SIE Practice Test

Answer choices

1. A. $500,000 total, including no more than $250,000 in cash, for evaluation.
2. B. $250,000 total with no separate cash limit, as presented.
3. C. $1 million total with no cash sublimit, under the organization’s defined implementation and exception-management process.
4. D. Unlimited protection for all customer property, for the stated implementation and support requirements.

Wrong-answer review

• B. $250,000 total with no separate cash limit, as presented.: The total limit is higher than $250,000 and includes a cash sublimit.
• C. $1 million total with no cash sublimit, under the organization’s defined implementation and exception-management process.: SIPC does not provide a $1 million general limit under this rule.
• D. Unlimited protection for all customer property, for the stated implementation and support requirements.: SIPC protection is limited, not unlimited.

Answer choices

1. A. Continue soliciting existing clients but stop opening new accounts, under the documented operational and governance requirements.
2. B. Stop activities requiring registration and do not accept or solicit securities business, for the specified implementation requirement.
3. C. Continue all activity if a principal reviews each recommendation, for the stated scenario.
4. D. Transfer the unfinished content to the next annual cycle without changing activity, when applied.

Answer choices

1. A. The fund calculates the net asset value of the shares and pays the investor the corresponding value.
2. B. The investor can sell their shares directly to another investor on a national securities market, under the documented operational and governance requirements.
3. C. The fund guarantees the investor will receive a specific price for their shares, within the stated policy framework.
4. D. The fund automatically converts the investor’s shares into cash at a predetermined rate, under the documented operational and governance requirements.

Answer choices

1. A. The total protection limit is $500,000, including a $250,000 limit for cash, as configured.
2. B. The total protection limit is unlimited if the customer owns securities, as the selected response to the described condition.
3. C. Only the cash is protected, and securities are never covered, as the organization’s selected response.
4. D. SIPC protection applies only if the investment loss was caused by market volatility, for the stated scenario.

Answer choices

1. A. An equity ownership share in the issuer, within the defined security and accountability boundaries.
2. B. A guarantee against changes in interest rates, for the described technical objective.
3. C. A debt security representing money lent to the issuer, when applied.
4. D. A voting interest identical to common stock, as described.

Answer choices

1. A. A stop-loss order that automatically sells shares if the price declines, for this requirement.
2. B. A market order that seeks immediate execution at the current price, in practice.
3. C. A buy limit order that sets the maximum price the trader will pay, within cross-functional operational-accountability boundaries.
4. D. A short sale that profits from a decline in the stock price, within the documented operational, security, ownership, and validation requirements.

Answer choices

1. A. Missing securities after a financially troubled member brokerage fails, for the required operational result and control objective.
2. B. Missing customer cash within the applicable SIPC limit after a member failure, for the required operational result and control objective.
3. C. A decline in the market value of securities the customer still owns, for consideration.
4. D. A shortfall in customer property held by a failed member firm, subject to limits, for review.

Answer choices

1. A. Permit the recommendation because the funds have comparable investment features, as the recommended response to this scenario.
2. B. Permit it after disclosing the representative's compensation difference, as the recommended implementation across the complete governed service lifecycle.
3. C. Require a recommendation that does not put the firm's or representative's interest ahead of the customer's, under end-to-end security-and-governance requirements.
4. D. Let the customer choose without explaining the products' risks, rewards, or costs, within the understanding trading, customer accounts and prohibited activities context.

Answer choices

1. A. The offering is a primary-market transaction; the later investor trade is a secondary-market transaction, as presented.
2. B. Both are primary-market transactions because they involve the same issuer's shares, under the proposed approach.
3. C. Both are secondary-market transactions because investors ultimately own the shares, for the required knowledge of capital markets outcome.
4. D. The offering is secondary-market trading; the later sale is new issuer financing, within the described operational context.

Answer choices

1. A. Sell limit order at $48, for the stated scenario.
2. B. Sell stop order at $48, for consideration.
3. C. Buy stop order at $48, within the stated policy framework.
4. D. Sell stop-limit order with a $48 limit, within the described context.