EXAMFX SIE PRACTICE EXAM 2026
Questions and Answers
What is the maximum amount of SIPC coverage available to each separate
customer? - Correct answer-$500,000 including up to $250,000 in cash
If a customer purchases securities and does not settle the account 4 business days,
what should the brokerage firm do first? - Correct answer-Ask for an extension of
time from the SRO or cancel the trade and sell off the purchased securities
When must a customer who purchases securities in a cash or margin account pay
for the securities? - Correct answer-4 business days
What is the maximum insurance the SIPC provides customer accounts for
unreturned cash? - Correct answer-$250,000
If a customer purchases securities and does not settle the account in 4 business
days, what is the brokerage firm's first order of business? - Correct answer-To sell
off the purchased securities and freeze the account for 90 days
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What act covers the trading of securities after they have been issued, the regulation
of exchanges, and the regulation of broker/dealers? - Correct answer-The
Securities Exchange Act of 1934
What term describes the legislation that regulates the sale of securities at the state
level? - Correct answer-Blue Sky laws
What entity is responsible for the safekeeping of an investment company's cash
and securities? - Correct answer-The custodian
Between what two parties does the underwriting agreement exist? - Correct
answer-The issuer and the managing underwriter
What FINRA bylaw regulates to dealings between member firms? - Correct
answer-Uniform Practice Code
What FINRA bylaw defines the proper methods for handling violations of trade
practice rules? - Correct answer-Code of Procedure
An underwriter is also known as what? - Correct answer-Investment Banker
What act of legislation created The Securities and Exchange Commission? -
Correct answer-The Securities Exchange Act of 1934
What FINRA bylaw is concerned with the settlement of disputes? - Correct
answer-Code of Arbitration
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,What is the maximum insurance the SIPC provides customer accounts for
unreturned securities? - Correct answer-$500,000
When a firm effects trades for its own account, it is known as the principal. In what
capacity is it considered to act? - Correct answer-Dealer
What SRO enforces MSRB rules? - Correct answer-FINRA
An investment adviser receives a fee for his services. What is this fee classified as?
- Correct answer-An operating expense of the fund
Under Reg. T, what can a customer do if his account is frozen for 90 days? -
Correct answer-Purchase securities on a cash basis
Whether the broker/dealer acted as an agent or a principal in a transaction must be
disclosed on what document? - Correct answer-Trade confirmation
If an investor wanted to purchase an unlisted security, where would the order be
entered? - Correct answer-In the over-the-counter market
What are the NYSE trading hours? - Correct answer-9:30 AM - 4:00 PM Eastern
Time
After a security is issued in the primary market, it trades in what market? - Correct
answer-Secondary market
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, When is a "red herring" prospectus distributed? - Correct answer-During the
cooling-off period
What is the term for the date when the SEC receives a registration statement from
an issuer? - Correct answer-Filing date
What type of securities offering cannot be advertised to the public? - Correct
answer-Regulation D
A listed security trading OTC is trading in what market? - Correct answer-Third
market
A publicly traded company issues more shares in order to finance a new factory.
What type of offering is this? - Correct answer-Additional Public Offering (APO)
A formal offer to existing shareholders to purchase their stock above the current
market price is what kind of offer? - Correct answer-Tender offer
Under Reg. A of the Securities Exchange Act of 1933, new issues valued at what
amount may be exempt from registration? - Correct answer-5,000,000 or less
What rule sets down the requirements for the resale of restricted stock to the
public? - Correct answer-Rule 144
The proceeds from a sale of a security went directly to the issuer of the security. In
what market did this transaction occur? - Correct answer-Primary market
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Questions and Answers
What is the maximum amount of SIPC coverage available to each separate
customer? - Correct answer-$500,000 including up to $250,000 in cash
If a customer purchases securities and does not settle the account 4 business days,
what should the brokerage firm do first? - Correct answer-Ask for an extension of
time from the SRO or cancel the trade and sell off the purchased securities
When must a customer who purchases securities in a cash or margin account pay
for the securities? - Correct answer-4 business days
What is the maximum insurance the SIPC provides customer accounts for
unreturned cash? - Correct answer-$250,000
If a customer purchases securities and does not settle the account in 4 business
days, what is the brokerage firm's first order of business? - Correct answer-To sell
off the purchased securities and freeze the account for 90 days
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What act covers the trading of securities after they have been issued, the regulation
of exchanges, and the regulation of broker/dealers? - Correct answer-The
Securities Exchange Act of 1934
What term describes the legislation that regulates the sale of securities at the state
level? - Correct answer-Blue Sky laws
What entity is responsible for the safekeeping of an investment company's cash
and securities? - Correct answer-The custodian
Between what two parties does the underwriting agreement exist? - Correct
answer-The issuer and the managing underwriter
What FINRA bylaw regulates to dealings between member firms? - Correct
answer-Uniform Practice Code
What FINRA bylaw defines the proper methods for handling violations of trade
practice rules? - Correct answer-Code of Procedure
An underwriter is also known as what? - Correct answer-Investment Banker
What act of legislation created The Securities and Exchange Commission? -
Correct answer-The Securities Exchange Act of 1934
What FINRA bylaw is concerned with the settlement of disputes? - Correct
answer-Code of Arbitration
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,What is the maximum insurance the SIPC provides customer accounts for
unreturned securities? - Correct answer-$500,000
When a firm effects trades for its own account, it is known as the principal. In what
capacity is it considered to act? - Correct answer-Dealer
What SRO enforces MSRB rules? - Correct answer-FINRA
An investment adviser receives a fee for his services. What is this fee classified as?
- Correct answer-An operating expense of the fund
Under Reg. T, what can a customer do if his account is frozen for 90 days? -
Correct answer-Purchase securities on a cash basis
Whether the broker/dealer acted as an agent or a principal in a transaction must be
disclosed on what document? - Correct answer-Trade confirmation
If an investor wanted to purchase an unlisted security, where would the order be
entered? - Correct answer-In the over-the-counter market
What are the NYSE trading hours? - Correct answer-9:30 AM - 4:00 PM Eastern
Time
After a security is issued in the primary market, it trades in what market? - Correct
answer-Secondary market
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, When is a "red herring" prospectus distributed? - Correct answer-During the
cooling-off period
What is the term for the date when the SEC receives a registration statement from
an issuer? - Correct answer-Filing date
What type of securities offering cannot be advertised to the public? - Correct
answer-Regulation D
A listed security trading OTC is trading in what market? - Correct answer-Third
market
A publicly traded company issues more shares in order to finance a new factory.
What type of offering is this? - Correct answer-Additional Public Offering (APO)
A formal offer to existing shareholders to purchase their stock above the current
market price is what kind of offer? - Correct answer-Tender offer
Under Reg. A of the Securities Exchange Act of 1933, new issues valued at what
amount may be exempt from registration? - Correct answer-5,000,000 or less
What rule sets down the requirements for the resale of restricted stock to the
public? - Correct answer-Rule 144
The proceeds from a sale of a security went directly to the issuer of the security. In
what market did this transaction occur? - Correct answer-Primary market
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
