bill

Long-term bond

Money market fund

Floating-rate note

#58. Which of the following customers would MOST likely benefit from a 529 savings plan?

Parents saving for a child’s future education

Retirees seeking immediate income

Investors seeking short-term trading profits

Day traders using margin

#59. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Municipal bond fund

U.S. Treasury bond

Dividend-paying common stock

Corporate bond fund

#60. Which of the following BEST describes liquidity?

The level of credit risk

The ability to convert an investment to cash quickly

The potential for high returns

The maturity of a bond

#61. Which of the following customers would MOST likely benefit from a 529 savings plan?

Investors seeking short-term trading profits

Parents saving for a child’s future education

Retirees seeking immediate income

Day traders using margin

#62. Which of the following is TRUE regarding suitability?

All customers should receive the same recommendations

Recommendations must match a customer’s investment profile

Suitability applies only to options

Suitability guarantees profits

#63. Which of the following investment objectives focuses on minimizing risk?

Speculation

Capital preservation

Maximum income

Aggressive growth

#64. Which of the following customers would MOST likely benefit from a 529 savings plan?

Retirees seeking immediate income

Parents saving for a child’s future education

Day traders using margin

Investors seeking short-term trading profits

#65. Which of the following investment objectives focuses on minimizing risk?

Capital preservation

Maximum income

Aggressive growth

Speculation

#66. Which of the following investment objectives focuses on minimizing risk?

Speculation

Capital preservation

Maximum income

Aggressive growth

#67. Which of the following BEST describes liquidity?

The maturity of a bond

The ability to convert an investment to cash quickly

The potential for high returns

The level of credit risk

#68. Which of the following best describes a variable annuity?

Its value fluctuates based on investment performance

It guarantees a fixed return

It matures like a bond

It is insured by SIPC

#69. Which of the following is a primary benefit of investing in mutual funds?

Professional management and diversification

Intraday trading only

Guaranteed returns

Exemption from market risk

#70. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Corporate bond fund

U.S. Treasury bond

Municipal bond fund

Dividend-paying common stock

#71. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Corporate bond fund

Dividend-paying common stock

U.S. Treasury bond

Municipal bond fund

#72. Which of the following investment objectives focuses on minimizing risk?

Capital preservation

Speculation

Maximum income

Aggressive growth

#73. Which of the following best describes a variable annuity?

It is insured by SIPC

It guarantees a fixed return

It matures like a bond

Its value fluctuates based on investment performance

#74. Which of the following is TRUE regarding Roth IRAs?

Contributions are always tax-deductible

They are available only through employers

They require RMDs at age 73

Qualified withdrawals may be tax-free

#75. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

Corporate bond fund

U.S. Treasury bond

Dividend-paying common stock

Municipal bond fund

ARE YOU READY?

LET’S PRACTICE!

Results

#1. Which of the following BEST describes the main function of an underwriting syndicate?

#2. Which of the following securities is typically quoted as a percentage of par value?

#3. Which of the following best describes a bond trading at a discount?

#4. Which of the following securities generally has priority in a corporate liquidation?

#5. Which of the following types of risk is MOST associated with long-term fixed-income securities?

#6. Which of the following describes the relationship between interest rates and bond prices?

#7. Which of the following municipal securities is typically exempt from federal income tax?

#8. Which of the following BEST describes a call provision in a bond?

#9. Which of the following investments is MOST exposed to inflation risk?

#10. Which of the following securities is considered equity rather than debt?

#11. Which of the following best describes the purpose of diversification?

#12. Which of the following investments is MOST suitable for a conservative investor?

#13. Which of the following is a characteristic of money market instruments?

#14. Which of the following risks applies to virtually all investments?

#15. Which of the following securities pays interest semiannually?

#16. Which of the following investments is MOST likely to provide long-term capital appreciation?

#17. Which of the following statements about preferred stock is TRUE?

#18. Which of the following is TRUE regarding exchange-traded funds (ETFs)?

#19. Which of the following investment companies issues redeemable shares?

#20. Which of the following BEST describes a closed-end fund?

#21. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#22. Which of the following BEST describes liquidity?

#23. Which of the following securities is most sensitive to changes in interest rates?

#24. Which of the following is TRUE regarding suitability?

#25. Which of the following best describes a variable annuity?

#26. Which of the following securities is most sensitive to changes in interest rates?

#27. Which of the following BEST describes liquidity?

#28. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#29. Which of the following market participants buys and sells securities for its own account?

#30. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#31. Which of the following is a primary benefit of investing in mutual funds?

#32. Which of the following customers would MOST likely benefit from a 529 savings plan?

#33. Which of the following is TRUE regarding suitability?

#34. Which of the following BEST describes liquidity?

#35. Which of the following securities is most sensitive to changes in interest rates?

#36. Which of the following customers would MOST likely benefit from a 529 savings plan?

#37. Which of the following customers would MOST likely benefit from a 529 savings plan?

#38. Which of the following investment objectives focuses on minimizing risk?

#39. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#40. Which of the following securities is most sensitive to changes in interest rates?

#41. Which of the following is TRUE regarding suitability?

#42. Which of the following investment objectives focuses on minimizing risk?

#43. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#44. Which of the following investment objectives focuses on minimizing risk?

#45. Which of the following market participants buys and sells securities for its own account?

#46. Which of the following market participants buys and sells securities for its own account?

#47. Which of the following securities is most sensitive to changes in interest rates?

#48. Which of the following securities is most sensitive to changes in interest rates?

#49. Which of the following customers would MOST likely benefit from a 529 savings plan?

#50. Which of the following is a primary benefit of investing in mutual funds?

#51. Which of the following is TRUE regarding suitability?

#52. Which of the following market participants buys and sells securities for its own account?

#53. Which of the following best describes a variable annuity?

#54. Which of the following BEST describes liquidity?

#55. Which of the following is a primary benefit of investing in mutual funds?

#56. Which of the following securities is most sensitive to changes in interest rates?

#57. Which of the following securities is most sensitive to changes in interest rates?

#58. Which of the following customers would MOST likely benefit from a 529 savings plan?

#59. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#60. Which of the following BEST describes liquidity?

#61. Which of the following customers would MOST likely benefit from a 529 savings plan?

#62. Which of the following is TRUE regarding suitability?

#63. Which of the following investment objectives focuses on minimizing risk?

#64. Which of the following customers would MOST likely benefit from a 529 savings plan?

#65. Which of the following investment objectives focuses on minimizing risk?

#66. Which of the following investment objectives focuses on minimizing risk?

#67. Which of the following BEST describes liquidity?

#68. Which of the following best describes a variable annuity?

#69. Which of the following is a primary benefit of investing in mutual funds?

#70. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#71. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?

#72. Which of the following investment objectives focuses on minimizing risk?

#73. Which of the following best describes a variable annuity?

#74. Which of the following is TRUE regarding Roth IRAs?

#75. Which of the following would MOST likely appeal to an investor seeking tax-exempt income?