[Apr 20, 2026] New SIE Exam Dumps with High Passing Rate
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FINRA SIE Exam Syllabus Topics:
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NEW QUESTION # 132
An investor generally purchases an open-end mutual fund from which of the following parties?
- A. The NYSE
- B. The fund's custodian
- C. The fund's underwriter
- D. An existing shareholder
Answer: C
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 # 133
Which of the following is the primary risk of using asset allocation models without periodic rebalancing?
- A. Interest rate risk
- B. Inflation
- C. Overweighting
- D. Marketability
Answer: C
Explanation:
Step by Step Explanation:
* Rebalancing: Ensures that a portfolio remains aligned with its target allocation. Without rebalancing, outperforming assets can become overweighted, increasing exposure to specific risks.
* Incorrect Options:
* Inflation: Impacts purchasing power but isn't tied to rebalancing.
* Marketability: Refers to liquidity and isn't linked to allocation models.
* Interest Rate Risk: Relates to fixed-income investments and isn't directly addressed by allocation models.
SEC Investor Bulletin on Asset Allocation: SEC Asset Allocation.
NEW QUESTION # 134
Which of the following responses describes a warrant?
- A. An interest-paying security
- B. Redemption rights for a debt instrument
- C. The right to purchase a specified amount of shares
- D. A fixed-income security issued by a state or municipality
Answer: C
Explanation:
Step by Step Explanation:
* Warrants: These are long-term options issued by a company that give the holder the right to buy shares at a specific price before expiration. They are typically attached to bond or stock offerings to make them more attractive.
* Incorrect Options:
* A: Warrants do not pay interest.
* B: Refers to callable bonds, not warrants.
* D: Describes municipal bonds, not warrants.
References:
* SEC Guide to Warrants and Options: SEC Warrants Information.
NEW QUESTION # 135
Which of the following statements concerning nonqualified deferred compensation plans is true?
- A. Such plans must be reviewed with the IRS.
- B. They are governed by ERISA rules.
- C. The deferred compensation must be held in escrow at a bank.
- D. A failure of the business could lead to nonpayment of the deferred compensation.
Answer: D
Explanation:
Nonqualified deferred compensation (NQDC) plans allow employees to defer income until a future date.
* D is correct because NQDC funds remain part of the company's general assets, which creditors may claim if the company goes bankrupt.
* A is incorrect as NQDC plans are not subject to ERISA rules.
* B is incorrect because these plans do not require IRS review.
* C is incorrect as NQDC assets are not required to be held in escrow.
Reference: IRS Code Section 409A
NEW QUESTION # 136
For up to how many business days is a firm initially permitted to place a temporary hold on disbursements for a specified adult account in which the firm reasonably believes financial exploitation has occurred?
- A. 5 business days
- B. 15 business days
- C. 3 business days
- D. 10 business days
Answer: D
Explanation:
Step by Step Explanation:
* Temporary Hold Period: Under FINRA Rule 2165, a firm can initially place a hold on disbursements for up to 10 business days if financial exploitation is suspected.
* Additional Holds: The period may be extended by an additional 10 business days if warranted and allowed by state law.
* Incorrect Options:
* A & B: These are shorter than the permissible period.
* D: The initial hold period is capped at 10 business days.
References:
* FINRA Rule 2165 (Financial Exploitation of Specified Adults): FINRA Rule 2165.
NEW QUESTION # 137
Which of the following responses describes treasury stock?
- A. Restricted stock owned by officers
- B. Stock subsequently reacquired by the issuer
- C. U.S. government securities held by a corporation
- D. Authorized but unissued stock
Answer: B
Explanation:
Treasury stock refers to shares that were issued by a company and subsequently repurchased by the company.
These shares are held in the company's treasury and are not considered outstanding.
* C is correctbecause treasury stock is stock reacquired by the issuer.
* Ais incorrect because authorized but unissued stock has never been issued.
* Bis incorrect because restricted stock refers to shares issued with restrictions on transferability, not reacquired stock.
