FINRA Updated SIE Exam Questions and Answers by paddy

The correct answer is C, $500. In options trading, the quoted premium is given on a per-share basis, but each standard options contract represents 100 shares of the underlying stock.

Step 1: Identify the premium. The premium is quoted as 5, which means $5 per share.

Step 2: Determine the contract size. One standard equity option contract controls 100 shares.

Step 3: Calculate the total cost.

$5 × 100 shares = $500 total premium paid

This means the investor must pay $500 to purchase the call option.

Choice A ($5) is incorrect because it reflects only the per-share premium, not the total contract cost. Choice B ($30) incorrectly uses the strike price (30), which is unrelated to the premium paid. Choice D ($3,000) incorrectly multiplies the strike price by 100, which represents the exercise value, not the premium.

For the SIE exam, it is essential to remember that all listed equity options are quoted per share but traded in contracts of 100 shares, so always multiply the premium by 100 to find the total cost.

Thus, the correct total payment is $500, making answer C correct.

NASAA is the North American Securities Administrators Association, and its membership is made up of state, provincial, and territorial securities regulators (in the U.S., primarily the state securities administrators). That makes C correct. On the SIE, NASAA is tested as the umbrella organization representing state-level regulators, which are responsible for enforcing state securities laws (“blue sky” laws), registering certain securities offerings when applicable, and registering/licensing investment adviser representatives and other participants under state jurisdiction.

Choice A is incorrect because broker-dealers are regulated entities, not NASAA members. Broker-dealers register with the SEC and are members of self-regulatory organizations like FINRA, but they are not “members of NASAA.” Choice B is incorrect because stock exchanges are marketplaces and are often SROs themselves, but they are not NASAA members. Choice D is incorrect because SROs (such as FINRA or MSRB) are not NASAA members; NASAA represents state-level governmental regulators, not self-regulatory organizations.

This question reinforces an important SIE framework: U.S. securities regulation is shared among federal regulators (SEC), self-regulatory organizations (FINRA, MSRB, exchanges), and state regulators. NASAA serves as a coordinating body for state regulators, promoting uniformity through model rules, policy coordination, investor education, and cooperation among jurisdictions. Understanding NASAA’s membership helps you correctly assign regulatory roles—especially when questions involve blue sky laws, state registration requirements, and state-level enforcement.

A municipal revenue bond is secured by and payable from a specific source of revenue, such as tolls from a bridge, fares from a transit system, fees from a water/sewer utility, or revenues from an airport authority. Bondholders rely on that pledged revenue stream rather than the issuer’s general taxing power. That is why the correct statement is C: bondholders are entitled to be paid only from a specified source of revenue.

Choice A is incorrect because revenue bond proceeds are typically earmarked for the project or enterprise, and repayment is not treated as “general revenue” in the GO sense. Choice B is incorrect because bondholders do not have a claim on any revenue of the issuer; that description aligns more with general obligation backing or a broad pledge. Choice D is incorrect because bondholders are owed debt service per the bond’s terms (interest and principal), not a “specified percentage” of issuer revenue.

The phrase “tax-free” refers to the typical federal tax-exempt status of municipal bond interest (subject to exceptions), but it does not change the fundamental revenue bond structure: repayment depends on the project’s performance and revenue collection. This is a key SIE distinction between GO bonds (supported by full faith and credit/taxing power) and revenue bonds (supported by a designated revenue stream).

Comparative performance statistics—especially across competing mutual funds—are most commonly obtained from independent fund rating services, making C correct. These services compile standardized fund performance data, risk metrics, category comparisons, peer rankings, and sometimes risk-adjusted measures, allowing investors to compare funds across managers and fund families. Because they are designed specifically for cross-fund comparisons, they are the best source among the choices.

A fund’s prospectus (choice A) contains important disclosures about that specific fund—objectives, strategies, risks, fees, and past performance—but it is not primarily a comparative document across multiple competing funds. Shareholder reports (choice B) provide periodic information about a specific fund (financial statements, portfolio holdings summaries, management discussion), and while they include performance figures, they typically do not provide broad comparisons of “competing mutual funds.” The statement of additional information (choice D) supplements the prospectus with expanded technical details about that particular fund; it is not meant to be a comparative performance source across the market.

For SIE purposes, recognize the roles of fund documents: prospectus/SAI/shareholder reports are issuer-specific disclosure documents, while independent rating services are built for industry-wide comparisons. This distinction helps you answer questions about where an investor would go for peer group performance, ranking, and objective comparative data rather than reading each fund’s disclosures individually.