SIE Practice Exam 3 | Free Mock Test (Updated for 2024)

This is our third SIE Practice Exam, which contains 25 challenging multiple-choice questions (MCQs). Our practice exam includes similar questions found on the FINRAs Securities Industry Essential exam.

1. Which of the following entities guarantees a savings account at a bank?

FDIC

SIPC

Federal Reserve

Department of Treasury

2. A broker-dealer is permitted to accept payment for a new issue from a new customer when the:

Registration is effective

Red herring is delivered

The preliminary prospectus is amended

The transaction takes place during the cooling-off period

3. The regular way settlement on Treasury bonds is:

Same day

Next business day

Second business day (skip day)

Fifth business day

4. Which of the following responses describes an advantage of index funds?

The protection of principal during bearish market

High turnover to take advantage of market opportunities

Higher management fee due to active management of the fund

Lower management fees due to passive management of the fund

5. Which of the following outcomes are possible for the covered call option writer?

Profit limited and loss limited

Profit limited and loss unlimited

Profit unlimited and loss limited

Profit unlimited and loss unlimited

6. Which of the following represents the effect of a stock split?

The price per share of common stock increases

The price per share of common stock decreases

Each stockholder’s proportionate ownership decreases

Each stockholder’s proportionate ownership increases

7. Under SEC Regulation S-P (Consumer Privacy), which of the following information must a firm include in its customer privacy and opt-out notices?

The address of the firm’s website

The fee to opt-out from the privacy program

The deadline by which to opt-out from the privacy program

The policies to protect the security of nonpublic information

8. Which of the following investments are generally traded according to their average life rather than their stated maturity dates?

Corporate bonds

Government bonds

Asset-backed securities

Fixed-rate securities

9. Direct participation programs (DPPs) provide:

Liquidity and transparency

Exposure to non-correlated assets

Market-related correlations with higher average returns

Investors with direct purchases of stock from public companies

10. A registered representative is reviewing the following portfolio:

30% ABC Energy Company
30% XYZ Health Care Company
30% Exchange-traded fund (tracks the S&P 500)
10% Money market funds

Which of the following risks is inherent in this portfolio?

Credit

Liquidity

Political

Nonsystematic

11. Roth 401(k) and Roth individual retirement account (IRA) plans share which of the following features?

Contributions are made pretax

Neither account has maximum contribution limits

Neither account is subject to early distribution penalties

Qualified distributions are excluded from federal income tax

12. When is the interest on Treasury notes paid?

Quarterly

Semiannually

Annually

At maturity

13. Which of the following stakeholders has first claim priority in a Chapter 11 proceedings?

Equity holders

Secured debt holders

Unsecured debt holders

Preferred stockholders

14. FinCEN accomplishes its mission to safeguard the financial system from the abuses of financial crime, including terrorist financing and money laundering, by enforcing:

SEC regulations

the Bank Secrecy Act

the Securities Act of 1933

the Investment Company Act of 1940

15. The primary purpose of a syndicate desk in the context of an equity offering is to:

Determine the list of selling shareholders

Build an order book and allocate the stock

Solicit interest from investors in the stock offering

Chaperone company management during the roadshow

16. Upon expiration, all in-the-money S&P 100 Index call options are settled by the delivery of which of the following?

Cash

S&P 100 Index stocks

S&P exchange-traded fund (ETF)

The same number of S&P 100 Index put options

17. Which of the following statements is true regarding the concept of an annuity contract?

Payouts of an investment in a nonqualified annuity are all income-tax-free

The kind of annuity selected partially determines the payment amount to the annuitant

In the case of life annuity contracts, the sex of the annuitant does not affect the payment amounts

The amounts of the periodic payments to the annuitant are determined by the performance of the insurance company’s investment returns

18. At the time of issuance, which of the following securities normally has the longest expiration period?

Rights

Options

Warrants

Repurchase agreements

19. Under Rule 144A, an issuer of restricted stock is permitted to sell to which of the following investors?

Financial institutions

Accredited investors

Qualified institutional buyers (QIBs)

Non-accredited investors who have previously purchased restricted stock

20. If a market maker posts a quote of 10.00-10.10[25×10], which of the following actions is the market maker willing to take?

Sell 1000 shares at $10.00 and buy 25000 shares at $10.10

Buy 2500 shares at $10.00 and 1000 shares at $10.10

Sell 100 shares at $10.00 and buy 250 shares $10.10

Buy 250 shares at $10.00 and sell 100 shares at $10.10

21. In the event of a stock split, which of the following parties is required to maintain a record of shareholders eligible to receive the additional shares?

DTC

Issuer

Custodian

Transfer agent

22. To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following products does a corporation issue?

Puts

Rights

Futures

Preferred stock

23. Under the Securities Act of 1933, registration is required for which of the following securities?

Eurodollar bonds

Municipal Securities

American Depositary Receipts (ADSs)

Securities issued by the federal government

24. No-load mutual funds may have lower expense ratios than load mutual funds for which of the following reasons?

No-load funds do not charge 12b-1 fees

No-load funds are not permitted to charge a 12b-1 fee greater than 25 basis points

Sales charges for load mutual funds increase their annual expense ratios

Fund management fees for no-load funds are always lower than load funds

25. Which of the following statements is TRUE about treasury stock?

It has voting rights

It receives dividends

It is issued stock that has been subsequently reacquired by the corporation

It is authorized stock that has not been issued and is held in the corporation’s treasury

Question 1 of 25

After attempting these questions, try our fourth practice test. Our SIE Practice Exam 4 also contains 25 challenging questions from Overview of Regulatory Framework, Capital Markets, Products and their Risks, Trading, Customer Accounts, and Prohibited Activities.

SIE Practice Exam 4 >>

Trading, Customer Accounts & Prohibited Activities
Trading
Customer Accounts
Prohibited Activities

Regulatory Framework
Registration
Employee Conduct