Prepare SIE Question Answers Free Update With 100% Exam Passing Guarantee [2025]

Dumps Real FINRA SIE Exam Questions [Updated 2025]

NEW QUESTION # 33
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. Contact the prospects at will since they provided express written consent
• B. Obtain the broker-dealer's approval before making a call
• C. 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
• D. Limit contact with prospects to between 9 a.m. and 9 p.m.

Answer: C

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 # 34
Offering 403(b) tax-sheltered annuity accounts to which of the following groups is permissible?

• A. Volunteer workers
• B. Small business owners
• C. Active duty military personnel
• D. Employees of a nonprofit hospital

Answer: D

Explanation:
Step by Step Explanation:
* 403(b) Accounts: These tax-advantaged retirement plans are specifically for employees of public schools, tax-exempt organizations, and certain other nonprofit employers, such as hospitals.
* Incorrect Options:
* Volunteer Workers: Ineligible unless they are also employees.
* Small Business Owners and Military Personnel: These groups typically qualify for other retirement plans, not 403(b).
References:
* IRS Publication 571 (403(b) Plans): IRS 403(b) Guidance.

NEW QUESTION # 35
Assuming yields are held constant, which of the following statements describes what will occur as a discount bond reaches maturity?

• A. Its par value decreases.
• B. Its par value increases.
• C. Its price increases.
• D. Its price 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.
References:
* SEC and FINRA Bond Basics: SEC Discount Bonds.

NEW QUESTION # 36
A rating agency downgrades a corporation's credit rating. Which of the following effects is this action most likely to have on the yield and price of the corporation's outstanding bonds?

• A. Yield will rise; price will fall.
• B. Yield will rise; price will rise.
• C. Yield will fall; price will fall.
• D. Yield will fall; price will rise.

Answer: A

Explanation:
Step by Step Explanation:
* Credit Downgrade: Increases perceived risk, causing bond prices to drop and yields to rise.
* Yield-Price Relationship: Yields move inversely to bond prices. Lower prices lead to higher yields as investors demand more return for increased risk.
References:
* SEC Guidance on Bond Ratings: SEC Bond Ratings.

NEW QUESTION # 37
Which of the following statements describes a characteristic of exchange-traded funds (ETFs)?

• A. ETFs are purchased and sold daily at net asset value (NAV).
• B. ETFs are not permitted to be purchased on margin.
• C. ETFs are offered with front-end or back-end loads.
• D. ETF expense ratios are generally lower than those of mutual funds.

Answer: D

Explanation:
Step by Step Explanation:
* ETF Expense Ratios: ETFs generally have lower expense ratios compared to mutual funds due to their passive management style.
* Incorrect Options:
* A: ETFs do not have sales loads; they are traded like stocks.
* B: ETFs can be purchased on margin, like other equities.
* C: ETFs are traded throughout the day at market prices, not NAV.
References:
* SEC ETF Fact Sheet: SEC ETF Info.

NEW QUESTION # 38
The cash value of a variable life insurance policy is affected by which of the following factors?

• A. Contingent deferred sales charges
• B. Fluctuating market conditions
• C. Changes in the beneficiary
• D. Changes in the death benefit

Answer: B

Explanation:
Step by Step Explanation:
* Variable Life Insurance: The cash value depends on the performance of the underlying investment options.
* Fluctuating Market Conditions: Since the cash value is linked to market performance, fluctuations directly impact its value.
* Beneficiary/Death Benefit Changes: These do not directly impact the cash value unless they involve additional costs or changes to premiums.
References:
* SEC Bulletin on Variable Life Insurance: SEC Variable Insurance.

NEW QUESTION # 39
An associated person at a member firm receives a complaint from a customer involving allegations of forgery.
Once the complaint is received, which of the following actions is required?

• A. The member firm is not required to report the event to FINRA but must maintain a file of the complaint for four years.
• B. The member firm must complete arbitration to resolve the complaint with the customer before filing a report with FINRA.
• C. The member firm must have a principal review the complaint and determine if the forgery occurred before filing a report with FINRA.
• D. The member firm must report the event promptly to FINRA.

Answer: D

Explanation:
Step by Step Explanation:
* FINRA Rule 4530: Requires member firms to report certain events, including allegations of forgery, to FINRA promptly.
* Incorrect Options:
* Option B: Maintaining a record does not substitute for required reporting.
* Option C: Arbitration isn't required before reporting.
* Option D: Reporting is mandatory irrespective of internal investigations.
References:
* FINRA Rule 4530 (Reporting Requirements): FINRA Rule 4530.

