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Free SIE Exam Braindumps (page: 4)

Page 3 of 42
PDF with 164 Questions

Shares in a private investment in public equity (PIPE) offering are priced:

  1. At the current market value per share.
  2. Below the current market value per share.
  3. Above the current market value per share.
  4. At the public offering price (POP) as determined by the underwriters.

Answer(s): B

Explanation:

PIPE Offerings: Typically priced below the current market value to incentivize institutional investors to participate in these transactions.

Discount: The discounted price compensates for the potential illiquidity and risk associated with PIPE offerings.

POP/Market Value: These do not apply to private offerings structured as PIPE transactions.


Reference:

SEC PIPE Offering Guidance: SEC PIPE Offerings.



Rising economic activity is most likely to increase revenues of which of the following sectors?

  1. Utilities
  2. Healthcare
  3. Consumer staples
  4. Consumer discretionary

Answer(s): D

Explanation:

Consumer Discretionary Sector: Includes products and services that are not essential, such as luxury items, travel, and entertainment. Revenues increase as disposable income rises during economic expansion.

Consumer Staples and Utilities: These sectors are defensive and less impacted by economic cycles.

Healthcare: Also less correlated with economic cycles due to its essential nature.


Reference:

SEC and FINRA Guidance on Sectors: Investopedia Sector Overview.



The provision that allows a bond issuer to purchase bonds from customers prior to the maturity date on the bond is known as a:

  1. Put
  2. Call
  3. Conversion
  4. Defeasement

Answer(s): B

Explanation:

Call Provision: This allows the issuer to redeem bonds before their maturity date, usually at a premium to the par value, which benefits the issuer in a declining interest rate environment.

Put Provision: Allows bondholders, not issuers, to sell the bond back to the issuer.

Conversion: Relates to convertible bonds that can be converted into equity.

Defeasement: Refers to the removal of a bond issuer's obligation by setting aside cash or securities to cover the debt.


Reference:

SEC Guide on Callable Bonds: SEC Callable Bonds.



Which of the following types of accounts permits an investor to borrow money from a broker-dealer to help pay for a trade?

  1. Cash
  2. Margin
  3. An individual retirement account (IRA)
  4. Delivery versus payment (DVP) / receive versus payment (RVP)

Answer(s): B

Explanation:

Margin Accounts: Allow investors to borrow funds to purchase securities, with the securities serving as collateral for the loan.

Cash Accounts: Require full payment for securities purchased.

IRAs: Do not permit borrowing due to their tax-advantaged status.

DVP/RVP: Settlement mechanisms, not account types for borrowing.


Reference:

FINRA Rule 4210 (Margin Requirements): F, I, N, R, A Rule 4210.






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