SIE Practice Test

Answer choices

1. A. A closed-end fund that trades intraday on an exchange.
2. B. A bank certificate of deposit.
3. C. A private partnership with no redemption feature.
4. D. An open-end mutual fund.

Wrong-answer review

• A. A closed-end fund that trades intraday on an exchange.: Closed-end funds generally trade between investors in the secondary market rather than continuously redeeming shares with the fund.
• B. A bank certificate of deposit.: A certificate of deposit is a bank deposit, not a mutual-fund structure.
• C. A private partnership with no redemption feature.: The described redemption feature is inconsistent with a private partnership.

Answer choices

1. A. No. SIPC protection concerns missing cash and securities at a troubled member brokerage firm, not suitability or market performance.
2. B. Yes. SIPC protection confirms every security held in the account was suitable.
3. C. Yes. SIPC protection prevents stocks in the account from losing market value.
4. D. No. SIPC applies only to bank deposits and never to brokerage accounts.

Answer choices

1. A. Passing the SIE qualifies her only to sell mutual funds, but not other securities.
2. B. Passing the SIE alone qualifies her to solicit any securities product as long as she is at least 18.
3. C. Passing the SIE demonstrates basic industry knowledge, but registration also requires association with a member firm and the appropriate qualification exam.
4. D. Passing the SIE qualifies her to act as a registered representative for four years without firm sponsorship.

Answer choices

1. A. Obtain senior-management approval, name a responsible person, and add ongoing training and independent testing
2. B. Replace transaction monitoring with customer self-certification and eliminate independent review
3. C. Limit AML controls to new accounts because ongoing monitoring is outside customer due diligence
4. D. Use supervisory approval for large trades instead of maintaining a written AML program

Answer choices

1. A. It increases automatically.
2. B. It is guaranteed to remain unchanged.
3. C. It decreases.
4. D. It becomes common stock.

Answer choices

1. A. A market order cannot execute during normal market hours.
2. B. A market order guarantees the customer will receive the limit price or better.
3. C. A market order can be executed at a price different from the quote the customer saw.
4. D. A market order automatically becomes a stop-limit order if the price moves.

Answer choices

1. A. Treat each gift separately, so both are permitted because each is below $300
2. B. Exclude both because gifts from associated persons are never attributed to the member
3. C. Aggregate them for the recipient; the $350 total exceeds the current $300 annual limit
4. D. Treat them as personal gifts because they were sent by two different individuals

Answer choices

1. A. Knowledge of Capital Markets.
2. B. Overview of the Regulatory Framework.
3. C. Understanding Trading, Customer Accounts and Prohibited Activities.
4. D. Advanced Portfolio Management.

Answer choices

1. A. A market order with no price restriction.
2. B. A stop order that becomes a market order after its stop price is reached.
3. C. A mutual fund redemption order.
4. D. A limit order specifying the highest price to pay or the lowest price to accept.

Answer choices

1. A. A dividend reinvestment election
2. B. SIPC claims submission requirements
3. C. A margin maintenance call
4. D. Customer Identification Program requirements