SIE (Securities Industry Essentials) Practice Exam

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Prepare for the SIE (Securities Industry Essentials) Exam by studying comprehensive materials, including interactive quizzes and flashcards that cover essential industry concepts. Maximize your scoring potential with targeted practice.

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Which of these are structured to have a portion of the principal to mature before the entire balance has been repaid?

  1. Serial bonds

  2. Sinking fund provisions

  3. Both A and B

  4. Neither A nor B

The correct answer is: Both A and B

Both A and B are structured to have a portion of the principal to mature before the entire balance has been repaid. Serial bonds are bonds that are issued in a series, with each bond having a different maturity date. This means that a portion of the principal is repaid at each maturity date, rather than waiting for the entire balance to be repaid at the end. Sinking fund provisions also allow for a portion of the principal to be repaid before the entire balance is due. This provision requires the issuer to set aside funds over time to repay the bond's principal before the maturity date.