SIE Practice Exam 1 | 25 Challenging Practice Questions

Are you preparing for the FINRA Securities Industry Essentials Exam (SIE)? Check your knowledge with our Free SIE Practice Exam. This practice test contains 25 questions related to the financial and securities market.

Free SIE Practice Questions

1. The so-called 5% policy pertains to:

Mark ups on retail OTC transactions excepting new issues

Commissions on NYSE trades exclusively

Mark ups, mark downs and commissions on retail secondary market trades in municipal bonds

None of the Above

2. In most cases, Federal Securities Laws:

Supersede State securities laws.

Are subordinate to State securities laws.

Are given the same weight as State securities laws

None of the Above

3. Accumulation units are most often associated with:

Life Insurance

Annuities

Mutual Funds

ETFs

4. Certain securities are marginable under Regulation T of the Securities & Exchange Act of 1934 except:

Listed stocks

Options

NASDAQ stocks

All of the above are marginal under Reg. T

5. The principal difference between a selling syndicate and a selling group would be:

Commissions earned

Eastern versus Western liability

Commitment

All of the above

6. The term ‘Disclaimer’ is most often associated with:

The fact that no agent can guarantee a customer against loss.

The fact that unregistered securities are more risky than registered ones.

The fact that the government cannot guarantee the accuracy of the information in a prospectus.

None of the Above

7. When a corporate Board announces a 10% stock dividend, shareholders know they will be receiving:

More shares

Money

Both of the Above

None of the Above

8. All of the below are typical features of an ETF except:

They are marginable

They often are sector-driven portfolios

They are traded each day based upon 4:00 pm NAV

None of the above are exceptions

9. When the market price of a company’s common stock has reached triple digits ($100 or above), the Board of Directors may elect to declare which of the below to make the shares more affordable.

Reverse stock split.

A stock split.

A stock dividend.

Any of the above.

10. One of the most frequently issued money market instruments is commercial paper. Typically, this investment has a maximum maturity:

Of one year

Of 90 days

Of 270 days

Of 180 days

11. Call option contracts are considered to have intrinsic value:

When CMV exceeds exercise price

When exercise price exceeds CMV

When CMV is equal to exercise price

When the option holder has exercised the option

12. Which of the following are NOT considered money market securities?

T-bills

Commercial Paper

Reverse Repos

ADRs

13. Corporate stockholders elect boards of Directors in the publicly traded sphere. Which of the following methods is used?

Statutory voting

Regular voting

Cumulative voting

Any of the above are possible voting procedures

14. One of the more attractive features of common stock is that:

One cannot lose more than one’s investment.

The stockholders have the right to vote on quarterly dividends.

The stockholders have the right to choose officers.

Any of the Above

15. Reinvestment risk is least present in:

2% 10 year Treasury Note

3% 10 year AA rated Municipal G.O.

4% 10 year AAA rated Corporate debenture

Zero coupon Treasury Bond

16. The term ‘Issuer’ most often refers to:

A corporation seeking to raise additional capital for expansion or modernization purposes.

A business which prints up securities certificates such as bonds and stocks.

A business which has satisfied the listing requirements of one or more approved stock exchanges.

A business, a municipality, or a federal governmental entity seeking to raise capital from the sale of securities.

17. When an investor is bearish on the broad stock market:

Buying puts on the S&P 500 index is an appropriate strategy

Buying calls on the S&P 500 index is an appropriate strategy

Buying mutual funds is an appropriate strategy

Not investing in the market is an appropriate strategy

18. A market maker is obligated:

To maintain subject quotes during trading hours

To maintain and honor firm quotes during trading hours

To buy no less than one round lot from a customer at its ask price

To sell no less than one round lot to a customer inside the spread

19. Every publicly traded corporation is required to have a transfer agent and a registrar. The primary distinction between the two is:

They are not different – they perform the same function.

The registrar keeps the record of all stock and bond holders.

The transfer agent transmits the payment for securities from the purchaser to the seller in all secondary market trades.

The transfer agent ensures that dividend payments go out to all registered owners of record on the payable date.

20. The Securities Industry Essentials examination gives a candidate:

The right to take one or more of the top-off representative exams

The right to trade securities

The right to engage in phone solicitation of sales prospects

All of the above

21. A customer wishes to liquidate 100 shares of ABC common at the market. If the current inside market is 904.78 – 905.57, the client’s transaction will occur disregarding commissions and other charges at:

904.78

905.57

At the last transaction price prior to entering this order

At a price agreed to between the firm and the customer

22. The Securities & Exchange Commission (SEC) was created by Congress in:

1923

1938

1940

1934

23. When a corporation goes public, it is issuing:

Common stock.

Preferred stock

Convertible bonds

Any of the Above

24. The Securities Investor Protection Corporation (SIPC) is:

An insurance entity which protects investors investments again market losses up to $500,000.

An insurance entity which protects investors who are sold worthless securities.

A Congressional guarantee against losses in the securities markets.

None of the Above

25. The spread between bid and offer:

Typically gets wider as the volume increases

Typically gets narrower as the volume increases

Is entirely up to the firm which is making a market in the stock

Is generally fixed for the trading day

Question 1 of 25

The above SIE Practice Test contains 25 questions. After completing the exam, try our second practice exam to test your knowledge of finance and the securities industry.

SIE Practice Exam 2 >>