NEW QUESTION # 40
The process in which the buying firm must pay for the securities and the selling firm must deliver the securities is known as:

• A. The settlement of the transaction
• B. A delivery versus payment (DVP) transaction
• C. A corporate action
• D. Clearing the trade

Answer: A

Explanation:
Step by Step Explanation:
* Settlement of the Transaction: Refers to the finalization of a trade, where the buyer pays for the securities, and the seller delivers them. For most securities, regular-way settlement occurs T+2 (trade date plus two business days).
* Incorrect Options:
* Clearing the Trade: Refers to matching trade details to prepare for settlement.
* DVP Transactions: A specific type of settlement involving simultaneous payment and delivery, often used for institutional clients.
* Corporate Action: Refers to events like stock splits or dividend declarations.
References:
* FINRA and SEC Guidelines on Settlement: SEC Settlement Process.

NEW QUESTION # 41
Before an affiliate of an issuer is permitted to sell 10,000 shares of restricted securities, which of the following conditions must be met?

• A. The affiliate must have a holding period of six months.
• B. The issuer must notify FINRA of the proposed sale by submitting a Form 144.
• C. The shares to be sold must be less than 10% of the average daily trading volume (ADTV) of the security.
• D. The company must be traded on a listed stock exchange.

Answer: A

Explanation:
Step by Step Explanation:
* Rule 144 Holding Period: Restricted securities held by affiliates require a six-month holding period before sale, provided the issuer is subject to SEC reporting requirements.
* Other Options:
* Notification to FINRA (C) is incorrect; Form 144 is submitted to the SEC, not FINRA.
* The 10% ADTV limitation (D) applies to the volume of shares sold, not the conditions for sale.
References:
* SEC Rule 144 (Selling Restricted Securities): SEC Rule 144.

NEW QUESTION # 42
An investor holds 1,000 shares of a stock with a total cost basis of $5,000 in his account when a 1-for-5 reverse stock split is announced. What will be the investor's total cost basis after the payable date of the reverse split?

• A. $1,000
• B. $25,000
• C. $2,500
• D. $5,000

Answer: D

Explanation:
Step by Step Explanation:
* Cost Basis in Reverse Split: The total cost basis remains unchanged in a reverse stock split. Only the number of shares and price per share adjust.
* Pre-Split: 1,000 shares at $5 each = $5,000.
* Post-Split: 200 shares at $25 each = $5,000.
* Incorrect Options:
* A, B, and D: Do not reflect the unchanged total cost basis.
References:
* IRS Guidance on Stock Splits: IRS Stock Split Info.

NEW QUESTION # 43
Which of the following statements characterizes the typical relationship between the market value of a municipal bond portfolio and interest rates?

• A. As interest rates increase, the market value goes up.
• B. As the market value goes down, interest rates decrease.
• C. As interest rates decrease, the market value goes up.
• D. As the market value goes up, interest rates stay constant.

Answer: C

Explanation:
Step by Step Explanation:
* Inverse Relationship: Bond prices and interest rates have an inverse relationship. When interest rates fall, existing bonds with higher coupon rates become more valuable, leading to an increase in market value.
* Incorrect Options:
* A: Market value decreases as interest rates increase.
* C: Interest rates and bond values move inversely, not in the same direction.
* D: Interest rates are not constant; they fluctuate over time.
References:
* SEC Municipal Bonds Overview: SEC Municipal Bonds.

NEW QUESTION # 44
The financial risk that a given security is not readily tradable in the market without impacting the market price is known as:

• A. Prepayment risk
• B. Credit risk
• C. Market risk
• D. Liquidity risk

Answer: D

Explanation:
Step by Step Explanation:
* Liquidity Risk: Refers to the difficulty of selling a security quickly without significantly affecting its price. This is common in thinly traded securities or complex instruments.
* Other Risks:
* Credit Risk: Relates to the possibility of default by the issuer.
* Market Risk: Pertains to overall price changes due to market conditions.
* Prepayment Risk: Associated with mortgage-backed securities and early repayment of loans.
References:
* SEC Investor Bulletin on Risks: SEC Risk Guidance.

NEW QUESTION # 45
A registered representative (RR) owns 500 shares of a thinly traded security. A customer of the firm calls the RR to place a sell order for 10,000 shares of the same security. The RR sells his shares before entering the customer's order to sell. Which of the following activities has the RR just engaged in?

