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FINRA SIE Exam Syllabus Topics:

SectionWeightObjectives
Understanding Trading, Customer Accounts and Prohibited Activities31%- Prohibited Activities
  • 1. Insider trading and front running
  • 2. Unauthorized transactions and misrepresentation
  • 3. Market manipulation (e.g., painting the tape, churning)
  • 4. Anti-money laundering (AML) requirements
- Customer Accounts
  • 1. Customer protection rules (e.g., SIPC, Rule 15c3-3)
  • 2. Margin accounts and Regulation T
  • 3. Account opening requirements and documentation
  • 4. Types of accounts (individual, joint, retirement, custodial)
- Trading, Settlement and Corporate Actions
  • 1. Corporate actions (dividends, stock splits, mergers)
  • 2. Order types (market, limit, stop orders)
  • 3. Trade execution and settlement (e.g., T+1, T+2)
Overview of the Regulatory Framework9%- Securities Acts and Regulations
  • 1. Investment Company Act of 1940 and Investment Advisers Act of 1940
  • 2. Securities Act of 1933 and Securities Exchange Act of 1934
  • 3. Securities Investor Protection Act of 1970 (SIPA)
- FINRA Rules and Registration Requirements
  • 1. Continuing education requirements
  • 2. Registration and qualification requirements (FINRA Rule 1210)
  • 3. Supervision and compliance obligations
Knowledge of Capital Markets16%- Market Structure
  • 1. Market indices and economic indicators (e.g., GDP, GNP, exchange rates)
  • 2. Exchange markets vs. OTC markets
  • 3. Types of markets (primary, secondary, third, fourth)
- Offerings
  • 1. Roles of participants (e.g., investment bankers, underwriting syndicate, municipal advisors)
  • 2. Regulatory filing requirements and exemptions (e.g., SEC, blue-sky laws)
  • 3. Types and purpose of offering documents (e.g., prospectus, official statement)
  • 4. Shelf registrations and distributions
  • 5. Types of offerings: public vs. private, IPO, secondary and follow-on offerings
  • 6. Methods of distribution (e.g., best efforts, firm commitment)
- Regulatory Entities, Agencies and Market Participants
  • 1. Role of the SEC, SROs (e.g., FINRA, MSRB), and other regulators
  • 2. Role of broker-dealers, investment advisers, and other market participants
Understanding Products and Their Risks44%- Debt Instruments
  • 1. Municipal securities (GO bonds, revenue bonds, short-term obligations)
  • 2. Agency securities (asset-backed and mortgage-backed securities)
  • 3. Corporate bonds
  • 4. Treasury securities (bills, notes, bonds, receipts)
  • 5. Money market instruments
- Options
  • 1. Basic options concepts (calls, puts, premiums, expiration)
  • 2. Options strategies and associated risks
- Alternative Investments
  • 1. Risks associated with alternative investments
  • 2. Hedge funds, private equity, and other alternative products
- Equity Securities
  • 1. Control and restrictions (e.g., SEC Rule 144)
  • 2. Ownership rights, voting rights, convertible features
  • 3. Common stock, preferred stock, rights, warrants, ADRs
- Packaged Products
  • 1. Variable annuities and variable life insurance
  • 2. Mutual funds (open-end and closed-end)
  • 3. Real estate investment trusts (REITs)
  • 4. Direct participation programs (DPPs)
  • 5. Exchange-traded funds (ETFs)
- Investment Risks
  • 1. Interest rate risk and reinvestment risk
  • 2. Political and currency risk
  • 3. Market risk, credit risk, liquidity risk, inflation risk

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FINRA Securities Industry Essentials Exam (SIE) Sample Questions (Q375-Q380):

NEW QUESTION # 375
An investor decides to use a registered representative to make investment decisions for his account, as well as decide when to place any trades. Which of the following types of accounts should the investor open?

Answer: C

Explanation:
The correct answer is D, Discretionary. A discretionary account allows a registered representative (RR) to make investment decisions and execute trades on behalf of the client without obtaining prior approval for each transaction. This directly matches the scenario described in the question.
Step-by-step, discretionary authority must be granted in writing by the customer and approved by the firm's principal before it can be exercised. Once approved, the RR can determine what securities to buy or sell and when to execute trades, although the account must still be managed in accordance with the customer's investment objectives and suitability requirements.
Choice A, margin, refers to borrowing money to purchase securities and does not grant trading authority to the RR. Choice B, options, is a type of account used for trading options contracts and also does not provide discretionary authority. Choice C, custodial accounts are established for minors and managed by an adult custodian, not applicable in this situation.
Thus, when an investor wants the RR to control investment decisions and timing of trades, a discretionary account is required, making Answer D correct.


NEW QUESTION # 376
An investor owns 200 shares of ABC common stock and sells four ABC calls. How many of those calls, if any, are covered by the ABC common stock position?

