Free Securities Industry Essentials Exam SIE Exam Practice Test

A customer is unhappy about a $5,000 loss in a stock that the registered representative (RR) recommended and threatens to call FINRA's Securities Helpline for Seniors about the matter. What is the most appropriate next step for the RR to take?

• The RR should notify their supervisor about the customer's dissatisfaction.
• The RR is permitted to reimburse the customer for the loss to resolve the customer's complaint.
• The RR should alert their compliance department to update their Form U4 with the complaint details.
• The RR should call FINRA's Securities Helpline for Seniors before the customer does and explain their side of the story.

Which of the following statements concerning nonqualified deferred compensation plans is true?

• They are governed by ERISA rules.
• Such plans must be reviewed with the IRS.
• The deferred compensation must be held in escrow at a bank.
• A failure of the business could lead to nonpayment of the deferred compensation.

Which of the following responses describes a warrant?

• An interest-paying security
• Redemption rights for a debt instrument
• The right to purchase a specified amount of shares
• A fixed-income security issued by a state or municipality

A registered representative (RR) owns 500 shares of a thinly traded security. A customer of the firm calls the RR to place a sell order for 10,000 shares of the same security. The RR sells his shares before entering the customer's order to sell. Which of the following activities has the RR just engaged in?

• Selling away
• Front running
• Insider trading
• Market manipulation

A customer purchases $3,000 of XYZ, which settles today in a margin account. The customer has no other positions or balances. According to initial margin requirements, what is the amount of the required deposit?

• $1,500
• $2,000
• $2,500
• $3,000

A broker-dealer (BD) creates a marketing postcard that includes a statement regarding FINRA's endorsement of the BD. Which of the following responses is true?

• The statement regarding FINRA's endorsement is not permissible.
• The statement is permissible if a principal of the BD approves it in writing prior to use.
• The statement is permissible if the statement is approved in writing by FINRA prior to use.
• The statement is permissible if the postcard does not discuss specific investment opportunities.

A customer receives a confirmation that discloses the firm has acted in a principal capacity. Which of the following statements is the best explanation for this disclosure?

• The firm is selling to the customer from its inventory.
• The firm is acting as an intermediary between the customer and an unrelated firm.
• The firm is acting as an intermediary between the customer and another customer.
• The firm matched the customer's purchase with a sell order listed on an electronic communication
• network (ECN).

Which of the following transactions is most profitable if executed prior to a significant rise in a company's stock price?

• Buying a put option
• Buying a call option
• Selling a put option
• Selling a call option

A registered representative (RR) opens a new account for a customer whose investment objectives are growth and income. She makes an initial deposit of $5,500 using a series of money orders drawnfrom different sources, and she makes no investments for the first 30 days the account is open. At the end of that time, the customer asks to have the funds wired to an account at a different firm as her needs have changed. The RR's first course of action should be to:

• Deny the request.
• Freeze the account.
• Report internally as a suspicious activity.
• Accept the instructions and wire the funds.

Which of the following statements is true of the writer of a listed equity call option?

• They have the right to sell stock at a fixed strike price.
• They have the right to buy stock at a fixed strike price.
• They have the obligation to sell stock at a fixed strike price.
• They have the obligation to buy stock at a fixed strike price.