FINRA Securities Industry Essentials (SIE): Exam Survival Playbook

Introductory Exam (US) | 75 Q, 105 minutes

Must-do topics:

Knowledge of capital markets – primary vs secondary, underwriters, syndicates, offering methods (IPO, rights, warrants)

Equity & fixed income products – common/preferred stock, corporate bonds, Treasury securities, agency issues, money market instruments

Investment companies & packaged products – mutual funds (open-end vs closed-end), ETFs, UITs, REITs, hedge fund structure (accredited investors, liquidity)

Options basics – calls/puts, rights/obligations of buyers and sellers, intrinsic vs time value, expiration, exercise

Retirement accounts & taxation – Traditional IRA, Roth IRA, 401(k), 403(b), tax treatment of contributions/distributions, early withdrawal penalties

Regulatory fundamentals – SEC, FINRA, MSRB roles, registration requirements, exempt securities/exempt transactions, conduct rules (disclosures, communication with public)

Top traps (avoid):

• Mixing up who does what – SEC writes rules, FINRA enforces rules, MSRB writes muni rules; know the boundaries

• Thinking like an investor, not a test-taker – the SIE wants the most suitable answer, not the highest return

• Confusing bond prices with interest rates – when rates go up, bond prices go down (inverse relationship)

• Option paralysis – they test basic knowledge, not complex strategies; focus on long/short definitions and breakeven

• Overthinking retirement accounts – just match the tax treatment to the account type (pre-tax vs after-tax)

Time split:

75 questions, 105 minutes → about 1 minute 24 seconds per question

Practical plan:

Q1–25 → ~30 minutes (quick hits: definitions, product knowledge, regs)

Q26–55 → ~45 minutes (scenarios, suitability, calculations)

Q56–75 → ~30 minutes (remaining + review flagged)

Last-48h checklist:

• Drill options basics:

  • Long call – right to buy, bullish

  • Short call – obligation to sell, bearish

  • Long put – right to sell, bearish

  • Short put – obligation to buy, bullish

  • Breakeven formulas: call = strike + premium, put = strike − premium

• Know your mutual funds:

  • Open-end (NAV, no secondary market, continuous offering)

  • Closed-end (trades like stock, can be premium/discount to NAV)

  • ETF (hybrid, intraday trading, lower fees)

• Regulation quick sheet:

  • Securities Act of 1933 – new issues (registration, prospectus)

  • Securities Exchange Act of 1934 – secondary trading, exchanges, margin

  • Investment Company Act of 1940 – mutual funds

  • Investment Advisers Act of 1940 – advisers over $100M AUM

• Tax-advantaged mnemonic:

  • Traditional IRA – tax-deductible now, taxed later

  • Roth IRA – taxed now, tax-free later

  • 401(k) – pre-tax contributions, employer match common

Quick facts / formulas:

Bond pricing:

• Premium bond → coupon > current market rate

• Discount bond → coupon < current market rate

Option breakeven:

• Long call: strike + premium

• Long put: strike − premium

Customer account types:

• Individual – sole ownership

• Joint tenants with rights of survivorship (JTWROS) – passes to survivor

• Tenants in common (TIC) – passes to estate

• Custodial (UGMA/UTMA) – minor owns, custodian manages

Speed tactics:

• For "which is suitable" questions:

  1. Identify the client's age, income, risk tolerance, time horizon

  2. Eliminate anything obviously wrong (e.g., aggressive growth for retiree)

  3. Pick the answer that discloses risks and matches objectives

• For bond questions:

  • If they mention income, safety, predictable payments → investment-grade corporate/muni

  • If they mention tax-free income, high tax bracket → municipal bond

  • If they mention speculation, interest rate risk → zero-coupon/long-term bond

• Read the last line first – "Which of the following is TRUE?" or "What is the MAXIMUM loss?" – then scan the stem for specifics

Day-of mini-plan:

Pre-exam: 10-minute brain dump on scratch paper:

• Option breakeven formulas

• Bond price/interest rate relationship

• 1933 vs 1934 Act differences

• IRA contribution limits (conceptually, not exact numbers)

During the test:

• First 10 questions will feel easy – bank those, build confidence

• If a calculation looks messy (e.g., weird spreads), flag it and move – likely a 1-pointer, not worth 5 minutes

• When two answers seem close, ask: "Which one is more correct under FINRA rules?"

• Remember: disclosure, fairness, client first – always the tiebreaker

Final 10 minutes:

• Check for blanks (no penalty for guessing)

• Review flagged questions – especially those where you narrowed to two choices

• Change answers only if you misread the question the first time – first instinct is usually right

Related guide: FINRA Series 7 — Exam Survival Playbook