SIE Exam Unit 2 Quiz

Questions and Answers

The two classifications of chapters for corporate bankruptcies are?

III and IV

I and II (correct)

II and III

I and IV

Rules to protect the investing public during the public offering process include all of the following EXCEPT?

Limiting the number of shares of an IPO that may be purchased by the issuing company's employees (correct)

Members must offer the securities at the public offering price

Member firms may not withhold securities in a public offering for their own benefit

Securities industry insiders may not take advantage of their insider status to gain access to new issues for their own benefit

An oil and gas DPP that invests in wells that are already producing is known as?

A leasing program

A tangible program

An income program (correct)

An exploratory program

Which is the most common way investors pay a mutual fund's sales charge?

Front-end load Signup and view all the answers

Each of the following is considered a control person under SEC Rule 144 EXCEPT?

Those persons who own 5% or more of the total beneficial interest of a company's common stock Signup and view all the answers

Limited partnerships?

Must end on a predetermined date or can be dissolved early by vote Signup and view all the answers

The owner of a listed put equity option has the right to?

Sell the stock at the strike price Signup and view all the answers

Which of the following are considered systematic risks—those that would impact all businesses?

I and II Signup and view all the answers

Study Notes

Corporate Bankruptcies

Two classifications: liquidations and reorganizations.
Liquidation involves selling assets; proceeds are distributed based on claim priority.
Reorganization allows companies to continue operating while repaying creditors.

Public Offering Protections

Securities industry cannot limit shares purchased by issuer’s employees.
Insiders must not exploit their position for personal benefit on new issues.
Securities must be offered at the public offering price.
Member firms cannot withhold securities in offerings for their own advantage.

Oil and Gas DPPs

An income program invests in currently producing wells.
Exploratory programs focus on drilling for new oil and gas reserves.

Mutual Fund Sales Charges

The most common sales charge is a front-end load, paid at purchase.
Class A shares (front-end load) have lower ongoing expenses than other share classes.

Control Persons Under SEC Rule 144

Control persons include directors, officers, and those owning 10% or more of equity securities.
Individuals owning 5% or more of common stock are not considered control persons.

Limited Partnerships

Limited partnerships can end on a predetermined date or be dissolved early by vote.
Unlike corporations, which exist in perpetuity, limited partnerships have a specified lifespan.

Options and Rights

Owners of listed put equity options have the right to sell stock at the strike price.
Exercising a put instructs the option writer to buy the stock at the agreed strike price.

Systematic Risks

Systematic risks affect all businesses and include market risk and inflation risk.
Regulatory risk and business risk are nonsystematic, affecting specific companies or sectors.

Hedge Funds

Associated activities include commodity speculation and high-leverage investments.
Further details on hedge fund characteristics were cut off; context may include strategies and investor types.

Description

Test your knowledge on corporate bankruptcies with this quiz from Unit 2 of the Securities Industry Essentials (SIE) Exam. Focus on understanding liquidations and reorganizations to succeed in the financial sector.