Securities Industry Essentials (SIE)
Exam Questions and Correct
Detailed Answers Latest Update
This Year
Broker (Agency) - correct answer=✔✔A
firm that acts as an agent, matching
buyers and sellers for a commission. It
takes no risk because it doesn't own
the security.
Dealer (Principal) - correct answer=✔✔A
firm that acts as a principal, trading for
its own account. It earns a markup or
markdown and takes on inventory risk.
1
,Market Maker - correct answer=✔✔A
broker-dealer that maintains a "two-
sided quote" (bid and ask) and stands
ready to buy or sell at least 100 shares
to provide liquidity.
Investment Adviser - correct
answer=✔✔A firm that charges a fee
(usually based on assets under
management) for providing investment
advice.
Primary Market - correct
answer=✔✔Where issuers
(corporations/governments) sell new
securities to the public for the first
time. Regulated by the Securities Act
of 1933
2
,Secondary Market - correct
answer=✔✔Where investors trade
existing securities with each other.
Regulated by the Securities Exchange
Act of 1934.
Third Market - correct
answer=✔✔Exchange-listed securities
trading over-the-counter.
Fourth Market - correct
answer=✔✔Direct institution-to-
institution trading, often using Dark
Pools to keep large orders
anonymous.
Accredited Investor - correct
answer=✔✔Individuals with a net worth
of $1 million (excluding primary
3
, residence) or an annual income of
$200,000 or $300,000 for couples.
Institutional Investor - correct
answer=✔✔Large entities like banks,
insurance companies, and pension
funds
QIB - correct answer=✔✔An institution
that owns and invests at least $100
million in securities and is not a natural
person
DTCC - correct answer=✔✔The central
depository and clearinghouse for most
securities transactions
4
Exam Questions and Correct
Detailed Answers Latest Update
This Year
Broker (Agency) - correct answer=✔✔A
firm that acts as an agent, matching
buyers and sellers for a commission. It
takes no risk because it doesn't own
the security.
Dealer (Principal) - correct answer=✔✔A
firm that acts as a principal, trading for
its own account. It earns a markup or
markdown and takes on inventory risk.
1
,Market Maker - correct answer=✔✔A
broker-dealer that maintains a "two-
sided quote" (bid and ask) and stands
ready to buy or sell at least 100 shares
to provide liquidity.
Investment Adviser - correct
answer=✔✔A firm that charges a fee
(usually based on assets under
management) for providing investment
advice.
Primary Market - correct
answer=✔✔Where issuers
(corporations/governments) sell new
securities to the public for the first
time. Regulated by the Securities Act
of 1933
2
,Secondary Market - correct
answer=✔✔Where investors trade
existing securities with each other.
Regulated by the Securities Exchange
Act of 1934.
Third Market - correct
answer=✔✔Exchange-listed securities
trading over-the-counter.
Fourth Market - correct
answer=✔✔Direct institution-to-
institution trading, often using Dark
Pools to keep large orders
anonymous.
Accredited Investor - correct
answer=✔✔Individuals with a net worth
of $1 million (excluding primary
3
, residence) or an annual income of
$200,000 or $300,000 for couples.
Institutional Investor - correct
answer=✔✔Large entities like banks,
insurance companies, and pension
funds
QIB - correct answer=✔✔An institution
that owns and invests at least $100
million in securities and is not a natural
person
DTCC - correct answer=✔✔The central
depository and clearinghouse for most
securities transactions
4
