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Free SIE Practice Questions

10 free, exam-style Securities Industry Essentials (SIE) (SIE) practice questions with answers and explanations. No signup required. Work through them below, then take the full free SIE practice test to study every exam domain.

These 10 free SIE questions are organized by exam domain, so you can see how each part of the Securities Industry Essentials (SIE) blueprint is tested. Reveal the answer and explanation under each question.

Domain 1: Knowledge of Capital Markets

Question 1

What is the primary difference between SIPC and FDIC?

  1. SIPC protects brokerage accounts at failed firms; FDIC insures bank deposits
  2. SIPC protects bank deposits; FDIC protects brokerage accounts
  3. SIPC is a government agency; FDIC is a non-profit
  4. SIPC and FDIC both protect against market losses
Show answer & explanation

Correct answer: A - SIPC protects brokerage accounts at failed firms; FDIC insures bank deposits

Domain 2: Understanding Products and Their Risks

Question 2

Variable annuities are generally NOT suitable for:

  1. High-income investors seeking additional tax deferral on investment gains
  2. Funding IRAs or other qualified plans that already provide tax deferral
  3. Investors with a long time horizon seeking growth and income combined
  4. Investors looking for guaranteed insurance benefits alongside market exposure
Show answer & explanation

Correct answer: B - Funding IRAs or other qualified plans that already provide tax deferral

Question 3

An investor buys 1 XYZ Dec 50 call at $3. If XYZ stock rises to $60, the investor's profit per share is:

  1. $3
  2. $10
  3. $13
  4. $7
Show answer & explanation

Correct answer: D - $7

Question 4

Zero-coupon bonds have the HIGHEST:

  1. Credit risk
  2. Interest rate risk
  3. Reinvestment risk
  4. Currency risk
Show answer & explanation

Correct answer: B - Interest rate risk

Question 5

A bond with a 7% coupon is trading at a premium. This means the current market yield is:

  1. Greater than 7%
  2. Equal to 7%
  3. Less than 7%
  4. Dependent on maturity
Show answer & explanation

Correct answer: C - Less than 7%

Domain 3: Understanding Trading, Customer Accounts and Prohibited Activities

Question 6

A registered representative notices a customer making multiple cash deposits of $9,500 over three consecutive days. The representative should:

  1. Recognize this as potential structuring and report it to the firm's AML compliance officer
  2. Document the transactions internally but take no action since each is below the threshold
  3. File a Currency Transaction Report for each individual deposit as a precautionary measure
  4. Inform the customer that deposits over $10,000 require additional identification documentation
Show answer & explanation

Correct answer: A - Recognize this as potential structuring and report it to the firm's AML compliance officer

Question 7

A corporate officer tells a friend about an upcoming earnings surprise. The friend buys stock based on this information. In this scenario:

  1. Only the corporate officer (tipper) is liable
  2. Only the friend (tippee) is liable
  3. Neither is liable because the friend is not a company employee
  4. Both the tipper and the tippee can be held liable for insider trading
Show answer & explanation

Correct answer: D - Both the tipper and the tippee can be held liable for insider trading

Question 8

All of the following retirement plans require RMDs at age 73 EXCEPT:

  1. Traditional IRA
  2. Traditional 401(k)
  3. Roth IRA (original owner)
  4. 403(b)
Show answer & explanation

Correct answer: C - Roth IRA (original owner)

Question 9

An investor buys stock ON the ex-dividend date. The investor:

  1. Will NOT receive the upcoming dividend
  2. Will receive the upcoming dividend
  3. Will receive half the dividend
  4. Must wait 30 days to receive the dividend
Show answer & explanation

Correct answer: A - Will NOT receive the upcoming dividend

Domain 4: Overview of the Regulatory Framework

Question 10

If a registered person fails to complete the Regulatory Element within the required 120-day window, their registration:

  1. Is permanently revoked and the person must re-qualify through examination
  2. Remains active for an additional 30-day grace period before suspension
  3. Is automatically transferred to another firm under a limited supervision arrangement
  4. Becomes inactive and the person is prohibited from performing registered activities
Show answer & explanation

Correct answer: D - Becomes inactive and the person is prohibited from performing registered activities

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