[Jun-2026 Newly Released] SIE Exam Questions For You To Pass
FINRA SIE Exam: Basic Questions With Answers
NEW QUESTION # 25
At a prospecting event, a registered representative (RR) provides cards for attendees to write down their contact information if they want to have a follow-up meeting with her. Which of the following actions should the RR take in this situation to comply with telemarketing rules?
- A. Limit contact with prospects to between 9 a.m. and 9 p.m.
- B. Contact the prospects at will since they provided express written consent
- C. Obtain the broker-dealer's approval before making a call
- D. Prior to contacting the prospects, check all of the names on the cards to make sure they are not on the National Do Not Call Registry
Answer: D
Explanation:
Step by Step Explanation:
* Telemarketing Rules (FINRA Rule 3230): Require firms to check the National Do Not Call Registry before contacting individuals, even if those individuals provide their contact information voluntarily.
* Incorrect Options:
* A: Approval isn't required for individual follow-ups; compliance with the registry is.
* B: While calls must be limited to appropriate hours, the registry check is still mandatory.
* C: Written consent does not override the registry requirement.
References:
* FINRA Rule 3230 (Telemarketing): FINRA Rule 3230.
NEW QUESTION # 26
Which of the following activities engaged in by a registered person is considered a private securities transaction?
- A. Working for an insurance company selling term life insurance policies
- B. Investing personal money in shares of a listed security in a brokerage account
- C. Soliciting donations to a charity
- D. Helping a friend raise money for a startup company they founded
Answer: D
Explanation:
A private securities transaction involves the sale of securities outside the scope of a registered representative's employment with their member firm. Such transactions must be disclosed to and approved by the firm under FINRA Rule 3280.
* B is correctbecause raising money for a startup involves the sale of securities and must be reported as a private securities transaction.
* Ais incorrect because soliciting charitable donations does not involve securities.
* Cis incorrect because selling term life insurance policies is not a securities transaction.
* Dis incorrect because investing personal money does not involve soliciting or selling securities to others.
NEW QUESTION # 27
Which of the following entities settles broker-to-broker equity, listed corporate and municipal bond, and unit investment trust (UIT) transactions in the U.S. equities markets?
- A. SEC
- B. National Securities Clearing Corporation (NSCC)
- C. Federal Reserve
- D. FINRA
Answer: B
Explanation:
Step by Step Explanation:
* National Securities Clearing Corporation (NSCC): A subsidiary of the Depository Trust & Clearing Corporation (DTCC), the NSCC handles the clearance and settlement of broker-to-broker equity, corporate bond, municipal bond, and UIT transactions.
* Incorrect Options:
* A: The SEC oversees regulatory compliance but does not settle trades.
* B: FINRA is a self-regulatory organization, not a clearing entity.
* C: The Federal Reserve manages monetary policy and banking but is not involved in securities settlement.
DTCC Overview of NSCC: DTCC NSCC.
NEW QUESTION # 28
Which of the following characteristics best describes a benefit of a variable annuity subaccount?
- A. The account is held separately from the insurance company's general account and, therefore, is protected from the claims of general creditors of the insurance company.
- B. The account is managed by a third-party custodian and is, therefore, subject to lower management fees than those charged by the insurance company.
- C. The account represents the indebtedness of the insurance company that is subordinated to the claims of general creditors and, therefore, offers investors a higher rate of return.
- D. The account is held at a broker-dealer that is separate from the insurance company, thereby allowing tax-deferred investments in all types of securities products.
Answer: A
Explanation:
Variable annuity subaccounts are held in separate accounts, distinct from the insurance company's general account. This separation protects subaccount assets from claims by creditors in case the insurance company becomes insolvent.
* C is correctbecause the separate account ensures creditor protection.
* Ais incorrect as management fees for variable annuities are often higher.
* Bis incorrect because the subaccounts are not held at broker-dealers.
* Dis incorrect as subaccounts do not represent subordinated debt.
NEW QUESTION # 29
Which of the following responses best describes a short sale?
- A. A sale of securities that the investor does not own
- B. A sale of securities that results in a loss
- C. A sale of securities that results in an unsecured debit balance in the investor's account
- D. A sale of securities that the investor had purchased in his cash account but had not yet paid for
Answer: A
Explanation:
Step by Step Explanation:
* Short Sale Definition: Involves selling borrowed securities with the expectation of repurchasing them at a lower price.
