SIE Exam Dumps - Securities Industry Essentials Exam (SIE)

In a UTMA account, the minor is the legal owner of the account. The custodian (in this case, the attorney) manages the account until the minor reaches the age of majority specified by state law.

C is correct because the grandson (the minor) is the account’s legal owner.

A is incorrect because the attorney is the custodian, not the owner.

B is incorrect because the grandfather established the account but does not own it.

D is incorrect because the parent does not have ownership unless explicitly named as the custodian.

High-income bond mutual funds typically invest in lower-rated (junk) bonds that offer higher yields. These bonds are exposed to significant credit risk, as issuers may default on their payments.

A is correct because credit risk is the primary concern with high-yield bonds.

B is incorrect as political risk is more relevant for international investments.

C is incorrect because taxability risk is not specific to bond mutual funds.

D is incorrect because purchasing power risk is more relevant for fixed-income investments during inflationary periods but is not the primary risk here.

Step by Step Explanation:

Variable Life Insurance: The cash value depends on the performance of the underlying investment options.

Fluctuating Market Conditions: Since the cash value is linked to market performance, fluctuations directly impact its value.

Beneficiary/Death Benefit Changes: These do not directly impact the cash value unless they involve additional costs or changes to premiums.

Step by Step Explanation:

Call Option Writer: When writing (selling) a call option, the writer has the obligation to sell the underlying stock at the strike price if the buyer exercises the option.

Incorrect Options:

A & B: Only the option buyer has rights, not the writer.

D: Obligations to buy stock apply to put option writers, not call option writers.

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.

FINRA Rule 3220 prohibits member firms from giving gifts exceeding $100 per individual per year to ensure that gifts do not influence business conduct. The rule applies to gifts given in connection with the firm’s business.

C is correct because it adheres to FINRA’s $100 annual limit.

A is incorrect because the total value of gifts must also not exceed $100 annually.

B is incorrect as there is no $200 limit.

D is incorrect as gifts are allowed within the $100 limit.

Step by Step Explanation:

Securitization: The process of pooling financial assets, such as mortgage loans, and creating asset-backed securities that investors can buy.

Incorrect Options:

B: Hypothecation refers to pledging assets as collateral.

C & D: Loan and claim processing are administrative terms, not related to the creation of securities.

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 correct because the president of a local bank is not considered a restricted person under FINRA Rule 5130.

A is incorrect because employees (registered or not) of broker-dealers are restricted.

B is incorrect because immediate family members of broker-dealer employees are restricted, even if unemployed.

D is incorrect because the immediate family of a registered representative is restricted.