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SIE trading and settlement practice questions

Free SIE exam questions on trading: order types, long and short positions, T+1 settlement, margin basics, confirmations, dividend dates, splits and other corporate actions, with rationales.

Tap an answer to check it, or open "Show the answer and rationale" under each question. Customers in the questions are fictional. Exam practice only, not investment advice.

Question 1 of 20

A normal dividend's record date falls on a day that is not a business day for settlement. What is the ex-date?

  1. The prior business day
  2. The next business day
  3. The payable date
  4. The declaration date
Show the answer and rationale

Answer: A

Rule 11140 sets the ex-date at the record date if it is a business day, or else the first business day before the record date. The next business day would be after the record date.

📚 Learn it: Four Dividend Dates and the One That Decides

Question 2 of 20

A customer owns 400 shares at $50. After a 5-for-4 split, what is the position?

  1. 500 shares at $40
  2. 500 shares at $50
  3. 800 shares at $25
  4. 320 shares at $62.50
Show the answer and rationale

Answer: A

5-for-4: 400 × 5/4 = 500 shares; $50 × 4/5 = $40. Value stays $20,000. 320 at $62.50 inverts the ratio, and 800 at $25 is a 2-for-1 split.

📚 Learn it: More Slices, Same Pizza: Splits and Stock Dividends

Question 3 of 20

In a stock-for-stock merger, each target share converts into 0.5 acquirer share. A customer owns 300 target shares. How many acquirer shares does the customer receive?

  1. 300
  2. 60
  3. 150
  4. 600
Show the answer and rationale

Answer: C

300 × 0.5 = 150 acquirer shares. 600 multiplies by 2 instead of 0.5, and 300 ignores the exchange ratio.

📚 Learn it: Offers You Can Take or Leave: Rights, Tenders and Mergers

Question 4 of 20

What is the main job of a transfer agent?

  1. Hold a firm's customer cash
  2. Approve dividend payments
  3. Keep the shareholder records
  4. Execute customer trades
Show the answer and rationale

Answer: C

A transfer agent keeps the issuer's records of registered owners and handles transfers and certificates. Boards approve dividends, broker-dealers execute trades and custodians hold cash.

📚 Learn it: Voting From Afar: Proxies and Street Name

Question 5 of 20

A buy stop is entered at $55. Trades print at $54.10, $54.90, $55.20 and $54.70. Where is the order triggered?

  1. $54.10
  2. $54.70
  3. $54.90
  4. $55.20
Show the answer and rationale

Answer: D

A buy stop triggers when a trade occurs at or above the stop price. $55.20 is the first print at or above $55; the earlier prints are below it, and $54.70 comes after the trigger.

📚 Learn it: Market, Limit, Stop: Which Order Does What

Question 6 of 20

A firm buys stock on an exchange for a customer and charges a commission. In what capacity did it act?

  1. As agent
  2. As dealer
  3. As market maker
  4. As principal
Show the answer and rationale

Answer: A

Charging a commission to arrange a trade for a customer is agency (broker) capacity. Principals, dealers and market makers trade for their own account and earn markups or markdowns.

📚 Learn it: Going Long, Selling Short and Who Is on the Other Side

Question 7 of 20

A municipal bond is bought regular way on a Tuesday with no holidays that week. When does it settle?

  1. Thursday
  2. Tuesday
  3. Wednesday
  4. Friday
Show the answer and rationale

Answer: C

Municipal securities settle T+1 regular way, so a Tuesday trade settles Wednesday. Tuesday would be cash settlement, and Thursday reflects the old T+2 cycle.

📚 Learn it: T+1: When the Cash and Shares Change Hands

Question 8 of 20

Which yield measure reflects the coupon plus any gain or loss to par if the bond is held to maturity?

  1. Yield to maturity
  2. Current yield
  3. Nominal yield
  4. Dividend yield
Show the answer and rationale

Answer: A

Yield to maturity accounts for all coupon payments and the difference between price and par at maturity. Current and nominal yields ignore that gain or loss.

📚 Learn it: Measuring the Payoff: Yields and Returns

Question 9 of 20

A broker-dealer re-pledges customer margin securities to a bank to finance customer loans. What is this called?

  1. Commingling
  2. Free-riding
  3. Rehypothecation
  4. Hypothecation
Show the answer and rationale

Answer: C

Re-pledging customer collateral to a bank is rehypothecation; the customer's original pledge to the firm is hypothecation. Commingling and free-riding are prohibited practices of a different kind.

📚 Learn it: Buying on Margin: 50% In, 25% to Stay

Question 10 of 20

A trade settles on Thursday. Under Rule 10b-10, by when must the customer's confirmation be sent?

  1. Within 30 days
  2. By Thursday
  3. By month-end
  4. By Friday
Show the answer and rationale

Answer: B

A confirmation must be given or sent at or before completion of the transaction, which is settlement on Thursday. Friday, 30 days and month-end are all too late.