* Investor Ownership: Short sales do not involve securities already owned by the seller.
* Other Options: None of the other choices accurately define a short sale.
:
SEC Regulation SHO (Short Selling): SEC Short Sales.
NEW QUESTION # 30
Which of the following entities settles broker-to-broker equity, listed corporate and municipal bond, and unit investment trust (UIT) transactions in the U.S. equities markets?
- A. SEC
- B. National Securities Clearing Corporation (NSCC)
- C. Federal Reserve
- D. FINRA
Answer: B
Explanation:
Step by Step Explanation:
* National Securities Clearing Corporation (NSCC): A subsidiary of the Depository Trust & Clearing Corporation (DTCC), the NSCC handles the clearance and settlement of broker-to-broker equity, corporate bond, municipal bond, and UIT transactions.
* Incorrect Options:
* A: The SEC oversees regulatory compliance but does not settle trades.
* B: FINRA is a self-regulatory organization, not a clearing entity.
* C: The Federal Reserve manages monetary policy and banking but is not involved in securities settlement.
:
DTCC Overview of NSCC: DTCC NSCC.
NEW QUESTION # 31
A lien was filed against the property of a registered representative (RR) for their failure to pay a contractor for home remodeling work. Which of the following items is the RR's broker-dealer (BD) required to file to reflect the lien, and within how many days of learning about the lien must the BD file?
- A. Form BD within 60 days
- B. The FINRA Rule 4530 complaint report within 45 days
- C. Form U4 within 30 days
- D. A new fingerprint card within 20 days
Answer: C
Explanation:
A lien against a registered person is a reportable financial event that must be disclosed on the individual's registration record. The mechanism for updating that record is an amended Form U4, and firms are required to update Form U4 disclosures promptly (commonly tested as within 30 days after the firm learns of the event).
Therefore, the correct answer is A. Form U4 is the Uniform Application for Securities Industry Registration or Transfer and is used not only for initial registration but also for ongoing updates to disclosure items, including certain financial matters such as liens, judgments, and bankruptcies when required.
Choice B is incorrect because Form BD is the broker-dealer's registration form (the firm's registration), used for firm-level changes and disclosures. A lien filed against an individual RR is not handled by updating the broker-dealer's Form BD. Choice C is incorrect because fingerprinting requirements relate to identity
/background checks and are not the reporting mechanism for financial liens. Choice D is incorrect because FINRA Rule 4530 generally concerns reporting of certain events such as regulatory actions, violations, and specified misconduct; a personal lien is addressed through the representative's disclosure updates rather than being a "customer complaint report" filing. (Also, the question's "complaint report" phrasing is a distractor- liens are not customer complaints.) On the SIE, the point is recognizing where disclosures live (Form U4 for associated persons) and the expectation that firms supervise and update registration records when reportable events occur.
NEW QUESTION # 32
A customer owns 100 shares of ABC with a current market value of $5.00 per share. The company undergoes a 1-for-2 reverse split of the stock. Which of the following statements is true of the customer's holdings and the price of the stock?
- A. The customer will have 1,000 shares at $0.50 per share.
- B. The customer will have 200 shares at $2.50 per share.
- C. The customer will have 50 shares at $10.00 per share.
- D. The customer will have 100 shares at $5.00 per share.
Answer: C
Explanation:
Step by Step Explanation:
* Reverse Split Calculation: A 1-for-2 reverse split reduces the number of shares by half while doubling the price per share.
* Pre-Split Holdings: 100 shares at $5.00 = $500.
* Post-Split Holdings: 50 shares at $10.00 = $500.
* Incorrect Options: The total value remains unchanged; only the number of shares and price per share adjust.
:
FINRA Corporate Actions Guidance: FINRA Reverse Splits.
NEW QUESTION # 33
A city has appointed Broker-dealer XYZ to act as lead underwriter for its upcoming issuance of municipal bonds. This is an example of which of the following types of offering?
- A. A follow-on offering
- B. A competitive offering
- C. A best-efforts offering
- D. A negotiated offering
Answer: D
Explanation:
Step by Step Explanation:
* Negotiated Offering: Occurs when the issuer directly selects an underwriter and negotiates terms.
Common in municipal bond issuances.
* Incorrect Options:
* A: Follow-on offerings apply to subsequent issuances of equity securities.
* C: Competitive offerings involve multiple underwriters submitting bids.
