SIE Exam Dumps - Securities Industry Essentials Exam (SIE)

A pass-through entity does not pay corporate income taxes; instead, income is passed to owners, who report it on their individual tax returns.

A is correctbecause C corporations are not pass-through entities; they pay corporate taxes.

B,C, andDare all pass-through entities for tax purposes.

Step by Step Explanation:

Breakeven Calculation: For covered call writing, breakeven is the stock purchase price minus the premium received.

Purchase Price = $50

Premium Received = $8

Breakeven = $50 - $8 = $42.

Other Options:

B, C, and D: Incorrect because they do not reflect the proper calculation of stock price minus the premium.

References:

Options Clearing Corporation (OCC) Education:OCC Options Guidance.

Step by Step Explanation:

Nonpublic Information: A customer’s net worth is nonpublic personal information that requires confidentiality under Regulation S-P.

Incorrect Options:

A, B, and D: Names, addresses, and phone numbers may be public unless linked to specific financial or personal details.

References:

SEC Regulation S-P (Privacy of Consumer Financial Information): SEC Regulation S-P.

FINRA Rule 3260 requires that discretionary trades be approved by the customer in writing and reviewed by the supervising firm. The order ticket must indicate that discretion was exercised to ensure proper oversight.

B is correctbecause marking the order ticket ensures compliance with supervisory requirements.

Ais incorrect because discretionary authority is not limited to market orders.

Cis incorrect as discretionary trades do not require pre-approval for each trade but require prior written authorization.

Dis incorrect because discretionary authority allows the RR to decide on price and timing without specific customer instructions.

A covered call involves selling a call option on a stock the investor already owns. The strategy generates income in the form of the premium collected for selling the call, providing additional returns on the stock position.

D is correctbecause the primary goal of a covered call is to generate income.

Ais incorrect because covered calls do not hedge against large declines in the stock price.

Bis incorrect because speculation involves taking higher risks, not a covered call’s conservative strategy.

Cis incorrect because no strategy guarantees a profit.

Step by Step 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.

References:

SEC PIPE Offering Guidance: SEC PIPE Offerings.

Step by Step Explanation:

Trust Accounts: Provide the account owner (trustee) full control over distributions and investment decisions. Suitable for complex estate planning needs.

Incorrect Options:

UTMA: Transfers control to the minor upon reaching the age of majority.

529 Plan: Used for educational savings, with limited control over distributions.

CD: A fixed-term deposit, not an account type for managing distributions.

References:

SEC and FINRA Guidelines on Trusts: FINRA Trust Accounts.

Treasury securities are among the most liquid investments, as they are backed by the U.S. government and trade actively in large volumes.

A is correctbecause Treasuries are highly liquid, making them easy to buy and sell.

Bis incorrect because most Treasury securities are not callable.

Cis incorrect because FDIC insurance applies to bank deposits, not Treasuries.

Dis incorrect because U.S. government securities have negligible default risk.