Securities Industry Essentials Exam Version 1
Practice exam for Licensed Securities Professional Exam under Licensed Securities Professional Exams (Licensing Exams). 5 sample questions.
Sample Questions
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Question 1
An investor is nearing retirement and holds 90% of his investment portfolio in stock and 10% in bonds and projects that he will need additional monthly income. The investor's registered representative may suggest which of the following strategies to help the investor achieve their goals?
Correct Answer: D
Rationale: Rebalancing the portfolio to increase bonds or income-generating assets can provide stable monthly income for retirement. Dollar-cost averaging is for investing over time, hedging reduces risk but not income, and liquidation is too drastic. This aligns with the investor's need for income stability.
Rationale: Rebalancing the portfolio to increase bonds or income-generating assets can provide stable monthly income for retirement. Dollar-cost averaging is for investing over time, hedging reduces risk but not income, and liquidation is too drastic. This aligns with the investor's need for income stability.
Question 2
A customer buys 1,000 shares of XYZ stock at $35.00 per share for $10. How many shares of XYZ will the customer own after the reverse stock split?
Correct Answer: B
Rationale: The question likely refers to a 10-for-1 reverse stock split (implied by the $10 price discrepancy), reducing 1,000 shares to 100 shares. The price per share increases proportionally, maintaining portfolio value. This reflects the mechanics of reverse stock splits.
Rationale: The question likely refers to a 10-for-1 reverse stock split (implied by the $10 price discrepancy), reducing 1,000 shares to 100 shares. The price per share increases proportionally, maintaining portfolio value. This reflects the mechanics of reverse stock splits.
Question 3
Which of the following corporate actions is mandatory for the investor?
Correct Answer: B
Rationale: A bond call is mandatory, as the issuer can redeem bonds before maturity, requiring investors to surrender them. Buybacks, rights offers, and purchase offers are optional for investors. This ensures compliance with bond terms.
Rationale: A bond call is mandatory, as the issuer can redeem bonds before maturity, requiring investors to surrender them. Buybacks, rights offers, and purchase offers are optional for investors. This ensures compliance with bond terms.
Question 4
Which of the following statements describes authorized shares of a corporation?
Correct Answer: C
Rationale: Authorized shares are the total number a corporation is permitted to issue, as set by its charter. They are not always greater than outstanding shares, not restricted to existing shareholders, and increases typically require shareholder approval. This defines corporate share structure.
Rationale: Authorized shares are the total number a corporation is permitted to issue, as set by its charter. They are not always greater than outstanding shares, not restricted to existing shareholders, and increases typically require shareholder approval. This defines corporate share structure.
Question 5
Which of the following information is required to be included in an official statement of a new municipal bond?
Correct Answer: A
Rationale: The official statement for a municipal bond must include the interest rate, as it defines the bond's yield. Payment guarantees, tax advice, and past ratings are not mandatory. This ensures transparency for investors.
Rationale: The official statement for a municipal bond must include the interest rate, as it defines the bond's yield. Payment guarantees, tax advice, and past ratings are not mandatory. This ensures transparency for investors.