SIE Exam Dumps - Securities Industry Essentials Exam (SIE)

Step by Step Explanation:

Regular-Way Settlement: For equity securities, settlement occurs on a T+2 basis, meaning two business days after the trade date.

Calculation:

Trade Date (T): Thursday, August 2.

T+2 Settlement: Excludes weekends, so settlement falls on Monday, August 6.

Incorrect Options:

A: Reflects T+1, not the correct settlement cycle.

C & D: Extend beyond the standard T+2 cycle.

References:

FINRA and SEC Settlement Rules: SEC Settlement Rules.

Step by Step Explanation:

Right of Accumulation: Allows an investor to combine the value of existing investments within the same fund family to qualify for a breakpoint (reduced sales charge) on new purchases.

Current Holdings: $80,000

New Purchase: $50,000

Total: $130,000, qualifying for the $100,000 breakpoint.

Incorrect Options:

B: Contributions from all funds within the same family can be aggregated.

C: A new letter of intent is unnecessary; right of accumulation applies automatically.

D: Discounts apply immediately, not retroactively.

References:

FINRA Guidance on Breakpoints: FINRA Breakpoints.

Federal Reserve Regulation T mandates that customers must pay for purchases in a cash account within two business days of settlement (T+4). If payment is not made, the brokerage firm must liquidate the securities and place the account on a 90-day restriction.

C is correctbecause the customer’s account is frozen for 90 days, during which all trades must be paid for in advance.

Ais incorrect as closing transactions are still permitted but require prepayment.

Bis incorrect because the restriction lasts for 90 days, not 30.

Dis incorrect as only the delinquent account, not related accounts, is frozen.

Step by Step Explanation:

Front Running Definition: Occurs when a broker executes a personal trade ahead of a customer’s order to profit from the anticipated market movement.

Thinly Traded Security: Front running is particularly impactful in low-liquidity securities.

Other Options:

Selling Away: Involves unapproved securities transactions outside the employing firm.

Insider Trading: Involves trading on material non-public information.

Market Manipulation: Encompasses activities like wash trading or spoofing, not specific to this scenario.

References:

FINRA Rule 5270 (Front Running of Block Transactions): FINRA Rule 5270.

Step by Step Explanation:

Government Bond Funds: Invest in government-backed securities, but the value of the fund itself is not guaranteed by the government, as these funds are subject to market risks.

Incorrect Options:

A: Diversification depends on the fund’s investment strategy.

B: Interest/dividend payments may fluctuate.

C: If interest rates fall, NAVs typically rise, not drop.

References:

SEC Guidance on Mutual Funds: SEC Government Bond Funds.

An option’s premium consists of intrinsic value and time value:

Intrinsic value= Current stock price - Strike price = $40 - $35 = $5.

Time value= Total premium - Intrinsic value = $7 - $5 =$2.

B is correctbecause $2 represents the time value.

A,C, andDare incorrect because they miscalculate the time value based on the option's total premium.

Currency devaluation reduces the value of a country’s currency relative to others, making its exports cheaper and more competitive internationally. This stimulates demand for the country’s goods and services.

D is correctbecause devaluation reduces export costs, encouraging foreign buyers.

Ais incorrect because devaluation can increase inflation by raising the cost of imported goods.

Bis incorrect because GDP often rises due to increased export demand.

Cis incorrect because imports become more expensive after devaluation, reducing demand.

Step by Step Explanation:

Settlement of the Transaction: Refers to the finalization of a trade, where the buyer pays for the securities, and the seller delivers them. For most securities, regular-way settlement occurs T+2 (trade date plus two business days).

Incorrect Options:

Clearing the Trade: Refers to matching trade details to prepare for settlement.

DVP Transactions: A specific type of settlement involving simultaneous payment and delivery, often used for institutional clients.

Corporate Action: Refers to events like stock splits or dividend declarations.

References:

FINRA and SEC Guidelines on Settlement: SEC Settlement Process.