STC - SIE: Final Exam 2025 With 100%
Correct Answers
If a registered representative terminates employment with a member firm, the jurisdiction of
FINRA:
A) Terminates upon the representative's resignation
B) Remains effective for five days following termination
C) Remains effective for 30 days following termination
D) Remains effective for two years following termination - CORRECT ANSWER✔✔D) Remains
effective for two years following termination
(FINRA retains jurisdiction over a registered representative for a period of two years following
resignation.)
A specialized or specialty fund invests in stocks that are primarily:
A) In many industries
B) In a particular industry or geographical area
C) Traded in the OTC market
D) Special situations - CORRECT ANSWER✔✔B) In a particular industry or geographical area
(A specialized or specialty fund is a type of a fund that invests primarily in a particular industry
or geographical area.)
,If a registered representative terminates employment with a member firm, the jurisdiction of
FINRA:
A) Terminates upon the representative's resignation
B) Remains effective for five days following termination
C) Remains effective for 30 days following termination
D) Remains effective for two years following termina - CORRECT ANSWER✔✔D) Remains
effective for two years following termination
(FINRA retains jurisdiction over a registered representative for a period of two years following
resignation.)
The fund that would probably have the most price volatility is a(n):
A) International equity fund
B) Growth fund
C) Income fund
D) Municipal bond fund - CORRECT ANSWER✔✔A) International Equity Fund
(In general, bond funds are less volatile than equity funds. Within the equity category, the NAVs
of growth and income bond funds are considerably less volatile than international equity funds
whether corporate or municipal. International equity funds are not only vulnerable to market
risk, but exchange and political risk as well.)
In order to convince a customer to purchase mutual fund shares, a registered representative
pledges to reimburse the client for a predetermined amount if the shares perform poorly. This
activity is:
A) Acceptable.
,B) Acceptable if it's in writing.
C) Acceptable if it's in writing and approved by a principal.
D) Prohibited. - CORRECT ANSWER✔✔D) Prohibited.
(The RR's pledge to reimburse the client for losses represents a guarantee against a loss. This
type of activity is a prohibited practice.)
When documenting an investor's profile, which of the following is important?
A) Marital status
B) Employment history
C) Liquidity needs
D) Education - CORRECT ANSWER✔✔C) Liquidity needs
(Liquidity needs is one of the factors that make up an investor's profile. By itself, marital status is
not relevant when making recommendations. An investor's current employment is more
important than his employment history. Education is not nearly as important as a client's
investing experience.)
A broker-dealer has received no written complaints from its customers. Which of the following
statements is TRUE?
A) The firm is required to maintain an empty complaint file.
B) The firm is not required to maintain an empty complaint file.
C) The firm should question its registered representatives to determine if there have been
verbal complaints.
D) Notification of FINRA is required since the firm has received no complaints. - CORRECT
ANSWER✔✔A) The firm is required to maintain an empty complaint file.
, (Even if a member firm has received no written complaints, the firm must still maintain an
empty file. FINRA need not receive a report that no complaints were received by the firm.)
Fee-based accounts are generally suitable for:
A) An account that uses a buy-and-hold strategy
B) An account that's rebalanced frequently
C) An account that uses an indexing strategy
D) A qualified retirement account - CORRECT ANSWER✔✔B. An account that's rebalanced
frequently
(Fee-based accounts charge clients an annual fee that's based on a percentage of assets under
management (AUM). These accounts are suitable for clients that trade frequently since the
annual fee typically includes an unlimited amount of trading. Commission-based accounts that
charge per transaction are more suitable for clients who don't trade frequently (e.g., buy-and-
hold investors).)
