SIE Understanding Products and Their Risks Practice Test 5

A. T-Bills are issued with face values of one thousand dollars or more.

B. T-Bonds are issued with face values of one thousand dollars or more.

C. The level of inflation affects the earning power of Treasury Inflation-Protected Securities (TIPS), just as other Treasury securities' interest payments do.

D. Auctions for 10-year notes are held monthly.

A. Broker-dealer firm

B. Investment bank

C. Member of the NYSE

D. Depositary bank

A. The issuer has a weak credit rating.

B. The economy is unusually strong.

C. The bond issue is especially simple and straightforward.

D. The size of the bond issue is small.

A. Fitch Ratings

B. Moody's Investors Service

C. Standard & Poor's Global Ratings

D. Municipal Securities Rulemaking Board (MSRB)

A. Special Tax Bond

B. Double-Barreled Bond

C. Moral Obligation Bond

D. Private Activity Bond

A. Call options are regulated by the Securities and Exchange Commission (SEC), rather than by the Financial Industry Regulatory Authority (FINRA).

B. The purchaser of a call option may possibly gain more profit from changes in market value of the underlying asset with less original cash outlay than if purchasing the underlying security.

C. Call options may be traded on the New York Stock Exchange (NYSE), which is the exchange with the highest option trading volume.

D. Options are relatively unknown in the investment community, as they began selling in 1973.

A. The strike price is not stated when the option is sold to the buyer.

B. The writer of a naked stock call option has an unlimited risk.

C. The expiration date is not stated when sold to the buyer.

D. The buyer of the option may choose which company's stock to buy.

A. All obligations of the options contracts are fulfilled.

B. No investor who exercises a contract will ever be "out of the money" for more than the premium paid for the option.

C. Every investor who exercises a contract will be "in the money" or "at the money."

D. No company will be bankrupt on the exercise date of its stock options.

A. Both are traded at NAV, with possible adjustments for a sales load, redemption, and/or commission.

B. Both are regulated by the Investment Company Act of 1940.

C. Both issue their shares when organized, as typical public companies do.

D. Both typically have a standing offer to redeem their shares for cash.

A. The largest proportion is the up-front sales load.

B. The management fee is usually a smaller percentage of net asset value (NAV) in a small mutual fund, as compared with a large fund.

C. The company does not calculate the performance of the investor's shares.

D. The Expense Ratio includes the cost of record-keeping, which can help the investor when filing taxes.

SIE Understanding Products and Their Risks Practice Test 5

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