SIE Practice Exam with all Correct & 100% Verified
Answers |Latest Version |Guaranteed to Pass
401(k) Early Withdrawal ✔Correct Answer-An individual who is over 55 and separated from
work may take an early distribution from their 401(k) plan from their LAST employer. They
would NOT be able to access funds from any 401(k) plans from previous employers. For those,
the usual 59.5 age applies.
*This does not apply to an IRA or Roth IRA.
REIT Characteristics ✔Correct Answer--Equity (invest in properties)
-Mortgage (invest in mortgage loans to property owners)
-Publicly-Traded (registered with SEC and trade on national exchanges)
-Public Non-Traded (registered with SEC but do not trade on exchanges, so less liquid but more
stable)
-Private (unregistered)
*Can be open-end or closed-end investment companies
*Avoid corporate taxes and therefore the usual double-taxation of C-Corporations.
Firm Communications ✔Correct Answer--Correspondence: < 25 investors in a 30-day period.
Monitored but not approved.
-Retail communications: > 25 investors in a 30-day period. Must be approved by principals
under FINRA Rule 2210.
-Institutional communications: Made only to institutional investors. Can be pre-approved
through training and education.
Types of Orders ✔Correct Answer-Market Order: Buy/sell immediately, which does not
guarantee price because there could be changes between the order and execution.
Limit Order: Buy at a certain price or lower; sell at a certain price or higher. Guarantees price,
but not execution.
Stop Order: Buy/sell once the price reaches a specified price. Once the price hits this level, the
order becomes a market order. Used to limit losses.
Good-til-cancelled (GTC): An order to buy/sell at a specified price that lasts 30-90 days (depends
on broker) or until cancelled by the investor. Kind of like long-term limit orders.
Discretionary: A limit order with a little more leeway in terms of what the limit price can be (for
example, 10 cents). Also, an order that gives the broker authority over when and at what price
to buy/sell.
, Solicited: An order recommended to a client by a registered investment adviser.
Ponzi Scheme ✔Correct Answer-A form of fraud in which belief in the success of a
nonexistent enterprise is fostered by the payment of quick returns to the first investors from
money invested by later investors.
Pump and Dump ✔Correct Answer-Placing deceptive information online to get unsuspecting
investors interested in a stock (and thus inflate its price) while those spreading the information
sell previously purchased stock at an inflated price.
Omitting Prospectus ✔Correct Answer-A mutual fund tombstone ad meeting the
requirements of SEC Rule 482. Performance data may be presented, but orders may not be
taken for fund shares.
Long-Term Equity Anticipation Securities (LEAPS) ✔Correct Answer-Have expiration dates that
can run over 1 year compared to the 9 months for standard option contracts.
Bond Volatility ✔Correct Answer-Lower coupon bonds vary MORE with changes in interest
rates compared to higher coupon bonds.
Treasury Inflation-Protected Securities (TIPS) ✔Correct Answer-Treasury issues in which the
principal amount is tied to the Consumer Price Index to protect the buyer against the effects of
inflation; that is, it increases and decreases with inflation and deflation.
*Coupon RATE is fixed, but since the principal changes, coupon PAYMENTS can vary.
*Taxed at the federal level only, like all Treasury securities.
Dutch Auction ✔Correct Answer-A method of issuing securities (common stock) by which
investors place bids indicating how many shares they are willing to buy and at what price. The
price the stock is then sold for becomes the lowest price at which the issuing company can sell
all the available shares.
*All the bidders then are able to buy their specified number of shares at the LOWEST bid price
at the auction.
Marking the Close ✔Correct Answer-Market manipulation in which one trades at or near the
close of trading with the intent to influence the price of the security.
Marking the Open ✔Correct Answer-Market manipulation in which one trades at or near the
open of trading with the intent to influence the price of the security.
Backing Away ✔Correct Answer-The failure of a market maker to fulfill its obligation to buy or
sell the minimum amount for a bona fide quote.
