SIE Knowledge of Capital Markets Practice Test 3

1. Which of the following statements is true regarding the named organization?

A. The CBOE's jurisdiction for trading is limited to the United States, Canada, Mexico, Puerto Rico and the U.S. Virgin Islands.

B. FINRA's role was originally defined by Congress to include banks and broker-dealers.

C. MSRB's function was originally defined to include municipal advisors.

D. NYSE is the stock exchange with access to the largest selection of companies in the world, when considering the market capitalization of their listed stock.

2. In what year was the central banking system in the U.S. established by Congress?

A. 1789

B. 1865

C. 1913

D. 1933

3. Which of the following statements is true regarding the Federal Reserve?

A. The system is overseen by a board that is called both the Federal Reserve Board and the Board of Governors.

B. The system has ten branch banks, each with its own board and president.

C. The system has twenty-four regional banks, each with its own board and president.

D. The member banks receive dividends from stock they hold in Reserve banks and can trade that stock.

4. Which is a true statement regarding the Securities Investor Protection Act of 1970 (SIPA)?

A. It required filing a prospectus with the SEC.

B. It encouraged investors to consider enhancing their returns by investing more in options and futures.

C. It created the Securities Investor Protection Corporation including a Board of Directors, some of whom are appointed by the President.

D. It added a guarantee that an investor's stock value would not fall more than twenty percent in a given trading day.

5. Which of the following statements is true regarding FINRA Rule 2266 - SIPC Information?

A. The members are required to inform investors in written form of the investor's ability to learn about SIPC, and obtain the SIPC brochure by contacting SIPC.

B. The members are required to inform investors in written form, and give an oral explanation to each one, of the investor's ability to learn about SIPC, and obtain the SIPC brochure by contacting SIPC.

C. The members are required to orally inform investors of the investor's ability to learn about SIPC, and obtain the SIPC brochure by contacting FINRA or the SEC.

D. The members are required to inform investors in written form of their ability to learn about SIPC, and obtain the SIPC brochure by contacting FINRA in writing.

6. In what year was the Federal Deposit Insurance Company (FDIC) established by Congress?

A. 1789

B. 1865

C. 1913

D. 1933

7. Which of the following statements is true regarding banks?

A. In times of high interest rates, bank customers chose to put more of their idle liquid assets into mutual funds.

B. Some banks arranged for brokerage firms to set up business in the banks' offices.

C. When the FDIC was established, it began assuring depositors that they may withdraw their funds at any time, up to $250,000 per depositor.

D. FDIC required that banks let their customers know that mutual funds purchased on their premises guaranteed the value of the mutual funds, up to the limit set by the FDIC.

SIE Knowledge of Capital Markets Practice Test 3

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