📚 Learn it: After the Trade: Reports, Confirms and Statements

Practice 10 more trading and settlement questions free →

A timed or tutor-mode set in the app, scored by SIE section, with every miss saved for review. Free, no sign-up needed.

Question 11 of 20

A customer buys stock in a cash (same-day) trade on the record date of a normal dividend. Who is entitled to the dividend?

  1. The seller
  2. The buyer
  3. The issuing company
  4. The transfer agent
Show the answer and rationale

Answer: B

A cash trade settles on the trade date, so the buyer is on the books on the record date and receives the dividend. Rule 11140's ex-date designation excepts cash trades for this reason.

📚 Learn it: Four Dividend Dates and the One That Decides

Question 12 of 20

A company pays $1.00 per share quarterly and then splits 2-for-1. If total dividends paid stay the same, what is the new per-share dividend?

  1. $0.50
  2. $2.00
  3. $1.00
  4. $0.25
Show the answer and rationale

Answer: A

Twice as many shares share the same total payout, so the per-share dividend halves to $0.50. Keeping $1.00 per share would double the company's total payout.

📚 Learn it: More Slices, Same Pizza: Splits and Stock Dividends

Question 13 of 20

How does an exchange offer pay shareholders who accept it?

  1. In a cash dividend
  2. In other securities
  3. Only in cash
  4. In new rights
Show the answer and rationale

Answer: B

An exchange offer gives holders other securities, such as the bidder's stock or bonds, instead of cash. A cash tender offer pays cash, and rights and dividends are different corporate actions.

📚 Learn it: Offers You Can Take or Leave: Rights, Tenders and Mergers

Question 14 of 20

A customer holds shares in street name. What is the customer's status?

  1. Transfer agent
  2. Beneficial owner
  3. Nominee holder
  4. Registered owner
Show the answer and rationale

Answer: B

In street name the firm's nominee is the registered owner, while the customer is the beneficial owner entitled to dividends, gains and voting instructions.

📚 Learn it: Voting From Afar: Proxies and Street Name

Question 15 of 20

Which order type protects the price but does not assure that the order will be filled?

  1. Market order
  2. Limit order
  3. Stop order
  4. Market-on-open order
Show the answer and rationale

Answer: B

A limit order fills only at the limit price or better, so it may never execute. Market orders and triggered stop orders give up price control in exchange for execution.

📚 Learn it: Market, Limit, Stop: Which Order Does What

Question 16 of 20

What is a short seller required to do to close the position?

  1. Exercise a call option on the stock
  2. Sell more shares in the market
  3. Buy the shares back and return them
  4. Deliver cash equal to the sale
Show the answer and rationale

Answer: C

Closing (covering) a short means buying the same number of shares and returning them to the lender. Selling more shares adds to the short; cash alone does not return the borrowed shares.

📚 Learn it: Going Long, Selling Short and Who Is on the Other Side

Question 17 of 20

Which statement about the settlement of US Treasury securities is accurate?

  1. They always settle in 5 days
  2. They never settle by book entry
  3. They settle at the next auction
  4. They settle on T+1
Show the answer and rationale

Answer: D

US government securities settle regular way on the next business day (T+1). They are held in book-entry form, and settlement is not tied to an auction.

📚 Learn it: T+1: When the Cash and Shares Change Hands

Question 18 of 20

For a bond bought at a premium, which yield is the lowest?

  1. Yield to maturity
  2. Coupon rate
  3. Nominal yield
  4. Current yield
Show the answer and rationale

Answer: A

A premium bond loses value as it moves toward par, so YTM is the lowest: YTM < current yield < nominal (coupon). Nominal yield and coupon rate are the same, and they are the highest here.

📚 Learn it: Measuring the Payoff: Yields and Returns

Question 19 of 20

In a long margin account, what does NOT change when the market price of the stock moves?

  1. Equity percentage
  2. Debit balance
  3. Equity
  4. Market value
Show the answer and rationale

Answer: B

The debit balance is the loan amount, which changes only with interest, deposits or withdrawals, not with price. Market value, equity and the equity percentage all move with the stock.

📚 Learn it: Buying on Margin: 50% In, 25% to Stay

Question 20 of 20

A customer places a market order to buy when the quote is $31.40 bid, $31.48 ask. At about what price will the order fill?

  1. $31.40
  2. $31.48
  3. $31.44
  4. $31.32
Show the answer and rationale

Answer: B

A market buy order pays the ask, about $31.48, assuming the quote holds. $31.40 is the bid (what sellers receive) and $31.44 is the midpoint.

📚 Learn it: After the Trade: Reports, Confirms and Statements

Practice 10 more trading and settlement questions free →

A timed or tutor-mode set in the app, scored by SIE section, with every miss saved for review. Free, no sign-up needed.

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