* D: Best-efforts offerings do not guarantee the sale of all securities.
References:
* MSRB Overview of Municipal Offerings: MSRB Offerings.
NEW QUESTION # 34
When making a mutual fund recommendation to a customer, a registered representative must consider all of the following factors except:
- A. the investment objective of the fund.
- B. the age of the customer.
- C. the fund's independent ranking
- D. the tax status of the customer.
Answer: C
NEW QUESTION # 35
Which of the following strategies is best for mitigating the risk of a concentrated position?
- A. Use of leverage
- B. Dividend reinvestment
- C. Dollar-cost averaging
- D. Diversification
Answer: D
Explanation:
Step by Step Explanation:
* Diversification: Spreads investments across multiple securities, industries, or asset classes to reduce exposure to a single security or sector.
* Other Options:
* Use of Leverage: Increases, not decreases, portfolio risk.
* Dollar-Cost Averaging: Reduces timing risk but does not address concentration.
* Dividend Reinvestment: Enhances returns but does not mitigate concentration risk.
References:
* SEC Guidance on Diversification: SEC Diversification.
NEW QUESTION # 36
Which of the following activities is a responsibility of a mutual fund transfer agent?
- A. Underwriting new shares of securities
- B. Maintaining records of shareholder purchases and redemptions
- C. Maintaining custody of the fund's securities
- D. Distributing the fund's prospectus to investors
Answer: B
Explanation:
A transfer agent is responsible for maintaining accurate records of shareholder purchases, redemptions, and account balances. They also handle the issuance and cancellation of shares and ensure shareholders receive appropriate distributions.
* D is correct because maintaining shareholder records is a core duty of a transfer agent.
* A is incorrect because underwriting is the responsibility of a broker-dealer.
* B is incorrect because distributing the prospectus is handled by the fund's distributor.
* C is incorrect because custody of securities is the role of a custodian, not the transfer agent.
Reference: SIE Study Guide, Chapter 5: Investment Companies
NEW QUESTION # 37
SEC regulations permit a company to issue securities exempted from registration requirements of the Securities Act of 1933 under which of the following conditions?
- A. Offerings sold inside of the U.S. to non-U.S. persons
- B. Offerings sold with an aggregate price exceeding $5 million
- C. Offerings sold with no more than 40 accredited investors
- D. Offerings with no more than 35 non-accredited investors and an unlimited number of accredited investors
Answer: D
Explanation:
Step by Step Explanation:
* Regulation D (Rule 506(b)): Allows offerings to an unlimited number of accredited investors and up to
35 non-accredited investors, provided certain disclosure requirements are met.
* Incorrect Options:
* A: Refers to Regulation S, which governs offshore offerings, not domestic exemptions.
* B: There is no 40-investor limit in Regulation D.
* C: The $5 million limit applies to Rule 504, not Rule 506(b).
References:
* SEC Regulation D: SEC Regulation D.
NEW QUESTION # 38
Which of the following statements best describes a characteristic of 529 savings plan accounts?
- A. The number of contributors to the account is limited.
- B. Earnings are taxed to the donor at the time of a qualified withdrawal.
- C. There are no contribution limits to the account.
- D. Using funds for undergraduate or graduate studies is permissible.
Answer: D
Explanation:
Step by Step Explanation:
* 529 Savings Plans: These plans allow tax-advantaged savings for education expenses. They can be used for both undergraduate and graduate studies, as well as certain K-12 expenses.
* Contribution Limits: Contributions are subject to gift tax limits but have no specific statutory maximum under federal law.
* Tax Treatment: Earnings grow tax-deferred and are tax-free if used for qualified education expenses.
References:
* IRS Section 529 Guidance: IRS 529 Plans.
NEW QUESTION # 39
Which of the following statements best describes a characteristic of 529 savings plan accounts?
- A. The number of contributors to the account is limited.
- B. Earnings are taxed to the donor at the time of a qualified withdrawal.
- C. There are no contribution limits to the account.
- D. Using funds for undergraduate or graduate studies is permissible.
Answer: D
NEW QUESTION # 40
The Options Clearing Corporation (OCC) is a registered clearing agency for which of the following products?
- A. Over-the-counter bonds
- B. Exchange-traded funds (ETFs)
- C. Listed stocks
- D. Long-term Equity Anticipation Securities (LEAPS)
Answer: D
Explanation:
The Options Clearing Corporation (OCC) is responsible for issuing and guaranteeing the performance of listed options contracts, including Long-term Equity Anticipation Securities (LEAPS), which are long-term options.
