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Finra SIE Exam Questions
- 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 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.
- Topic 4: 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 5: Overview of the Regulatory Framework: This section of the exam measures the skills of Compliance Officers and evaluates knowledge of self-regulatory organization (SRO) requirements, including registration and continuing education for associated persons. Candidates must understand the distinction between registered and non-registered individuals and the requirements for maintaining industry qualifications.
- Topic 6: Employee Conduct and Reportable Events: This section of the exam measures the skills of Financial Compliance Specialists and covers regulatory expectations regarding employee conduct and disclosure requirements. Candidates must be familiar with Form U4 and Form U5, as well as reporting obligations for outside business activities and political contributions.
Free Finra SIE Exam Actual Questions
Note: Premium Questions for SIE were last updated On Feb. 24, 2025 (see below)
Which of the following responses best describes how member firms are required to retain electronic correspondence and internal communications of associated persons?
FINRA Rule 4511 requires member firms to retain records, including electronic communications, in a non-rewriteable, non-erasable format (often referred to as WORM: Write Once, Read Many). This ensures that records cannot be altered or deleted once stored.
D is correct because firms must store records in a tamper-proof format.
A, B, and C are incorrect because these formats do not guarantee compliance with the tamper-proof requirements set forth by FINRA and the SEC.
Which of the following account registration types is subject to probate upon the death of the account owner?
Accounts held individually are subject to probate, which is the legal process of administering the decedent's estate. Probate determines the distribution of assets according to the deceased's will or state intestacy laws.
A is correct because individual accounts require probate to transfer assets.
B is incorrect because irrevocable trusts bypass probate.
C is incorrect because TOD accounts allow direct transfer of assets to named beneficiaries without probate.
D is incorrect because JTWROS accounts transfer ownership to the surviving account holder automatically.
How long are unused funds permitted to remain in a Coverdell education savings account?
Coverdell Education Savings Accounts (ESAs) require that all funds be distributed by the time the beneficiary reaches 30 years old. If the funds are not used for qualified educational expenses, they may be subject to taxes and penalties.
B is correct because funds must be distributed by age 30 unless transferred to another eligible family member.
A is incorrect as age 21 is not relevant for Coverdell ESAs.
C is incorrect because age 59 applies to retirement accounts like IRAs.
D is incorrect because there is a distribution deadline for Coverdell accounts.
A grandfather establishes a Uniform Transfers to Minors Act (UTMA) custodial account for his grandson and appoints an attorney as custodian. Which of the following individuals owns the account?
In a UTMA account, the minor is the legal owner of the account. The custodian (in this case, the attorney) manages the account until the minor reaches the age of majority specified by state law.
C is correct because the grandson (the minor) is the account's legal owner.
A is incorrect because the attorney is the custodian, not the owner.
B is incorrect because the grandfather established the account but does not own it.
D is incorrect because the parent does not have ownership unless explicitly named as the custodian.
An investor owns $10,000 par value of a municipal bond with the following rates:
4.0% coupon rate
5.0% current yield
4.5% yield to maturity (YTM)
6.5% tax-equivalent yield
What amount of interest should the investor expect to receive each year?
The annual interest on a bond is calculated based on the coupon rate and the bond's par value.
Coupon rate = 4.0%.
Annual interest = $10,000 (par value) 4.0% = $400.
A is correct because the coupon rate determines the annual interest.
B, C, and D are incorrect because they reflect incorrect calculations. The current yield, YTM, and tax-equivalent yield do not affect the bond's fixed coupon payments.
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