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FINRA SIE Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Trading, Customer Accounts, and Prohibited Activities31%- Regulated and prohibited conduct
  • 1. Fraud and manipulation prevention
    • 2. Insider trading rules
      - Order types and execution
      • 1. Trade settlement process
        • 2. Market and limit orders
          - Customer accounts
          • 1. Account types and registration requirements
            • 2. Suitability and documentation
              Topic 2: Understanding Products and Their Risks44%- Investment vehicles
              • 1. Mutual funds and ETFs
                • 2. Options and packaged products overview
                  - Risk concepts
                  • 1. Investment suitability and risk tolerance
                    • 2. Systematic and unsystematic risk
                      - Equity and debt securities
                      • 1. Common and preferred stock
                        • 2. Bonds and fixed income products
                          Topic 3: Regulatory Framework9%- Securities regulation
                          • 1. FINRA role and structure
                            • 2. SEC oversight and enforcement
                              - Ethics and compliance
                              • 1. Compliance obligations
                                • 2. Code of ethics standards
                                  Topic 4: Knowledge of Capital Markets16%- Types and structure of markets
                                  • 1. Market participants and roles
                                    • 2. Primary vs secondary markets
                                      - Economic factors
                                      • 1. Market cycles and risk factors
                                        • 2. Monetary policy and economic indicators

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                                          FINRA Securities Industry Essentials Exam (SIE) Sample Questions (Q81-Q86):

                                          NEW QUESTION # 81
                                          A customer is unhappy about a $5,000 loss in a stock that the registered representative (RR) recommended and threatens to call FINRA's Securities Helpline for Seniors about the matter. What is the most appropriate next step for the RR to take?

                                          Answer: B

                                          Explanation:
                                          Step by Step Explanation:
                                          * Escalation Requirement: The RR must promptly notify their supervisor or compliance department about the customer's complaint as required by FINRA rules. Supervisors handle customer complaints according to firm procedures.
                                          * Incorrect Options:
                                          * B: Reimbursing the customer is not permissible without firm approval and may create compliance issues.
                                          * C: Complaints requiring Form U4 updates involve specific allegations such as fraud, not general dissatisfaction.
                                          * D: The RR should not contact FINRA directly; the firm will handle communications.
                                          :
                                          FINRA Rule 4530 (Reporting Requirements): FINRA Rule 4530.


                                          NEW QUESTION # 82
                                          Under FINRA rules, which of the following activities is a private securities transaction that requires preapproval?

                                          Answer: D

                                          Explanation:
                                          A private securities transaction generally involves an associated person participating in the sale of securities outside the regular scope of their member firm's business, often referred to as "selling away." Under FINRA rules, such activity typically requires prior written notice to the firm and, if compensation is involved, firm approval and supervision. Participating in the sale of promissory notes to raise money for a small business is a classic example of a securities transaction that falls into this category, making D correct. Promissory notes can be securities depending on their structure and context, and selling them to investors outside firm supervision raises significant investor protection concerns.
                                          Choices A, B, and C are generally outside business activities that may require disclosure to the firm, but they are not necessarily securities transactions. Selling insurance (especially term life and property/casualty) is typically an insurance activity, not a securities sale (though variable products are securities). Providing accounting/tax services is a professional service, not a securities transaction. Teaching a class is an outside activity, not a securities sale. These may require firm reporting under outside business activity rules, but they are not inherently private securities transactions.
                                          SIE-wise, this question tests your ability to identify when an activity crosses the line from ordinary outside business activity into selling securities away from firm oversight. The high-risk, heavily tested example is the representative selling notes or other investments to customers through a separate business or personal arrangement-this requires firm preapproval and supervision.


                                          NEW QUESTION # 83
                                          Which of the following is a reportable obligation with respect to an individual's Form U4?

                                          Answer: C

                                          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.
                                          :
                                          FINRA Form U4 Instructions: FINRA Form U4.


                                          NEW QUESTION # 84
                                          Which of the following statements is true about a corporation's balance sheet?

                                          Answer: D

                                          Explanation:
                                          Step by Step Explanation:
                                          * Balance Sheet Definition: Shows a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity (net worth).
                                          * Other Financial Statements:
                                          * Profit and Loss Statement: Summarizes revenues and expenses over a period.
                                          * Cash Flow Statement: Tracks cash inflows and outflows.
                                          References:
                                          * SEC Guide to Financial Statements: SEC Financials.


                                          NEW QUESTION # 85
                                          For a customer thinking about purchasing a high-income bond mutual fund, which of the following is considered the primary risk of the underlying securities in the portfolio?

                                          Answer: C

                                          Explanation:
                                          High-income bond mutual funds typically invest in lower-rated (junk) bonds that offer higher yields. These bonds are exposed to significant credit risk, as issuers may default on their payments.
                                          * A is correct because credit risk is the primary concern with high-yield bonds.
                                          * B is incorrect as political risk is more relevant for international investments.
                                          * C is incorrect because taxability risk is not specific to bond mutual funds.
                                          * D is incorrect because purchasing power risk is more relevant for fixed-income investments during inflationary periods but is not the primary risk here.
                                          Reference: SIE Study Guide, Chapter 3: Risks Associated with Bonds


                                          NEW QUESTION # 86
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