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FINRA SIE Exam
Securities Industry Essentials (Page 3 )

Updated On: 7-Feb-2026
Page 3 of 34
PDF with 266 Questions

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

  1. Changes in the beneficiary
  2. Changes in the death benefit
  3. Fluctuating market conditions
  4. Contingent deferred sales charges

Answer(s): C

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.


Reference:

SEC Bulletin on Variable Life Insurance: SEC Variable Insurance.



An investor wants to purchase additional mutual fund shares with income distributed by the fund.
Which of the following fund options permits this?

  1. Asset reallocation
  2. Dollar cost averaging
  3. Dividend reinvestment
  4. Capital gains reinvestment

Answer(s): C

Explanation:

Dividend Reinvestment Plans (DRIPs): These allow investors to automatically reinvest income distributed by the mutual fund to purchase additional shares.

Dollar Cost Averaging: Refers to systematic investments over time, not directly tied to income distributions.

Capital Gains Reinvestment: Involves reinvesting profits from the sale of fund holdings, which is distinct from dividend reinvestment.


Reference:

FINRA Mutual Fund Features: FINRA Mutual Funds.



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

  1. The NYSE
  2. The fund's custodian
  3. The fund's underwriter
  4. An existing shareholder

Answer(s): C

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.


Reference:

SEC Mutual Fund Basics: SEC Mutual Funds.



Shares in a private investment in public equity (PIPE) offering are priced:

  1. At the current market value per share.
  2. Below the current market value per share.
  3. Above the current market value per share.
  4. At the public offering price (POP) as determined by the underwriters.

Answer(s): B

Explanation:

PIPE Offerings: Typically priced below the current market value to incentivize institutional investors to participate in these transactions.

Discount: The discounted price compensates for the potential illiquidity and risk associated with PIPE offerings.

POP/Market Value: These do not apply to private offerings structured as PIPE transactions.


Reference:

SEC PIPE Offering Guidance: SEC PIPE Offerings.



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

  1. Utilities
  2. Healthcare
  3. Consumer staples
  4. Consumer discretionary

Answer(s): D

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.


Reference:

SEC and FINRA Guidance on Sectors: Investopedia Sector Overview.



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