All of the following must be included in a preliminary prospectus according to the Securities Act
of 1933, EXCEPT:
A) A written statement on the left border of the preliminary prospectus (red herring) that states
that the prospectus may be subject to changes
B) The purpose for which the funds are being raised
C) The final offering price
D) The financial status and history of the company - CORRECT ANSWER✔✔C) The final offering
price
Correct Answers
If a registered representative terminates employment with a member firm, the jurisdiction of
FINRA:
A) Terminates upon the representative's resignation
B) Remains effective for five days following termination
C) Remains effective for 30 days following termination
D) Remains effective for two years following termination - CORRECT ANSWER✔✔D) Remains
effective for two years following termination
(FINRA retains jurisdiction over a registered representative for a period of two years following
resignation.)
A specialized or specialty fund invests in stocks that are primarily:
A) In many industries
B) In a particular industry or geographical area
C) Traded in the OTC market
D) Special situations - CORRECT ANSWER✔✔B) In a particular industry or geographical area
(A specialized or specialty fund is a type of a fund that invests primarily in a particular industry
or geographical area.)
,If a registered representative terminates employment with a member firm, the jurisdiction of
FINRA:
A) Terminates upon the representative's resignation
B) Remains effective for five days following termination
C) Remains effective for 30 days following termination
D) Remains effective for two years following termina - CORRECT ANSWER✔✔D) Remains
effective for two years following termination
(FINRA retains jurisdiction over a registered representative for a period of two years following
resignation.)
The fund that would probably have the most price volatility is a(n):
A) International equity fund
B) Growth fund
C) Income fund
D) Municipal bond fund - CORRECT ANSWER✔✔A) International Equity Fund
(In general, bond funds are less volatile than equity funds. Within the equity category, the NAVs
of growth and income bond funds are considerably less volatile than international equity funds
whether corporate or municipal. International equity funds are not only vulnerable to market
risk, but exchange and political risk as well.)
In order to convince a customer to purchase mutual fund shares, a registered representative
pledges to reimburse the client for a predetermined amount if the shares perform poorly. This
activity is:
A) Acceptable.
,B) Acceptable if it's in writing.
C) Acceptable if it's in writing and approved by a principal.
D) Prohibited. - CORRECT ANSWER✔✔D) Prohibited.
(The RR's pledge to reimburse the client for losses represents a guarantee against a loss. This
type of activity is a prohibited practice.)
When documenting an investor's profile, which of the following is important?
A) Marital status
B) Employment history
C) Liquidity needs
D) Education - CORRECT ANSWER✔✔C) Liquidity needs
(Liquidity needs is one of the factors that make up an investor's profile. By itself, marital status is
not relevant when making recommendations. An investor's current employment is more
important than his employment history. Education is not nearly as important as a client's
investing experience.)
A broker-dealer has received no written complaints from its customers. Which of the following
statements is TRUE?
A) The firm is required to maintain an empty complaint file.
B) The firm is not required to maintain an empty complaint file.
C) The firm should question its registered representatives to determine if there have been
verbal complaints.
D) Notification of FINRA is required since the firm has received no complaints. - CORRECT
ANSWER✔✔A) The firm is required to maintain an empty complaint file.
, (Even if a member firm has received no written complaints, the firm must still maintain an
empty file. FINRA need not receive a report that no complaints were received by the firm.)
Fee-based accounts are generally suitable for:
A) An account that uses a buy-and-hold strategy
B) An account that's rebalanced frequently
C) An account that uses an indexing strategy
D) A qualified retirement account - CORRECT ANSWER✔✔B. An account that's rebalanced
frequently
(Fee-based accounts charge clients an annual fee that's based on a percentage of assets under
management (AUM). These accounts are suitable for clients that trade frequently since the
annual fee typically includes an unlimited amount of trading. Commission-based accounts that
charge per transaction are more suitable for clients who don't trade frequently (e.g., buy-and-
hold investors).)
All of the following must be included in a preliminary prospectus according to the Securities Act
of 1933, EXCEPT:
A) A written statement on the left border of the preliminary prospectus (red herring) that states
that the prospectus may be subject to changes
B) The purpose for which the funds are being raised
C) The final offering price
D) The financial status and history of the company - CORRECT ANSWER✔✔C) The final offering
price
