FINRA SIE Real Exam Questions Test Engine Dumps Training With 87 Questions [Q13-Q36]

Published date January 9, 2025

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FINRA SIE Real Exam Questions Test Engine Dumps Training With 87 Questions

SIE Actual Questions Answers PDF 100% Cover Real Exam Questions

NEW QUESTION 13
A hypothecation agreement gives the broker-dealer the right to engage in which of the following activities?

Sharing customers’ nonpublic personal information with nonaffiliated third parties

Entering trades in a customer’s account without prior authorization from the customer

Selling a customer’s securities when the customer has failed to pay for trades in a cash account

Using securities that a customer has bought on margin as collateral to obtain a loan from a bank

Step by Step Explanation:
* Hypothecation Agreement: Required for margin accounts, it authorizes the broker-dealer to use the customer’s margin securities as collateral to secure loans for funding customer transactions.
* Incorrect Options:
* A: Sharing customer information is regulated under privacy rules (Regulation S-P).
* B: Unauthorized trading violates securities laws.
* C: Selling unpaid securities in cash accounts pertains to Regulation T, not hypothecation agreements.
References:
* FINRA Margin Account Rules: FINRA Rule 4210.

NEW QUESTION 14
Which of the following terms describes an offer to purchase some or all shareholders’ shares in a corporation, usually at a premium to the market price?

Tender

Stock split

Redemption

Class action

Step by Step Explanation:
* Tender Offer Definition: A tender offer is an offer to purchase a certain number of shares from shareholders, typically at a price above the current market value. This is often part of mergers, acquisitions, or corporate takeovers.
* Stock Split: A stock split increases the number of shares but decreases the price per share without affecting the total value of an investor’s holdings.
* Redemption: Redemption refers to the repayment of a bond or preferred stock at maturity or at a predetermined date.
* Class Action: A class action is a lawsuit filed by a group of people with similar grievances.
References:
* SEC Rule 14e on tender offers: SEC Tender Offers.

NEW QUESTION 15
Which of the following statements is true regarding the difference in treatment between common stock and preferred stock?

Common stock and preferred stock are treated the same under a bankruptcy proceeding.

Common stock and preferred stock are treated the same when it comes to payment of dividends.

Common stock dividend payment is treated as a higher priority over that of preferred stock.

Common stock is a lower priority compared to preferred stock under a bankruptcy proceeding.

Step by Step Explanation:
* Priority in Bankruptcy: Preferred stockholders have a higher claim on a company’s assets than common stockholders during liquidation. Common stockholders are residual claimants.
* Dividend Priority: Preferred stockholders are entitled to fixed dividends before common stockholders receive any dividends.
* Incorrect Options:
* A & B: Common and preferred stocks are treated differently in bankruptcy and dividend payments.
* C: Common stock dividends are subordinate to preferred stock dividends.
References:
* SEC Guidance on Stockholder Rights: SEC Stock Rights.

NEW QUESTION 16
Under SEC Regulation D, which of the following parties is considered an accredited investor?

A person whose joint income with their spouse exceeds $200,000 in each of the two most recent years and who has a reasonable expectation of reaching the same income level in the current year.

A person whose net worth, excluding the net equity in their primary residence, exceeds $500,000 at the time of purchase.

A person whose net worth, excluding the net equity in their primary residence, exceeds $1 million at the time of purchase.

A charitable organization, partnership, or corporation whose assets exceed $2.5 million.

Step by Step Explanation:
* Definition of Accredited Investor: As per SEC Regulation D, Rule 501, an accredited investor includes:
* Individuals with a net worth exceeding $1 million (excluding primary residence equity).
* Individuals with an annual income exceeding $200,000 (or $300,000 jointly with a spouse) for the past two years.
* Elimination of Incorrect Answers:
* $500,000 threshold (option B) is too low to qualify under Regulation D.
* Option D is incorrect as it requires assets of $5 million, not $2.5 million.
References:
* SEC Regulation D, Rule 501 (Accredited Investor Definition): SEC Regulation D.

NEW QUESTION 17
The cash value of a variable life insurance policy is affected by which of the following factors?

Changes in the beneficiary

Changes in the death benefit

Fluctuating market conditions

Contingent deferred sales charges

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 18
When is a newly registered person subject to the Continuing Education Regulatory Element requirement?

The calendar year following initial registration

On the anniversary date of initial registration

Every three years after the date of registration

Every five years

Step by Step Explanation:
* Regulatory Element Requirement: Newly registered persons must complete the Continuing Education (CE) Regulatory Element on the second anniversary of their initial registration and every three years thereafter.
* Incorrect Options:
* A: The requirement begins on the second anniversary, not the following calendar year.
* D: The cycle is every three years, not five.
References:
* FINRA Rule 1240 (Continuing Education): FINRA Rule 1240.

NEW QUESTION 19
A customer will be out of the country for the next two months on business and asks his firm to hold his mail until he returns. Which of the following statements is true regarding this request?

The firm is prohibited from holding the customer’s mail under FINRA rules due to the personal information contained.

The firm must receive written instructions from the customer that include the time period for the requested mail hold.

