10 Must-Know Questions for the SIE Exam

🟦 10 Must-Know Questions for the SIE Exam
Start with these to test your foundation and boost your confidence.

The Securities Industry Essentials (SIE) exam tests your understanding of basic securities concepts, regulations, and industry functions. It’s the gateway to a career in finance—and passing it requires mastering both facts and logic.

Here are 10 must-know questions that reflect the style and content of the real SIE exam:

✅ Question 1

What is the main purpose of the Securities Act of 1933?
A. Regulate insider trading
B. Govern the secondary market
C. Require disclosure for new securities offerings
D. Supervise broker/dealer conduct

Answer: ✅ C
👉 The 1933 Act is also known as the “truth in securities” law—focused on disclosure in the primary market.

✅ Question 2

Which investment product is not typically considered a security?
A. Mutual fund
B. Fixed annuity
C. Common stock
D. REIT

Answer: ✅ B
👉 Fixed annuities are insurance products, not securities.

✅ Question 3

Which of the following best describes a broker’s role?
A. Trading for their own account
B. Selling only proprietary products
C. Acting as an agent between buyers and sellers
D. Charging a markup on all transactions

Answer: ✅ C
👉 A broker acts as an agent and earns commissions, not markups.

✅ Question 4

Which of the following accounts is NOT protected by SIPC?
A. Cash account holding mutual funds
B. IRA account holding stocks
C. Futures contract held in a margin account
D. Margin account with equities

Answer: ✅ C
👉 Futures contracts are not securities, so they’re not covered by SIPC.

✅ Question 5

What does “buying on margin” involve?
A. Using leverage to increase bond yield
B. Short selling in a retirement account
C. Borrowing funds to purchase securities
D. Purchasing securities for a tax-sheltered account

Answer: ✅ C
👉 Buying on margin means borrowing from a broker to purchase securities.

✅ Question 6

Which of the following is a self-regulatory organization (SRO)?
A. FDIC
B. Federal Reserve
C. FINRA
D. SEC

Answer: ✅ C
👉 FINRA is an SRO responsible for regulating member firms and representatives.

✅ Question 7

An investor who wants to benefit from rising prices should:
A. Buy a put option
B. Sell a call option
C. Buy a call option
D. Sell a bond

Answer: ✅ C
👉 Call options become more valuable when the underlying price goes up.

✅ Question 8

Which of the following best defines a mutual fund?
A. An illiquid pool of hedge-backed securities
B. A professionally managed investment company
C. A security exempt from all federal laws
D. An FDIC-insured bank investment

Answer: ✅ B
👉 A mutual fund is a regulated, liquid, professionally managed investment product.

✅ Question 9

Which organization insures customer accounts at broker/dealers?
A. SIPC
B. FDIC
C. SEC
D. OCC

Answer: ✅ A
👉 The Securities Investor Protection Corporation (SIPC) covers accounts if a firm fails, up to $500,000.

✅ Question 10

Which two documents are required for a customer to open a margin account?
A. Trust agreement and W-2
B. Margin agreement and risk disclosure
C. Loan consent form and trade ticket
D. Options agreement and advertising brochure

Answer: ✅ B
👉 Margin accounts require the customer to sign a margin agreement and receive a risk disclosure document.

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