SIE (Securities Industry Essentials) Practice Exam

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Which of the following security types provides investors with a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis?

Variable rate demand note
Fixed-rate bond
Certificate of deposit
Common stock

The correct answer is: Variable rate demand note

A variable rate demand note is a type of security that provides a stated maturity date, a floating interest rate, and an option to put the security back to a financial intermediary on a daily or weekly basis. This means that the investor has the ability to sell the security back to the intermediary at any point before the maturity date, providing them with flexibility. However, options B, C, and D do not offer these features. Fixed-rate bonds have a set interest rate and maturity date, and do not have an option to put the security back to the intermediary. Certificates of deposit also have a fixed interest rate and maturity date, but do not offer the option to put the security back. Common stock represents ownership in a company and does not have a stated maturity date or an option to put the security back to an intermediary. Therefore, the other options are incorrect because they do not offer the combination of features described in the question.