The firm is permitted to hold the mail as long as the registered representative (RR) complies with the customer’s oral instructions.

At the discretion of the RR, the firm is permitted to hold the customer’s mail provided it takes reasonable actions to ensure no tampering occurs with this mail.

Step by Step Explanation:
* FINRA Rule 3150: Permits firms to hold customer mail only with written instructions specifying the duration, which cannot exceed three months unless there are exceptional circumstances.
* Incorrect Options:
* A: Holding mail is not prohibited if done in compliance with FINRA rules.
* C & D: Oral instructions or RR discretion are not sufficient; written authorization is mandatory.
References:
* FINRA Rule 3150 (Holding of Customer Mail): FINRA Rule 3150.

NEW QUESTION 20
A customer purchases 100 shares of stock on Thursday, August 2. This transaction must settle regular way no later than:

Friday, August 3

Monday, August 6

Tuesday, August 7

Wednesday, August 8

Step by Step Explanation:
* Regular-Way Settlement: For equity securities, settlement occurs on a T+2 basis, meaning two business days after the trade date.
* Calculation:
* Trade Date (T): Thursday, August 2.
* T+2 Settlement: Excludes weekends, so settlement falls on Monday, August 6.
* Incorrect Options:
* A: Reflects T+1, not the correct settlement cycle.
* C & D: Extend beyond the standard T+2 cycle.
References:
* FINRA and SEC Settlement Rules: SEC Settlement Rules.

NEW QUESTION 21
An investor sells shares of a closed-end fund at the market. Which of the following responses best describes the net proceeds to be received?

Net asset value (NAV)

NAV less any redemption fee

Bid price less any commission

Public offering price (POP) less any redemption fee

Step by Step Explanation:
* Closed-End Funds: Trade on exchanges like stocks, and the investor receives the bid price (market price) minus any applicable commissions.
* Incorrect Options:
* A & B: NAV applies to open-end mutual funds, not closed-end funds.
* D: POP applies to initial sales of mutual fund shares.
References:
* SEC Guidance on Closed-End Funds: SEC Closed-End Funds.

NEW QUESTION 22
Which of the following statements best describes a characteristic of 529 savings plan accounts?

There are no contribution limits to the account.

The number of contributors to the account is limited.

Using funds for undergraduate or graduate studies is permissible.

Earnings are taxed to the donor at the time of a qualified withdrawal.

Step by Step Explanation:
* 529 Savings Plans: These plans allow tax-advantaged savings for education expenses. They can be used for both undergraduate and graduate studies, as well as certain K-12 expenses.
* Contribution Limits: Contributions are subject to gift tax limits but have no specific statutory maximum under federal law.
* Tax Treatment: Earnings grow tax-deferred and are tax-free if used for qualified education expenses.
References:
* IRS Section 529 Guidance: IRS 529 Plans.

NEW QUESTION 23
Which of the following risks are associated with Treasury securities?

Credit risk

Liquidity risk

Prepayment risk

Interest rate risk

Step by Step Explanation:
* Interest Rate Risk: Treasury securities are sensitive to changes in interest rates. When rates rise, Treasury prices fall, exposing investors to price risk.
* Incorrect Options:
* Credit Risk: Virtually nonexistent for Treasuries, as they are backed by the U.S. government.
* Liquidity Risk: Treasuries are highly liquid.
* Prepayment Risk: Applies to mortgage-backed securities, not Treasuries.
References:
* SEC Bond Risk Disclosures: SEC Treasury Risks.

NEW QUESTION 24
Which of the following statements best describes the permissibility of a borrowing arrangement between a registered representative (RR) and a customer who is also the RR’s grandfather?

It is permissible subject to FINRA approval.

It is permissible if the grandfather agrees in writing.

It is permissible if the loan was made on commercially reasonable terms.

It is permissible provided that the loan was made in accordance with the firm’s policies.

Step by Step Explanation:
* FINRA Rule 3240: Permits borrowing or lending arrangements between RRs and customers under specific conditions, including familial relationships, provided the arrangement complies with the firm’s policies.
* Incorrect Options:
* A: FINRA approval is not required; firm approval is.
* B: A written agreement alone is insufficient without firm approval.
* C: Commercially reasonable terms are not the sole criterion for permissibility.
References:
* FINRA Rule 3240 (Borrowing from or Lending to Customers): FINRA Rule 3240.

NEW QUESTION 25
Offering 403(b) tax-sheltered annuity accounts to which of the following groups is permissible?

Volunteer workers

Small business owners

Active duty military personnel

Employees of a nonprofit hospital

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 26
Which of the following statements is true with regard to SIPC and FDIC?

SIPC coverage is only for securities, and FDIC coverage is only for cash.

SIPC protects brokerage accounts, and FDIC protects bank deposits.

Money market mutual funds are covered by the FDIC and are not covered by SIPC.

Securities held at broker-dealers are covered by the FDIC and are not covered by SIPC.