* Dis incorrect because it incorrectly refers to government securities, not corporate stock.
NEW QUESTION # 138
A registered representative (RR) notices that their long-time elderly customer's portfolio has some unusual activity that is not within the customer's typical investing pattern. The RR wants to ensure that the customer is not being exploited. Which of the following initial steps is the RR permitted to take to resolve their suspicions?
- A. Liquidate the suspicious assets
- B. Immediately report the unusual activity to FINRA and the SEC
- C. Immediately close the account
- D. Contact the customer directly and, if necessary, notify the customer's trusted contact person
Answer: D
Explanation:
The most appropriate permitted initial step is to contact the customer directly to confirm the activity and, if needed, notify the customer's trusted contact person, making D correct. FINRA guidance and firm practices around protecting seniors emphasize proactive steps to detect and respond to potential financial exploitation.
A trusted contact is a person the customer authorizes the firm to contact if there are concerns about possible exploitation, diminished capacity, or suspicious activity. Reaching out to the customer helps verify whether the activity was authorized and consistent with their intentions, and involving the trusted contact (when appropriate and permitted) adds another protective layer.
Choice A is inappropriate because immediately closing an account is an extreme action that is not the standard first step and could harm the customer or disrupt legitimate needs. Choice B is also inappropriate because liquidating assets without authorization is generally impermissible absent a clear legal basis, proper discretion, or a valid protective hold process under firm policy and applicable rules. Choice C is not the correct initial step; while firms may have reporting obligations in certain circumstances, the immediate first response is typically internal escalation and customer contact rather than "reporting to FINRA and the SEC" as the first action.
On the SIE, this tests senior investor protection concepts: recognizing red flags, escalating internally, and using tools like the trusted contact to help protect vulnerable customers while respecting account authority and documentation requirements.
NEW QUESTION # 139
Corporate bonds unsecured by any pledge of property are called:
- A. General obligation (GO) bonds
- B. Collateral trust bonds
- C. Trust certificates
- D. Debentures
Answer: D
Explanation:
Step by Step Explanation:
* Debentures: Corporate bonds not backed by physical assets or collateral. They rely on the issuer's creditworthiness.
* Incorrect Options:
* B: Trust certificates are a legacy term for bonds backed by a trust.
* C: Collateral trust bonds are secured by financial assets.
* D: GO bonds are issued by municipalities, not corporations.
:
SEC Guide on Corporate Bonds: SEC Corporate Bonds.
NEW QUESTION # 140
A customer receives a confirmation that discloses the firm has acted in a principal capacity. Which of the following statements is the best explanation for this disclosure?
- A. The firm is acting as an intermediary between the customer and another customer.
- B. The firm is selling to the customer from its inventory.
- C. The firm matched the customer's purchase with a sell order listed on an electronic communication network (ECN).
- D. The firm is acting as an intermediary between the customer and an unrelated firm.
Answer: B
Explanation:
When a firm acts in a principal capacity, it trades securities for its own account, buying or selling directly to or from its inventory. The firm's role differs from an agency capacity, where it acts as an intermediary.
* A is correct because principal capacity involves selling directly from the firm's inventory.
* B, C, and D are incorrect because these scenarios describe agency transactions, where the firm facilitates trades between two parties.
Reference: SIE Study Guide, Chapter 1: Market Participants and Trade Execution
NEW QUESTION # 141
Which of the following terms describes failure to honor a firm quote?
- A. Market manipulation
- B. Backing away
- C. Interpositioning
- D. Freeriding
Answer: B
Explanation:
Step by Step Explanation:
* Backing Away: Refers to the failure of a market maker to honor a firm quote when a customer attempts to trade at that price. It is a violation of market rules.
* Incorrect Options:
* Freeriding: Involves selling securities before paying for them in a cash account.
* Interpositioning: Involves unnecessary intermediaries in trades, which can harm customers.
