SIE (Securities Industry Essentials) Practice Exam

Which of the following is considered misleading communication with the public?

1. Literature providing 10-year performance information to support future predictions

2. A pamphlet outlining general investment risks

3. A yearly update newsletter from the fund manager

4. Educational material on diversification benefits

The correct answer is: Literature providing 10-year performance information to support future predictions

Providing literature with 10-year performance information can be considered misleading to the public because past performance does not guarantee future performance. While this may seem like useful information, it can give a false sense of security and encourage individuals to make uninformed investment decisions. The other options are more general and objective in nature, providing important information without making any predictions or guarantees. Educating people on diversification benefits is also important in helping them make informed decisions. Ultimately, providing misleading information can harm the public's understanding of the market and their investments.