• A. Market manipulation
• B. Insider trading
• C. Front running
• D. Selling away

Answer: C

Explanation:
Step by Step Explanation:
* Front Running Definition: Occurs when a broker executes a personal trade ahead of a customer's order to profit from the anticipated market movement.
* Thinly Traded Security: Front running is particularly impactful in low-liquidity securities.
* Other Options:
* Selling Away: Involves unapproved securities transactions outside the employing firm.
* Insider Trading: Involves trading on material non-public information.
* Market Manipulation: Encompasses activities like wash trading or spoofing, not specific to this scenario.
References:
* FINRA Rule 5270 (Front Running of Block Transactions): FINRA Rule 5270.

NEW QUESTION # 46
Under which of the following circumstances, if any, is it permissible for an individual without a Power of Attorney (POA) to sign a customer's name on their behalf?

• A. Upon receipt of verbal authorization provided that written authorization is subsequently provided
• B. When accounts are fully discretionary
• C. Never permissible to sign a customer's name on their behalf
• D. Upon approval by a firm principal

Answer: C

Explanation:
Step by Step Explanation:
* Prohibition on Signing Customer Names: It is never permissible to sign a customer's name without written authorization (POA) due to legal and ethical concerns. Unauthorized signing constitutes forgery and violates FINRA rules.
* Incorrect Options:
* A: Firm principal approval does not override this prohibition.
* B: Verbal authorization is insufficient.
* C: Discretionary authority does not allow unauthorized signing.
References:
* FINRA Rule 4512 (Customer Account Information): FINRA Rule 4512.

NEW QUESTION # 47
Publicly traded limited partnership interests are typically considered:

• A. Equity securities
• B. Fixed-income securities
• C. Mutual funds
• D. Derivative investments

Answer: A

Explanation:
Step by Step Explanation:
* Publicly Traded Limited Partnerships (PTPs): Represent ownership stakes, which categorize them as equity securities. PTPs often involve sectors like real estate or energy.
* Incorrect Options:
* A: Mutual funds are pooled investment vehicles, not partnerships.
* C: Fixed-income securities are debt instruments like bonds.
* D: Derivatives include options or futures, not ownership stakes.
References:
* SEC Guidance on Publicly Traded Partnerships: SEC PTPs.

NEW QUESTION # 48
Which of the following is a reportable obligation with respect to an individual's Form U4?

• A. A gambling-related misdemeanor charge
• B. A speeding ticket
• C. A change of residential address
• D. A change of business telephone number

Answer: A

Explanation:
Step by Step Explanation:
* Form U4 Reporting Requirements: Registered persons must disclose criminal charges (excluding minor traffic violations) and material changes such as residential address changes. Gambling-related misdemeanors are considered reportable.
* Incorrect Options:
* Speeding Ticket: Typically not reportable unless it involves a felony.
* Business Telephone Number: Not material for Form U4.
References:
* FINRA Form U4 Instructions: FINRA Form U4.

NEW QUESTION # 49
Which of the following statements is a characteristic of a government bond fund?

• A. Dividend/interest payments will be the same each month.
• B. If interest rates fall, the net asset value (NAV) of the fund will likely drop as well.
• C. Government bond funds are diversified.
• D. The value of the fund is not guaranteed by the government or any federal agency.

Answer: D

Explanation:
Step by Step Explanation:
* Government Bond Funds: Invest in government-backed securities, but the value of the fund itself is not guaranteed by the government, as these funds are subject to market risks.
* Incorrect Options:
* A: Diversification depends on the fund's investment strategy.
* B: Interest/dividend payments may fluctuate.
* C: If interest rates fall, NAVs typically rise, not drop.
References:
* SEC Guidance on Mutual Funds: SEC Government Bond Funds.

NEW QUESTION # 50
Which of the following statements is true regarding the ownership of investment company shares held as tenants in common?

• A. All tenants must sign redemption requests.
• B. Upon the death of a tenant, all shares in the account are taxable in the estate of the deceased.
• C. Any income is distributed evenly among the tenants.
• D. Each tenant has a fractional interest in the investment.

