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Exam Code: RSE
Exam Name: Retail Securities Exam
Updated: Aug 28, 2026
Q & A: 122 Questions and Answers
RSE Free Demo download
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| Section | Weight | Objectives |
|---|---|---|
| Fixed Income | Approximately 8.3% | - Interest rate risk - Credit risk - Yield and pricing - Government and corporate bonds |
| Securities Analysis | Approximately 11.7% | - Fundamental analysis - Technical analysis - Financial statement interpretation |
| Equities | Approximately 10% | - Common and preferred shares - Valuation concepts - Equity markets |
| Managed Products and Other Investments | Approximately 13.3% | - Mutual funds - Structured products - Alternative investments - Exchange-traded funds (ETFs) |
| Investment Recommendations | Approximately 11.7% | - Client communication - Product selection - Recommendation development |
| Portfolio Construction | Approximately 10.8% | - Portfolio risk management - Diversification - Asset allocation |
| Execution and Market Integrity | Approximately 5.8% | - Order handling - Best execution - Market integrity rules |
| Monitoring, Reporting and Maintaining Client Relationships | Approximately 5.8% | - Account monitoring - Client relationship management - Performance reporting - Ongoing suitability review |
| Know-Your-Client (KYC) and Suitability | Approximately 22.5% | - Client profile collection and maintenance - Regulatory obligations - Investment objectives and risk tolerance - Know-Your-Product (KYP) - Suitability assessment |
1. What is a principal purpose of the Black-Litterman model in portfolio construction?
A) To calculate a bond's current yield from its coupon and price
B) To combine market-implied equilibrium returns with the manager's investment views
C) To guarantee that a portfolio will outperform its benchmark
D) To replace diversification with concentrated stock selection
2. During the year, a company issues $5 million of new bonds and repays $1 million of existing debt principal.
Ignoring all other financing transactions, what net cash flow from financing activities should be reported?
A) $1 million inflow
B) $6 million inflow
C) $5 million inflow
D) $4 million inflow
3. A corporation is liquidated after it becomes insolvent. All secured and unsecured creditors have been paid, followed by the full liquidation entitlement of the preferred shareholders. Who is entitled to any assets remaining after these claims?
A) The bondholders
B) The common shareholders
C) The company's directors
D) The preferred shareholders for a second payment
4. If the beta of a company is 1.8, what can be said with certainty about its risk profile?
A) It has low unsystematic risk
B) It has low systematic risk
C) It has high systematic risk
D) It has high unsystematic risk
5. A Registered Representative posts on a personal social-media account that a particular fund is "guaranteed to earn at least 15% next year." The message was not reviewed through the Dealer's approved communication process. What is the primary compliance concern?
A) The communication may be misleading, unapproved and improperly maintained outside firm channels
B) The statement is acceptable because it appears on a personal account
C) The statement is acceptable if the RR genuinely expects a 15% return
D) The only concern is whether the post receives client comments
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: C | Question # 5 Answer: A |
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