Step by Step Explanation:
* SIPC Coverage: Protects customers of brokerage firms against the loss of securities and cash due to broker-dealer insolvency, but it does not protect against market losses.
* FDIC Coverage: Protects bank deposits (checking, savings, CDs) up to $250,000 per depositor, per institution.
* Incorrect Options:
* A: SIPC covers both securities and cash held at brokerage firms (within limits).
* C & D: Money market mutual funds are not FDIC insured, and securities are not covered by the FDIC.
References:
* SIPC Overview: SIPC Coverage.
* FDIC Insurance: FDIC Coverage.

NEW QUESTION 27
A customer owns 100 shares of ABC with a current market value of $5.00 per share. The company undergoes a 1-for-2 reverse split of the stock. Which of the following statements is true of the customer’s holdings and the price of the stock?

The customer will have 50 shares at $10.00 per share.

The customer will have 100 shares at $5.00 per share.

The customer will have 200 shares at $2.50 per share.

The customer will have 1,000 shares at $0.50 per share.

Step by Step Explanation:
* Reverse Split Calculation: A 1-for-2 reverse split reduces the number of shares by half while doubling the price per share.
* Pre-Split Holdings: 100 shares at $5.00 = $500.
* Post-Split Holdings: 50 shares at $10.00 = $500.
* Incorrect Options: The total value remains unchanged; only the number of shares and price per share adjust.
References:
* FINRA Corporate Actions Guidance: FINRA Reverse Splits.

NEW QUESTION 28
Which of the following statements is true about a corporation’s balance sheet?

It is also called a profit and loss statement.

It summarizes a company’s revenues and expenses for the firm’s fiscal year.

It lists a company’s assets, liabilities, and net worth on the date the statement was prepared.

It reports where a corporation’s cash is being generated and where its cash is being spent for a specific period.

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 29
A customer wants to establish an account for the benefit of his grandchildren. He states to his registered representative that he wants to be able to control the distribution of the assets and direct how the account will be invested. Which of the following account types is most appropriate?

Trust

UTMA

529 savings plan

Certificate of deposit (CD)

Step by Step Explanation:
* Trust Accounts: Provide the account owner (trustee) full control over distributions and investment decisions. Suitable for complex estate planning needs.
* Incorrect Options:
* UTMA: Transfers control to the minor upon reaching the age of majority.
* 529 Plan: Used for educational savings, with limited control over distributions.
* CD: A fixed-term deposit, not an account type for managing distributions.
References:
* SEC and FINRA Guidelines on Trusts: FINRA Trust Accounts.

NEW QUESTION 30
Which of the following is considered nonpublic information?

Customer’s name

Customer’s address

Customer’s net worth

Customer’s telephone number

Step by Step Explanation:
* Nonpublic Information: A customer’s net worth is nonpublic personal information that requires confidentiality under Regulation S-P.
* Incorrect Options:
* A, B, and D: Names, addresses, and phone numbers may be public unless linked to specific financial or personal details.
References:
* SEC Regulation S-P (Privacy of Consumer Financial Information): SEC Regulation S-P.

NEW QUESTION 31
Rising economic activity is most likely to increase revenues of which of the following sectors?

Utilities

Healthcare

Consumer staples

Consumer discretionary

Step by Step Explanation:
* Consumer Discretionary Sector: Includes products and services that are not essential, such as luxury items, travel, and entertainment. Revenues increase as disposable income rises during economic expansion.
* Consumer Staples and Utilities: These sectors are defensive and less impacted by economic cycles.
* Healthcare: Also less correlated with economic cycles due to its essential nature.
References:
* SEC and FINRA Guidance on Sectors: Investopedia Sector Overview.

NEW QUESTION 32
Which of the following statements describes a characteristic of exchange-traded funds (ETFs)?

ETFs are offered with front-end or back-end loads.

ETFs are not permitted to be purchased on margin.

ETFs are purchased and sold daily at net asset value (NAV).

ETF expense ratios are generally lower than those of mutual funds.

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 33
A customer buys 100 ABC at $50 and at the same time sells an ABC April 50 call at $8. At expiration, ABC must be at what market price for the customer to break even?

$42

$44

$50

$58

Step by Step Explanation:
* Breakeven Calculation: For covered call writing, breakeven is the stock purchase price minus the premium received.
* Purchase Price = $50
* Premium Received = $8
* Breakeven = $50 – $8 = $42.
* Other Options:
* B, C, and D: Incorrect because they do not reflect the proper calculation of stock price minus the premium.
References:
* Options Clearing Corporation (OCC) Education: OCC Options Guidance.

NEW QUESTION 34
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?

At least 50% of total assets

At least 75% of total assets

At least 90% of total assets

100% of assets

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 35
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?

Obtain the broker-dealer’s approval before making a call

Limit contact with prospects to between 9 a.m. and 9 p.m.

Contact the prospects at will since they provided express written consent

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

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 36
The process in which the buying firm must pay for the securities and the selling firm must deliver the securities is known as:

A corporate action

Clearing the trade

The settlement of the transaction

A delivery versus payment (DVP) transaction

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.

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FINRA SIE Real Exam Questions Test Engine Dumps Training With 87 Questions [Q13-Q36]

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FINRA SIE Real Exam Questions Test Engine Dumps Training With 87 Questions [Q13-Q36]

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