Answer: D

Explanation:
Step by Step Explanation:
* Tenants in Common: In this arrangement, each tenant owns a fractional interest in the account's assets, which can be unequal depending on the agreement.
* Income Distribution: Income is distributed based on ownership percentage, not necessarily equally.
* Redemption Requests: Only the owner of the fractional interest has authority to request redemption for their portion.
* Estate Taxation: Upon the death of a tenant, only their fractional interest is taxable in their estate.
References:
* FINRA Guidelines on Joint Accounts: FINRA Joint Accounts.

NEW QUESTION # 51
Which of the following listed securities carries voting rights?

• A. Corporate bond
• B. Convertible bond
• C. Common stock
• D. Preferred stock

Answer: C

Explanation:
Step by Step Explanation:
* Common Stock: Holders of common stock typically have voting rights, which allow them to participate in decisions like electing the board of directors or approving major corporate actions.
* Other Securities:
* Preferred Stock: Usually does not carry voting rights.
* Corporate and Convertible Bonds: Debt instruments, so they do not confer voting rights.
References:
* SEC Guide on Stock Voting Rights: SEC Voting Rights.

NEW QUESTION # 52
A registered representative (RR) intends to enter into an arrangement for compensation with an unaffiliated entity to participate in the sale of promissory notes to the general public. Which of the following statements is true?

• A. The RR is not required to provide prior notice to his firm as promissory notes are not considered securities.
• B. The RR is required to notify his firm regarding this arrangement if compensation received is directly related to transactions.
• C. The RR must receive written approval from his firm prior to entering into this arrangement.
• D. This is a permissible arrangement, and the RR is only required to notify his firm.

Answer: C

Explanation:
Step by Step Explanation:
* Private Securities Transactions: Under FINRA Rule 3280, RRs must obtain written approval from their employing firm before participating in the sale of securities outside the firm.
* Promissory Notes: These are typically considered securities, requiring prior approval.
* Incorrect Options:
* A & C: Notification alone is insufficient; written approval is required.
* D: Promissory notes are generally treated as securities under federal law.
References:
* FINRA Rule 3280 (Private Securities Transactions): FINRA Rule 3280.

NEW QUESTION # 53
A real estate investment trust (REIT) is required to invest what percentage of total assets in real-estate-related assets to maintain favorable tax treatment?

• A. At least 50% of total assets
• B. 100% of assets
• C. At least 90% of total assets
• D. At least 75% of total assets

Answer: D

Explanation:
Step by Step Explanation:
* REIT Requirements: REITs must invest at least 75% of their total assets in real estate to qualify for favorable tax treatment under IRS regulations.
* 90% Rule: Refers to the distribution requirement for taxable income, not asset allocation.
* 100% Rule: There is no requirement to allocate 100% of assets to real estate.
References:
* IRS Publication 542 (Real Estate Investment Trusts): IRS REIT Guidelines.

NEW QUESTION # 54
Which of the following statements best describes an American Depositary Receipt (ADR)?

• A. ADRs represent shares of a foreign security held in foreign commercial banks.
• B. ADRs trade like U.S. issues and are quoted in foreign currency.
• C. ADRs represent shares of a U.S. security held in foreign commercial banks.
• D. ADRs trade like U.S. issues and are quoted in U.S. dollars.

Answer: D

Explanation:
Step by Step Explanation:
* ADRs: Represent foreign securities but are issued in the U.S. and quoted in U.S. dollars, making them easier for American investors to trade.
* Incorrect Options:
* B: ADRs are quoted in U.S. dollars, not foreign currencies.
* C & D: ADRs represent foreign securities held by U.S. banks, not foreign banks.
References:
* SEC Bulletin on ADRs: SEC ADR Overview.

NEW QUESTION # 55
A retail investor owns shares of Mutual Fund ABC that paid a $0.25 dividend on September 1 and closed at
$10.00. What is the opening price once this fund trades on the ex-dividend date?

• A. $9.25
• B. $10.00
• C. $10.25
• D. $9.75

Answer: D

Explanation:
Step by Step Explanation:
* Ex-Dividend Date Pricing: On the ex-dividend date, the mutual fund's price is adjusted downward by the amount of the dividend.
* Closing Price: $10.00
* Dividend: $0.25
* Adjusted Opening Price: $10.00 - $0.25 = $9.75.
* Incorrect Options:
* A: $9.25 subtracts more than the dividend amount.
* C: $10.00 does not reflect the dividend adjustment.
* D: $10.25 adds to the price rather than subtracting the dividend.
References:
* SEC Guidance on Mutual Fund Pricing: SEC Mutual Funds.

NEW QUESTION # 56
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