SIE Trading and Customer Accounts Practice Questions

Correct answer: B. Market order

A market order guarantees execution at the best currently available price but does not guarantee a specific price. Limit orders specify a maximum/minimum price, and stop and stop-limit orders only become active once a trigger price is reached.

• AA. A limit order specifies a maximum (or minimum) acceptable price, which is the opposite of executing immediately at whatever price is available.
• BB. Correct. A market order executes immediately at the best available price without specifying a price, matching the customer's instruction.
• CC. A stop order only becomes a market order once a specified stop price is triggered; it isn't for immediate execution at the current market.
• DD. A stop-limit order becomes a limit order (not immediate execution) once triggered, and requires a specified price.

• Source: FINRA Investor Education: Order Types, accessed October 2026

Correct answer: B. The hypothecation agreement

The hypothecation agreement pledges the customer's securities as collateral for the margin loan and allows the firm to re-pledge them. The loan consent agreement is optional and covers lending securities to short sellers.

• AA. This document discloses the terms of the loan, such as how interest is charged. It does not authorize pledging the securities.
• BB. Right: hypothecation is the pledge of customer margin securities as collateral, and it is required for a margin account.
• CC. This optional document lets the firm lend the customer's securities to short sellers, which is different from pledging them for a bank loan.
• DD. This lets another person place orders in the account. It says nothing about collateral for the firm's borrowing.

• Source: 17 CFR § 240.8c-1, accessed October 2026

Correct answer: C. $5,000

Under Regulation T's 50% initial margin requirement, the customer must deposit 50% of the purchase price: 50% × $10,000 = $5,000. The remainder may be financed as a margin loan from the broker-dealer.

• AA. $2,500 reflects only 25%, not the current 50% Reg T initial margin requirement.
• BB. $7,500 (75%) overstates the current 50% Reg T initial margin requirement.
• CC. Correct. At the 50% Reg T initial margin requirement, the customer must deposit $5,000 (50% of $10,000) and may finance the remainder.
• DD. $10,000 represents full cash payment, not a margin purchase financed partly by the broker-dealer.

• Source: Federal Reserve Regulation T Section 220.12 (Supplement: Margin Requirements), accessed October 2026

Correct answer: B. $20

The investor pays the ask and receives the bid, so each share loses the $0.20 spread. Across 100 shares that is a $20 gross loss before fees.

• AA. This is ten times the actual loss; the spread is $0.20 per share, not $2.00.
• BB. The $0.20 spread times 100 shares equals a $20 round-trip loss.
• CC. A loss does occur because the purchase is at the higher ask and the sale at the lower bid.
• DD. This counts only half the spread, as if the sale were at the midpoint rather than the bid.

• Source: Exam outline: FINRA SIE Content Outline, accessed October 2026