* D is correctbecause LEAPS are a type of listed options contract cleared by the OCC.
* Ais incorrect because listed stocks are not options contracts.
* Bis incorrect because over-the-counter bonds are not cleared by the OCC.
* Cis incorrect because ETFs are not options, though ETF options may be cleared by the OCC.
NEW QUESTION # 41
Which of the following responses describes a FINRA member?
- A. A BD regulated by a national securities association
- B. A registered representative with a national securities exchange
- C. An associated person of a registered brokerage firm
- D. A natural person who is employed by a broker-dealer (BD)
Answer: A
NEW QUESTION # 42
A registered representative (RR) wants to recommend a mortgage-backed security to his customer. Which of the following risks should the RR review with his customer?
- A. Liquidity risk
- B. Market risk
- C. Diversification risk
- D. Prepayment risk
Answer: D
NEW QUESTION # 43
A broker-dealer (BD) is considering employing a nonregistered person to assist its sales staff in servicing customers. Which of the following activities are nonregistered persons permitted to perform?
- A. Taking unsolicited orders from customers
- B. Contacting current customers to determine if they are satisfied with their existing investments
- C. Assisting sales staff in tracing and tabulating commissions
- D. Contacting prospective investors to discuss a BD educational seminar regarding the BD's proprietary mutual fund
Answer: C
Explanation:
Nonregistered persons may perform clerical, ministerial, and administrative functions that do not involve securities recommendations, solicitation, or order taking. Assisting sales staff in tracing and tabulating commissions is a classic back-office/administrative task and is permitted for nonregistered personnel, making B correct. This type of activity supports operations but does not involve engaging in securities business that requires registration.
Choice A is not permitted because even taking unsolicited orders can be considered participating in securities transactions and can cross into activity reserved for registered persons, depending on the specifics. The SIE expects you to treat order taking as a registered activity unless it is clearly limited to purely clerical receipt and immediate routing under strict supervision-most exam questions treat "taking orders" as requiring registration.
Choice C is also problematic because contacting customers about whether they are satisfied with their investments can easily become a discussion about performance, holdings, or recommendations. While customer service calls may be allowed if strictly scripted and non-securities related, the wording "satisfied with their existing investments" suggests an investment discussion that can cross into solicitation or advice, which a nonregistered person should not do.
Choice D is not permitted because contacting prospective investors about a seminar tied to the BD's proprietary mutual fund is effectively marketing/sales-related outreach that can be viewed as solicitation.
Even if framed as "educational," it is connected to a specific product and prospecting activity, which generally requires registration.
The SIE tests the boundary: nonregistered = administrative support; registered = solicitation, recommendations, and securities business communications.
NEW QUESTION # 44
Which of the following company details is included on a balance sheet?
- A. Assets, debts and the amount invested in the company
- B. Revenues and expenses
- C. Earnings at a specific point in time
- D. Assets, debts and number of investors
Answer: A
Explanation:
A balance sheet provides a snapshot of a company's financial position at a specific point in time by showing what the company owns and owes, and the residual value attributable to owners. The core balance sheet equation is Assets = Liabilities + Shareholders' Equity. That is why the best description among the choices is
"assets, debts, and the amount invested in the company"-assets correspond to resources owned, debts correspond to liabilities owed, and the "amount invested" corresponds to equity (often including paid-in capital and retained earnings). This aligns with how fundamental analysis uses financial statements to evaluate issuer health, leverage, and capitalization.
Choice A (revenues and expenses) describes an income statement, which measures operating performance over a period of time (e.g., a quarter or a year), not a point-in-time snapshot. Choice B is misleading: while a balance sheet is indeed "at a specific point in time," it does not show "earnings" at a point in time. Earnings are generated over a period and appear on the income statement; the balance sheet may reflect accumulated earnings through retained earnings, but it is not an earnings statement. Choice C is incorrect because the balance sheet does not include the "number of investors" as a standard line item. Public companies disclose shares outstanding elsewhere, but investor count is not a balance sheet category.
For SIE purposes, the key is recognizing which statement answers which question: balance sheet = financial position (assets, liabilities, equity), income statement = profitability (revenue, expenses, net income), and cash flow statement = sources/uses of cash.