Answer: C

Explanation:
A call option is considered covered when the seller (writer) owns the underlying security in sufficient quantity to meet the delivery obligation if the option is exercised. In listed equity options, one options contract typically represents 100 shares of the underlying stock. Here, the investor owns 200 shares of ABC stock.
That means the investor can cover two call contracts (2 × 100 shares = 200 shares). Since the investor sold four calls, only two of them are covered; the remaining two calls are uncovered (naked). Therefore, the correct answer is C.
This question tests a fundamental options concept that is heavily emphasized on the SIE: understanding contract size, delivery obligations, and the risk difference between covered and uncovered strategies. If the covered calls are assigned, the investor can deliver the shares they already own, limiting the risk profile on those contracts. For the uncovered calls, if assigned, the investor would need to purchase shares in the market to deliver (or otherwise acquire them), which exposes the investor to potentially unlimited loss if the stock rises substantially above the strike price.
The mechanics are straightforward:
* Shares owned: 200
* Shares required per call contract: 100
* Covered contracts = 200 ÷ 100 = 2
This is also a subtle suitability/risk topic: selling uncovered calls is generally far riskier than selling covered calls, and firms often require higher options approval levels for uncovered writing. Understanding what makes an option "covered" is essential for evaluating both strategy intent and risk exposure.


NEW QUESTION # 377
A customer purchases 100 shares of stock. The customer fears a decline in the share price and would like to protect his investment and minimize loss. Which of the following strategies should the customer employ to lock in his profit?

Answer: D

Explanation:
Purchasing a put option allows the customer to sell the stock at a predetermined price (the strike price) if the share price declines. This strategy protects against downside risk while maintaining upside potential.
* C is correct because a put acts as insurance, locking in a minimum sale price.
* A is incorrect because selling a put exposes the investor to additional risk if the stock declines.
* B is incorrect because selling a call generates income but does not protect against downside risk.
* D is incorrect because purchasing a call is a bullish strategy unrelated to protecting existing positions.
Reference: SIE Study Guide, Chapter 8: Protective Put Strategies


NEW QUESTION # 378
A customer deposits an $8,000 cashier's check in their account. Later the same day, they deposit a $2,500 money order. Which of the following actions, if any, must the firm take in response to this activity?

Answer: C

Explanation:
The correct answer is A (No filing required) based on the facts provided. A Currency Transaction Report (CTR) is generally triggered by currency transactions (cash) over the applicable threshold within a single business day. In this scenario, the customer deposited a cashier's check and a money order, which are monetary instruments, not "currency" (cash). Therefore, even though the combined amount is $10,500, the deposits described are not cash deposits, so this does not automatically require a CTR.
A Suspicious Activity Report (SAR) is required when activity is suspicious and meets reporting criteria- such as transactions that appear designed to evade reporting requirements, have no apparent lawful purpose, involve potential money laundering, or otherwise raise red flags. Here, the amounts and instruments alone-$8,000 cashier's check and $2,500 money order deposited the same day-do not necessarily indicate suspicious activity. Without additional facts (e.g., patterns of structuring, inconsistent customer profile, unusual source of funds, evasive behavior, or other AML red flags), the firm is not required to file a SAR solely on this activity.
Form W-9 is used to request a taxpayer identification number and certification for certain tax-reporting purposes, but it is not a standard "required filing" triggered by these deposits as described.
The SIE tests the ability to distinguish between currency-based reporting (CTR) and suspicion-based reporting (SAR), and to recognize that not every large or same-day deposit is automatically reportable without meeting the specific rule trigger.


NEW QUESTION # 379
Which of the following safeguards must a broker-dealer maintain to protect customer funds and securities?

Answer: C

Explanation:
A broker-dealer must safeguard customer funds and securities by segregating customer assets from the firm's proprietary business activities. Segregation helps ensure that customer securities and cash are not improperly used by the broker-dealer and remain available for customers, even if the firm experiences financial or operational difficulty. Choice D is correct. FDIC insurance applies to bank deposits at insured depository institutions, not brokerage securities accounts. Brokerage customer protection is generally associated with customer protection rules and SIPC coverage, not FDIC protection. Choice B is prohibited because firm personnel may not sign on behalf of customers merely for convenience. Choice C is incorrect because broker- dealers do not protect customers from market losses caused by declining securities values. The safeguard concerns custody and proper handling of customer assets, not investment performance. The SIE outline includes customer protection and custody of assets, improper use of customer securities or funds, and books and records requirements. It also lists FINRA Rule 2150, improper use of customers' securities or funds, and customer protection-related rules. Reference: Section 3.2.4 Books and Records and Privacy Requirements; Section 3.3.3 Other Prohibited Activities.


NEW QUESTION # 380
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