Answers |Latest Version |Guaranteed to Pass
401(k) Early Withdrawal ✔Correct Answer-An individual who is over 55 and separated from
work may take an early distribution from their 401(k) plan from their LAST employer. They
would NOT be able to access funds from any 401(k) plans from previous employers. For those,
the usual 59.5 age applies.
*This does not apply to an IRA or Roth IRA.
REIT Characteristics ✔Correct Answer--Equity (invest in properties)
-Mortgage (invest in mortgage loans to property owners)
-Publicly-Traded (registered with SEC and trade on national exchanges)
-Public Non-Traded (registered with SEC but do not trade on exchanges, so less liquid but more
stable)
-Private (unregistered)
*Can be open-end or closed-end investment companies
*Avoid corporate taxes and therefore the usual double-taxation of C-Corporations.
Firm Communications ✔Correct Answer--Correspondence: < 25 investors in a 30-day period.
Monitored but not approved.
-Retail communications: > 25 investors in a 30-day period. Must be approved by principals
under FINRA Rule 2210.
-Institutional communications: Made only to institutional investors. Can be pre-approved
through training and education.
Types of Orders ✔Correct Answer-Market Order: Buy/sell immediately, which does not
guarantee price because there could be changes between the order and execution.
Limit Order: Buy at a certain price or lower; sell at a certain price or higher. Guarantees price,
but not execution.
Stop Order: Buy/sell once the price reaches a specified price. Once the price hits this level, the
order becomes a market order. Used to limit losses.
Good-til-cancelled (GTC): An order to buy/sell at a specified price that lasts 30-90 days (depends
on broker) or until cancelled by the investor. Kind of like long-term limit orders.
Discretionary: A limit order with a little more leeway in terms of what the limit price can be (for
example, 10 cents). Also, an order that gives the broker authority over when and at what price
to buy/sell.
, Solicited: An order recommended to a client by a registered investment adviser.
Ponzi Scheme ✔Correct Answer-A form of fraud in which belief in the success of a
nonexistent enterprise is fostered by the payment of quick returns to the first investors from
money invested by later investors.
Pump and Dump ✔Correct Answer-Placing deceptive information online to get unsuspecting
investors interested in a stock (and thus inflate its price) while those spreading the information
sell previously purchased stock at an inflated price.
Omitting Prospectus ✔Correct Answer-A mutual fund tombstone ad meeting the
requirements of SEC Rule 482. Performance data may be presented, but orders may not be
taken for fund shares.
Long-Term Equity Anticipation Securities (LEAPS) ✔Correct Answer-Have expiration dates that
can run over 1 year compared to the 9 months for standard option contracts.
Bond Volatility ✔Correct Answer-Lower coupon bonds vary MORE with changes in interest
rates compared to higher coupon bonds.
Treasury Inflation-Protected Securities (TIPS) ✔Correct Answer-Treasury issues in which the
principal amount is tied to the Consumer Price Index to protect the buyer against the effects of
inflation; that is, it increases and decreases with inflation and deflation.
*Coupon RATE is fixed, but since the principal changes, coupon PAYMENTS can vary.
*Taxed at the federal level only, like all Treasury securities.
Dutch Auction ✔Correct Answer-A method of issuing securities (common stock) by which
investors place bids indicating how many shares they are willing to buy and at what price. The
price the stock is then sold for becomes the lowest price at which the issuing company can sell
all the available shares.
*All the bidders then are able to buy their specified number of shares at the LOWEST bid price
at the auction.
Marking the Close ✔Correct Answer-Market manipulation in which one trades at or near the
close of trading with the intent to influence the price of the security.
Marking the Open ✔Correct Answer-Market manipulation in which one trades at or near the
open of trading with the intent to influence the price of the security.
Backing Away ✔Correct Answer-The failure of a market maker to fulfill its obligation to buy or
sell the minimum amount for a bona fide quote.