* Market Manipulation: Covers a range of deceptive practices, such as wash trading or spoofing, not specific to honoring quotes.
FINRA Rule 5220 (Firm Quote Rule): FINRA Rule 5220.
NEW QUESTION # 142
Which of the following terms describes failure to honor a firm quote?
- A. Market manipulation
- B. Backing away
- C. Interpositioning
- D. Freeriding
Answer: B
Explanation:
Step by Step Explanation:
* Backing Away: Refers to the failure of a market maker to honor a firm quote when a customer attempts to trade at that price. It is a violation of market rules.
* Incorrect Options:
* Freeriding: Involves selling securities before paying for them in a cash account.
* Interpositioning: Involves unnecessary intermediaries in trades, which can harm customers.
* Market Manipulation: Covers a range of deceptive practices, such as wash trading or spoofing, not specific to honoring quotes.
:
FINRA Rule 5220 (Firm Quote Rule): FINRA Rule 5220.
NEW QUESTION # 143
Which of the following statements is true of the writer of a listed equity call option?
- A. They have the right to sell stock at a fixed strike price.
- B. They have the obligation to buy stock at a fixed strike price.
- C. They have the right to buy stock at a fixed strike price.
- D. They have the obligation to sell stock at a fixed strike price.
Answer: D
Explanation:
Step by Step Explanation:
* Call Option Writer: When writing (selling) a call option, the writer has the obligation to sell the underlying stock at the strike price if the buyer exercises the option.
* Incorrect Options:
* A & B: Only the option buyer has rights, not the writer.
* D: Obligations to buy stock apply to put option writers, not call option writers.
References:
* Options Clearing Corporation (OCC) Options Education: OCC Options Education.
NEW QUESTION # 144
Under which of the following circumstances, if any, is a registered representative (RR) permitted to share in the profits and losses of security interests that the RR has purchased jointly with a customer?
- A. When the profits and losses are proportionate to the amount contributed by the RR
- B. Only when the customer is an accredited investor
- C. Under no circumstances
- D. Only if the RR's firm is also a participant in the sharing arrangement
Answer: A
Explanation:
Under FINRA Rule 2150, registered representatives may share in profits and losses in a customer's account if:
* The customer provides written consent.
* The arrangement is approved by the RR's firm.
* The sharing is proportional to the RR's financial contribution.
* C is correctbecause it aligns with FINRA requirements.
* A,B, andDare incorrect because they do not meet the necessary conditions for sharing.
NEW QUESTION # 145
A market maker quotes the market on an NMS equity security as 39.05 - 39.15 [5x10]. Which of the following orders is the market maker required to fill?
- A. A buy order for 1,000 shares at $39.10
- B. A sell order for 300 shares at $39.05
- C. A buy order for 2,000 shares at $39.15
- D. A sell stop order for 500 shares at $39.00
Answer: C
Explanation:
The quote indicates that the market maker is willing to buy 500 shares at $39.05 (bid) and sell 1,000 shares at
$39.15 (ask). Market makers are required to honor their quoted size for orders that fall within their bid/ask prices.
* D is correct because the market maker is obligated to sell at least 1,000 shares at $39.15 as it falls within the quoted size and price.
* B is incorrect because the bid is at $39.05, not $39.00.
* C is incorrect because $39.10 does not match the ask price.
* A is invalid as a stop order would not activate at $39.00.
Reference: Securities Exchange Act of 1934, Regulation NMS Rule 602
NEW QUESTION # 146
Company XYZ files a registration statement for its initial public offering (IPO). XYZ is permitted to communicate all of the following information about the offering in writing to investors except that:
- A. The IPO is expected to price in early February.
- B. The road show will be held February 6-10 in New York and Boston.
- C. The IPO is being underwritten by Bank ABC and Bank DEF.
- D. A recent industry report supports the company's valuation.
Answer: D
Explanation:
During the "quiet period" after filing the registration statement, issuers are restricted in what they can communicate to the public to avoid influencing the market.
