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FINRA SIE Exam Syllabus Topics:

Topic	Details
Topic 1	Regulatory Entities, Agencies, and Market Participants: This section of the exam measures the skills of Financial Regulatory Analysts and covers the structure, authority, and jurisdiction of key regulatory bodies overseeing financial markets. The SEC's role in enforcing securities regulations is assessed, along with the authority of self-regulatory organizations such as FINRA and MSRB. Candidates must also understand the functions of other financial regulators, including the Department of the Treasury and state regulatory agencies. One key skill evaluated is identifying the jurisdictional scope of different financial regulators.
Topic 2	Market Structure: This section of the exam measures the skills of Equity Market Specialists and covers the classification of financial markets, including the primary, secondary, third, and fourth markets. Candidates must demonstrate knowledge of electronic trading, over-the-counter (OTC) markets, and physical exchanges. One specific skill tested is differentiating between various market types and their operational mechanisms.
Topic 3	Understanding Trading, Customer Accounts, and Prohibited Activities: This section of the exam measures the skills of Securities Traders and focuses on different trading strategies, settlement processes, and corporate actions. Candidates must demonstrate knowledge of order types, including market, limit, stop, and good-til-canceled orders, as well as bid-ask spreads and discretionary versus non-discretionary trading.
Topic 4	Understanding Products and Their Risks: This section of the exam measures the skills of Investment Analysts and examines different financial products and associated risks. Candidates must understand equity securities, including common stock, as well as debt instruments such as Treasury securities and mortgage-backed securities.

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FINRA Securities Industry Essentials Exam (SIE) Sample Questions (Q138-Q143):

NEW QUESTION # 138
An investor is bullish on the technology sector and heavily invests in microchip companies. Impactful regulatory changes are announced that will negatively affect microchip manufacturing. In order to mitigate the risk to his portfolio, the investor should:

A. Buy more shares of the microchip companies already in his portfolio.
B. Purchase shares of other microchip companies in the technology sector.
C. Sell holdings that are unaffected by the regulatory changes.
D. Purchase holdings uncorrelated to the technology sector.

Answer: D

Explanation:
The announcement of negative regulatory changes introducesunsystematic risk, specific to the technology sector. Diversification into unrelated sectors can reduce exposure to this risk.
* A is correctbecause uncorrelated holdings reduce portfolio risk.
* Bis incorrect because adding more microchip companies increases exposure to sector-specific risk.
* Cdoes not address the core issue of over-concentration.
* Dis the opposite of mitigating risk.

NEW QUESTION # 139
Which of the following statements is true regarding Treasury securities?

A. They are issued by states and municipalities.
B. They are only traded in the primary market.
C. They are FDIC-insured.
D. Interest earned is subject to federal tax.

Answer: D

Explanation:
Treasury securities (Treasury bills, notes, and bonds) are obligations of the U.S. government. A key testable feature is their tax treatment: interest earned on Treasuries is subject to federal income tax (though it is generally exempt from state and local income taxes). That makes choice B correct.
Choice A is incorrect because FDIC insurance applies to bank deposit products (e.g., bank CDs, savings accounts) held at insured depository institutions, within insurance limits. Treasury securities are not bank deposits; they are direct government securities, so "FDIC-insured" is not the right concept. Treasuries are considered to have very low credit risk due to U.S. government backing, but that is different from FDIC insurance.
Choice C is incorrect because Treasuries trade in both the primary market (when issued by the Treasury) and the secondary market (after issuance). In fact, Treasuries are among the most actively traded securities in the world, and secondary-market trading is a major source of liquidity and price discovery. Investors can buy newly issued Treasuries at auction (primary) or purchase existing Treasuries from other investors and dealers (secondary).
Choice D is incorrect because securities issued by states and municipalities are municipal securities (muni bonds/notes), not Treasury securities. Treasuries are issued by the U.S. Department of the Treasury, while municipal bonds are issued by states, cities, counties, and other political subdivisions or authorities.
On the SIE, this question targets product knowledge: issuer identity, trading markets, and tax characteristics of government vs. municipal vs. bank products.

NEW QUESTION # 140
Under FINRA rules, which of the following events does not require a registered representative to update her Form U4 disclosure?

A. Receipt of a deficiency letter after an internal compliance audit
B. Regulatory disciplinary actions
C. Felony convictions
D. Any resolution of customer complaints involving payment of $15,000 or more

Answer: A

NEW QUESTION # 141
The FINRA Suitability Rule obligations apply to:

A. recommendations to hold a specific security position.
B. descriptive information about an employer-sponsored retirement or benefit plan.
C. general financial and investment information, including basic investment concepts.
D. asset allocation models that are based on generally accepted investment theories.

Answer: A

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 # 142
An investor generally purchases an open-end mutual fund from which of the following parties?

A. The NYSE
B. The fund's underwriter
C. An existing shareholder
D. The fund's custodian

Answer: B

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 # 143
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