SIE Practice Exam With Verified Detailed Answers
Which of the following statements is true about the concept of an annuity contract?
a) Payouts of an investment in a nonqualified annuity are all income tax-free
b) The type of annuity chosen in part determines the amount to be paid to the annuitant
c) In the case of life annuity contracts, the age and sex of the annuitant do not impact
the amount of payments
d) The size of the periodic payment to the annuitant is gauged by the performance of the
insurance company's investment return - ANSWER b) The kind of annuity selected is
partially determinative of the amounts to be paid to the annuitant
Which of the following Form U4 reportable events statutorily disqualifies an individual?
a) Filing a personal bankruptcy
b) A written customer complaint alleging theft of customer assets
c) A felony charge of theft
d) A felony conviction resulting from a driving under the influence (DUI) charge
Under SEC Rule S-P (Consumer Privacy), which of the following disclosures must a firm
include in its customer privacy and opt-out notices?
a) The addresses of the firm's website
b) The fee and opt out from the privacy program
c) The deadline by which to opt out of the privacy program
d) The policies to safeguard the security of nonpublic information - ANSWER d) The
policies to safeguard the security of nonpublic information
,Normally, a customer's letter of intent regarding a mutual fund purchase is considered
valid for no more than how many months?
a) 3 months
b) 6 months
c) 13 months
d) 24 months - ANSWER c) 13 months
No-load mutual funds may have lower expense than load mutual funds for which of the
following reasons?
a) No-load funds do not charge 12b-1 fees
b) No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
c) Sales charges for load mutual funds increase their annual expense ratios
d) Fund management fees for no-load funds are always lower than load funds - ANSWER
b) No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
A client is an officer of a company that is about to undergo some major changes. Which
of the following is NOT considered material nonpublic information if the customer
shares them with his registered representative?
a) pending transactions
b) declared stock dividend
c) top management changes
d) impending financial liquidity problems - ANSWER b) declared stock dividends
To give its shareholders a right to purchase its shares at a predetermined price, which
of the following instruments does an issuer grant?
, a) Puts
b) Rights
c) Futures
d) Preferred stock - ANSWER b) Rights
Which of the following will be responsible in case of stock split, to make a record of the
additional share owners?
a) DTC
b) Issuer
c) Custodian
d) Transfer agent - ANSWER d) Transfer agent
Under which of the following circumstances is a registered representative under FINRA
rules required to provide notice in writing to her firm?
a) Volunteering as a youth soccer league coach
b) Gambling and winning over $10,000
c) Driving part time for a transportation network company on weekends
d) Selling nonproprietary investment company securities products through her firm -
ANSWER c) Driving part time for a transportation network company on weekends
Which of the following is an advantage of index funds?
a) Principal is protected if the market begins to bear
b) High turnover to capture market opportunities
c) Higher management fees result because of the active management of the fund
d) Lower management fees because of passive management of the fund - ANSWER d)
Lower management fees because of passive management of the fund
Which of the following statements is true about the concept of an annuity contract?
a) Payouts of an investment in a nonqualified annuity are all income tax-free
b) The type of annuity chosen in part determines the amount to be paid to the annuitant
c) In the case of life annuity contracts, the age and sex of the annuitant do not impact
the amount of payments
d) The size of the periodic payment to the annuitant is gauged by the performance of the
insurance company's investment return - ANSWER b) The kind of annuity selected is
partially determinative of the amounts to be paid to the annuitant
Which of the following Form U4 reportable events statutorily disqualifies an individual?
a) Filing a personal bankruptcy
b) A written customer complaint alleging theft of customer assets
c) A felony charge of theft
d) A felony conviction resulting from a driving under the influence (DUI) charge
Under SEC Rule S-P (Consumer Privacy), which of the following disclosures must a firm
include in its customer privacy and opt-out notices?
a) The addresses of the firm's website
b) The fee and opt out from the privacy program
c) The deadline by which to opt out of the privacy program
d) The policies to safeguard the security of nonpublic information - ANSWER d) The
policies to safeguard the security of nonpublic information
,Normally, a customer's letter of intent regarding a mutual fund purchase is considered
valid for no more than how many months?
a) 3 months
b) 6 months
c) 13 months
d) 24 months - ANSWER c) 13 months
No-load mutual funds may have lower expense than load mutual funds for which of the
following reasons?
a) No-load funds do not charge 12b-1 fees
b) No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
c) Sales charges for load mutual funds increase their annual expense ratios
d) Fund management fees for no-load funds are always lower than load funds - ANSWER
b) No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points
A client is an officer of a company that is about to undergo some major changes. Which
of the following is NOT considered material nonpublic information if the customer
shares them with his registered representative?
a) pending transactions
b) declared stock dividend
c) top management changes
d) impending financial liquidity problems - ANSWER b) declared stock dividends
To give its shareholders a right to purchase its shares at a predetermined price, which
of the following instruments does an issuer grant?
, a) Puts
b) Rights
c) Futures
d) Preferred stock - ANSWER b) Rights
Which of the following will be responsible in case of stock split, to make a record of the
additional share owners?
a) DTC
b) Issuer
c) Custodian
d) Transfer agent - ANSWER d) Transfer agent
Under which of the following circumstances is a registered representative under FINRA
rules required to provide notice in writing to her firm?
a) Volunteering as a youth soccer league coach
b) Gambling and winning over $10,000
c) Driving part time for a transportation network company on weekends
d) Selling nonproprietary investment company securities products through her firm -
ANSWER c) Driving part time for a transportation network company on weekends
Which of the following is an advantage of index funds?
a) Principal is protected if the market begins to bear
b) High turnover to capture market opportunities
c) Higher management fees result because of the active management of the fund
d) Lower management fees because of passive management of the fund - ANSWER d)
Lower management fees because of passive management of the fund