* C is correct because promotional statements, such as those supporting the company's valuation, are prohibited during this time.
* A, B, and D are factual, non-promotional statements and are permitted.
Reference: Securities Act of 1933, Section 5; SEC Regulation S-K
NEW QUESTION # 147
Which of the following products is the most appropriate class of investments for a customer looking for income and capital gains?
- A. Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS)
- B. A blue-chip stock mutual fund
- C. A money market account
- D. A growth stock
Answer: B
Explanation:
Step by Step Explanation:
* Blue-Chip Stock Mutual Funds: Invest in large, established companies that typically provide stable dividend income and potential for capital appreciation.
* Incorrect Options:
* A: Growth stocks prioritize capital appreciation, not income.
* B: Money market accounts focus on safety and liquidity, not capital gains.
* D: STRIPS provide fixed income without capital gains potential.
References:
* FINRA Investment Product Education: FINRA Investment Guidance.
NEW QUESTION # 148
Which of the following products is the most appropriate class of investments for a customer looking for income and capital gains?
- A. Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS)
- B. A blue-chip stock mutual fund
- C. A money market account
- D. A growth stock
Answer: B
Explanation:
Step by Step Explanation:
* Blue-Chip Stock Mutual Funds: Invest in large, established companies that typically provide stable dividend income and potential for capital appreciation.
* Incorrect Options:
* A: Growth stocks prioritize capital appreciation, not income.
* B: Money market accounts focus on safety and liquidity, not capital gains.
* D: STRIPS provide fixed income without capital gains potential.
FINRA Investment Product Education: FINRA Investment Guidance.
NEW QUESTION # 149
Which of the following entities issues certificates of deposit (CDs)?
- A. Broker-dealers
- B. Banks
- C. Federal Reserve
- D. FDIC
Answer: B
Explanation:
Certificates of Deposit (CDs) are time deposit accounts issued by banks, offering fixed interest rates for a specified term. CDs are insured by the FDIC up to $250,000 per depositor, but the issuing entity is the bank itself.
* B is correct because banks issue CDs.
* A is incorrect because the FDIC insures CDs but does not issue them.
* C is incorrect because broker-dealers may facilitate the purchase of CDs but do not issue them.
* D is incorrect because the Federal Reserve does not issue CDs; it manages monetary policy.
Reference: SIE Study Guide, Chapter 4: Banking Products
NEW QUESTION # 150
The FINRA Suitability Rule obligations apply to:
- A. asset allocation models that are based on generally accepted investment theories.
- B. descriptive information about an employer-sponsored retirement or benefit plan.
- C. recommendations to hold a specific security position.
- D. general financial and investment information, including basic investment concepts.
Answer: C
Explanation:
FINRA's suitability obligations apply when there is a recommendation-including a recommendation to hold a specific security or investment strategy-so A is correct. Suitability is triggered not by general education, but by advice that can reasonably be viewed as urging a customer to take action (buy, sell, or hold) regarding a particular security, account type, or strategy. A "hold" recommendation matters because it can influence a customer's decision to maintain exposure and forgo alternative actions; therefore, it carries the same expectation that the recommendation aligns with the customer's investment profile.
Choices B, C, and D are generally framed as non-recommendation communications when presented as purely educational or broadly informational. Descriptive information about an employer plan (choice B) can be educational and may not be a recommendation if it's factual and not individualized. Asset allocation models based on generally accepted theories (choice C) can be non-recommendation tools when generic and not tailored; however, if a model is personalized or used to steer a specific customer into specific investments, it can become a recommendation. General financial information and basic concepts (choice D) are classic examples of communications that, by themselves, do not typically trigger suitability because they do not direct a customer to a specific action or security.
On the SIE, the key test point is "what constitutes a recommendation." Once the communication crosses into recommending a specific action (including holding) tied to the customer, suitability obligations apply, including knowing the customer and ensuring the recommendation fits objectives, risk tolerance, time horizon, and liquidity needs.
