FINRA Updated SIE Exam Questions and Answers by zakaria

A private securities transaction involves the sale of securities outside the scope of a registered representative’s employment with their member firm. Such transactions must be disclosed to and approved by the firm under FINRA Rule 3280.

B is correctbecause raising money for a startup involves the sale of securities and must be reported as a private securities transaction.

Ais incorrect because soliciting charitable donations does not involve securities.

Cis incorrect because selling term life insurance policies is not a securities transaction.

Dis incorrect because investing personal money does not involve soliciting or selling securities to others.

Mutual funds are traded based on forward pricing. Orders received after the market closes are executed at the NAV calculated at the next market close.

A is correctbecause it aligns with forward pricing rules.

B,C, andDare incorrect as they do not follow mutual fund trade practices.

Step by Step 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.

References:

FINRA Mutual Fund Features: FINRA Mutual Funds.

Buying a put option gives the investor the right to sell a stock at a specific strike price, effectively setting a floor for potential losses if the stock price declines. This is a common risk-management strategy.

A is correctbecause buying puts limits downside risk while retaining the potential for upside gains.

Bis incorrect as buying puts is a bearish strategy, not one used during upward momentum.

Cis incorrect because selling call options does not hedge losses; it is a speculative or income-generating strategy.

Dis incorrect because buying calls is a bullish strategy, used during upward momentum, not downward.