Pass the FINRA General Securities Representative SIE Questions and answers with CertsForce

Step by Step Explanation:

SIPC Coverage Limits: Protects up to $500,000 per customer, including a maximum of $250,000 for cash.

In this case, $300,000 in cash exceeds the SIPC limit, so only $250,000 is protected.

Incorrect Options:

A: $150,000 understates the SIPC limit for cash.

C: The full $300,000 in cash is not protected.

D: Total coverage exceeds SIPC limits.

References:

SIPC Coverage Details:SIPC Protection.

SEC Regulation A provides a registration exemption for smaller public offerings but includes a "bad actor" disqualification. If certain key parties, such as the issuer, underwriter, or affiliates, have been involved in securities violations, the exemption is forfeited.

B is correctbecause underwriters are considered essential participants, and their status as bad actors disqualifies the offering.

A,C, andDare incorrect because custodians, transfer agents, and clearing corporations are not included in the "bad actor" provisions of Regulation A.

Under Federal Reserve Regulation T, customers must deposit at least 50% of the purchase price for margin trades. However, theminimum deposit requirement is $2,000, regardless of the 50% rule, if the account is below this threshold.

50% of $3,000 = $1,500.

Since $1,500 is less than the $2,000 minimum, the customer must deposit the full $2,000.

B is correctbecause $2,000 is the required minimum deposit.

Ais incorrect because the $1,500 calculation does not meet the minimum.

CandDare incorrect because they exceed the minimum deposit requirement.

Nonqualified deferred compensation (NQDC) plans allow employees to defer income until a future date.

D is correctbecause NQDC funds remain part of the company’s general assets, which creditors may claim if the company goes bankrupt.

Ais incorrect as NQDC plans are not subject to ERISA rules.

Bis incorrect because these plans do not require IRS review.

Cis incorrect as NQDC assets are not required to be held in escrow.

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.

FINRA Rule 2360 requires that customers receive theOptions Disclosure Document (ODD), published by the Options Clearing Corporation (OCC), before they are approved to trade options. The ODD explains the risks and characteristics of options trading.

D is correctbecause the ODD is mandatory for options account approval.

Ais incorrect because a prospectus is not specific to options trading.

Bis incorrect because the MSRB Investor Brochure applies to municipal securities.

Cis incorrect because a margin disclosure statement is required only for margin accounts.

Under FINRA Rule 2210, firms must avoid making predictions or projections of future investment performance.

B is correctbecause it involves prohibited predictive statements.

A,C, andDare acceptable under FINRA guidelines, as they do not involve prohibited content.

Step by Step Explanation:

REIT Requirements: REITs must invest at least 75% of their total assets in real estate to qualify for favorable tax treatment under IRS regulations.

90% Rule: Refers to the distribution requirement for taxable income, not asset allocation.

100% Rule: There is no requirement to allocate 100% of assets to real estate.

References:

IRS Publication 542 (Real Estate Investment Trusts):IRS REIT Guidelines.

Step by Step Explanation:

Balance Sheet Definition: Shows a company’s financial position at a specific point in time, listing assets, liabilities, and shareholders' equity (net worth).

Other Financial Statements:

Profit and Loss Statement: Summarizes revenues and expenses over a period.

Cash Flow Statement: Tracks cash inflows and outflows.

References:

SEC Guide to Financial Statements: SEC Financials.

Step by Step Explanation:

Debentures: Corporate bonds not backed by physical assets or collateral. They rely on the issuer’s creditworthiness.

Incorrect Options:

B: Trust certificates are a legacy term for bonds backed by a trust.

C: Collateral trust bonds are secured by financial assets.

D: GO bonds are issued by municipalities, not corporations.

References:

SEC Guide on Corporate Bonds:SEC Corporate Bonds.