NEW QUESTION # 151
Under FINRA rules, which of the following activities is not considered an outside business activity (OBA)?
- A. Professionally refereeing athletic events
- B. Selling health insurance
- C. Passively investing in a multifamily house for rental purposes
- D. Selling real estate
Answer: C
Explanation:
Step by Step Explanation:
* Outside Business Activity Definition: Per FINRA Rule 3270, an OBA involves compensated business activities outside the scope of the RR's role at their firm. Passive investments are excluded because they do not require active involvement.
* Incorrect Options:
* A, B, and C: Selling real estate, selling insurance, and refereeing are considered OBAs as they involve active participation and compensation.
References:
* FINRA Rule 3270 (Outside Business Activities): FINRA Rule 3270.
NEW QUESTION # 152
After a customer purchases bonds at a yield of 5.00%, the current yield at market price increases to 5.25%.
Which of the following statements is true regarding the value of the bonds?
- A. The value of the bonds has increased.
- B. The value of the bonds has decreased.
- C. There is no change in the value of the bonds.
- D. The face value of the bonds has decreased.
Answer: B
Explanation:
When bond yields rise, the price of existing bonds falls. This inverse relationship exists because the fixed coupon payments of the bonds become less attractive compared to new bonds issued at higher yields.
* B is correctbecause the bond's market value decreases as its yield increases.
* Ais incorrect because bond values decrease, not increase, with rising yields.
* Cis incorrect because the face value (par value) remains unchanged.
* Dis incorrect because changes in yield directly affect the bond's market price.
NEW QUESTION # 153
Under FINRA rules, which of the following activities is not considered an outside business activity (OBA)?
- A. Professionally refereeing athletic events
- B. Selling health insurance
- C. Passively investing in a multifamily house for rental purposes
- D. Selling real estate
Answer: C
Explanation:
Step by Step Explanation:
* Outside Business Activity Definition: Per FINRA Rule 3270, an OBA involves compensated business activities outside the scope of the RR's role at their firm. Passive investments are excluded because they do not require active involvement.
* Incorrect Options:
* A, B, and C: Selling real estate, selling insurance, and refereeing are considered OBAs as they involve active participation and compensation.
FINRA Rule 3270 (Outside Business Activities): FINRA Rule 3270.
NEW QUESTION # 154
Which of the following statements is true about a general obligation (GO) municipal bond?
- A. It is backed by the full faith and credit of the issuing jurisdiction.
- B. It does not carry an attached legal opinion.
- C. It is payable solely from the revenues of the facility against which the bonds were issued.
- D. It carries no exemption from federal or state income taxes.
Answer: A
Explanation:
A general obligation (GO) municipal bond is backed by the full faith and credit of the issuing municipality or governmental unit, which is why choice C is correct. In practical terms, this means the issuer pledges its general taxing power and overall resources to meet debt service-interest and principal payments. GO bonds are typically supported by the issuer's ability to levy taxes (often property taxes, subject to legal limits), making their repayment source broader than that of revenue bonds.
Choice D describes a revenue bond, which is payable only from a specific revenue stream (e.g., tolls from a bridge, fees from a water/sewer system, or revenues from an airport). Revenue bonds do not rely on the issuer' s general taxing power; instead, bondholders depend on the project's or enterprise's revenues. That is a key GO vs. revenue distinction tested heavily on the SIE.
Choice A is incorrect because municipal securities customarily include a legal opinion addressing validity and tax status, especially for tax-exempt issues; the presence of a legal opinion is not something GO bonds uniquely lack. Choice B is incorrect because many municipal bonds, including many GO bonds, are federally tax-exempt on interest (and may also be state/local tax-exempt for in-state residents), though there are exceptions such as taxable munis and AMT considerations in certain cases. The question's best, universally correct feature of a GO bond is the backing by the issuing jurisdiction's full faith and credit.
This question aligns with SIE product knowledge of municipal securities, including repayment sources and how those sources affect credit considerations.
NEW QUESTION # 155
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