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FINRA Securities Industry Essentials (SIE) Exam

3. Trading, Customer Accounts and Prohibited Activities: practice questions

Our FINRA SIE bank has 56 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

How many minors and custodians can a UTMA/UGMA custodial account have?

  1. Two minors and one custodian
  2. One minor and two custodians
  3. One minor and one custodian
  4. Any number
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C. One minor and one custodian — Assets belong to the minor.

Question 2

What is a buy limit order?

  1. An order to buy immediately at any price
  2. An order to sell at a minimum price
  3. An order to buy at a specified price or higher
  4. An order to buy at a specified price or lower
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D. An order to buy at a specified price or lower — Buy limits are placed below the current market price.

Question 3

What is the restriction on borrowing money from customers?

  1. Allowed up to $1,000
  2. Allowed with verbal approval
  3. Generally prohibited unless the firm has written procedures allowing it and the arrangement fits permitted categories (e.g. immediate family, lending institution)
  4. Always allowed
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C. Generally prohibited unless the firm has written procedures allowing it and the arrangement fits permitted categories (e.g. immediate family, lending institution) — FINRA Rule 3240.

Question 4

What is the spread in a quote?

  1. The dividend yield
  2. The daily price range between the stock's high and low trades
  3. The difference between the bid and the ask
  4. The commission
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C. The difference between the bid and the ask — Narrow spreads indicate more liquid securities.

Question 5

What is a 'pump and dump' scheme?

  1. Selling short to hedge
  2. Buying a stock and holding it long-term
  3. Promoting a stock with false or misleading claims to raise its price and then selling
  4. A dividend reinvestment plan
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C. Promoting a stock with false or misleading claims to raise its price and then selling — It is a form of market manipulation.

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