NEW QUESTION # 45
An investor generally purchases an open-end mutual fund from which of the following parties?
- A. The fund's underwriter
- B. An existing shareholder
- C. The NYSE
- D. The fund's custodian
Answer: A
Explanation:
Step by Step Explanation:
* Open-End Mutual Funds: Shares are purchased directly from the fund or its underwriter at the current Net Asset Value (NAV), plus any applicable sales charges.
* Custodian: Holds the fund's assets but does not sell shares.
* NYSE and Shareholders: Open-end funds do not trade on exchanges or between individual shareholders.
SEC Mutual Fund Basics: SEC Mutual Funds.
NEW QUESTION # 46
Under the Securities Act of 1933, the SEC is empowered to take which of the following actions?
- A. Require that all pertinent information is disclosed
- B. Pass on the accuracy of statements made in a prospectus
- C. Approve a security based on its investment merits
- D. Approve registration statements
Answer: A
Explanation:
The Securities Act of 1933 is built on the principle of full and fair disclosure in the primary (new issue) market. Under this framework, the SEC's core authority is to require that material (pertinent) information be disclosed to investors so they can make informed decisions. That makes C correct. The SEC enforces registration and disclosure requirements by reviewing filings for completeness and compliance, and it can delay effectiveness or take action when disclosure is deficient. The key idea tested on the SIE is that U.S.
securities regulation is disclosure-based, not merit-based.
Choice A is incorrect because the SEC does not "approve" registration statements in the sense of endorsing them; a registration statement becomes effective, but effectiveness is not an SEC "approval" of the offering.
Choice B is incorrect because the SEC does not approve a security based on its investment merits-meaning the SEC does not judge whether a security is a good investment or safe for investors. Choice D is incorrect because the SEC does not "pass on" (vouch for) the accuracy of statements in a prospectus as an investment endorsement; instead, issuers and underwriters are responsible for the truthfulness and completeness of disclosures, and they may face liability for material misstatements or omissions.
For SIE purposes, remember the clean distinction: the SEC's role is to ensure that investors receive required disclosures, not to guarantee outcomes. This is why prospectuses carry language indicating that the SEC has not approved or disapproved the securities or passed upon the merits-reinforcing that the investor must evaluate the disclosed risks and information.
NEW QUESTION # 47
A customer holds 1,000 shares of Company XYZ and wants to sell covered calls against this position. What is the maximum number of contracts that the customer could sell and still remain covered?
- A. 10 contracts
- B. 5 contracts
- C. 1,000 contracts
- D. 100 contracts
Answer: A
Explanation:
Each option contract represents 100 shares. A covered call involves selling a call option while holding an equivalent number of shares to deliver if the option is exercised.
* The customer owns 1,000 shares.
* Since 1 contract = 100 shares, the maximum number of contracts the customer can sell is:1,000 shares ÷
100 shares/contract = 10 contracts.
* B is correct because selling 10 contracts corresponds to 1,000 shares, fully covering the position.
Reference: SIE Study Guide, Chapter 8: Options Strategies
NEW QUESTION # 48
Assuming yields are held constant, which of the following statements describes what will occur as a discount bond reaches maturity?
- A. Its price decreases.
- B. Its par value increases.
- C. Its price increases.
- D. Its par value decreases.
Answer: C
Explanation:
Step by Step Explanation:
* Discount Bonds: These are issued or traded below par value. Over time, their price moves closer to par as they approach maturity, assuming yields remain constant.
* Other Options:
* Par Value Changes: The par value of a bond does not change over time; only its price fluctuates.
:
SEC and FINRA Bond Basics: SEC Discount Bonds.
NEW QUESTION # 49
Class A and Class C shares of a mutual fund differ in which of the following ways?
- A. The expense ratio
- B. When the customer is permitted to purchase
- C. The underlying investments
- D. The net asset value (NAV)
Answer: A
Explanation:
Step by Step Explanation:
* Expense Ratio: Class A shares typically have lower ongoing expense ratios but higher front-end sales charges. Class C shares often have higher ongoing expense ratios but no front-end charges.
* Incorrect Options:
* B: NAV is determined daily and does not vary by share class.
* C: All share classes invest in the same underlying portfolio.
* D: Purchase timing is the same for all share classes.
:
SEC Guidance on Mutual Fund Share Classes: SEC Fund Classes.
NEW QUESTION # 50
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