SIE Trading & Settlement Practice Questions
Trading & Settlement makes up 8 of every 50 questions on a Tigertest SIE practice test. Here are 10 of the 32 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on FINRA's Securities Industry Essentials content outline. Original questions; 50 per test, weighted like the real 75-question exam, 70% to pass.
1. Regular-way settlement for most U.S. stock trades is:
- A.Three business days after the trade
- B.One business day after the trade
- C.Two business days after the trade
- D.The same day as the trade
Answer: B. Since May 28, 2024, regular-way settlement for most U.S. stocks, corporate and municipal bonds is T+1.
2. A cash settlement trade settles:
- A.Two business days later
- B.At the end of the month
- C.One business day later
- D.On the trade date
Answer: D. Cash settlement means delivery and payment on the same day as the trade, usually by a set time.
3. A buy limit order is placed:
- A.At or below the market
- B.Only for odd lots
- C.Above the current price
- D.Only at the opening
Answer: A. A buy limit sets the highest price the customer will pay, so it is entered at or below the market. It will not fill above the limit.
4. A sell stop order is usually entered:
- A.At the current bid
- B.Only on short sales
- C.Below the current market price
- D.Above the current market price
Answer: C. A sell stop protects a long position or locks in a gain. It becomes a market order once the stock trades at or below the stop price.
5. When a stop order is triggered, it becomes a:
- A.Day order
- B.Good-til-canceled order
- C.Market order
- D.Limit order
Answer: C. A stop order turns into a market order once the stop price is reached, so the fill price is not guaranteed. A stop-limit becomes a limit order instead.
6. Which order guarantees execution but not price?
- A.A market order
- B.A stop-limit order
- C.An all-or-none order
- D.A limit order
Answer: A. A market order fills at the best available price right away. Limit orders guarantee price but not execution.
7. An investor who sold stock short would use which order to limit a loss?
- A.A sell limit above the market
- B.A sell stop below the market
- C.A buy limit below the market
- D.A buy stop above the market
Answer: D. A short seller loses when the price rises. A buy stop above the market buys the stock back if the price climbs to the stop.
8. A fill-or-kill order must be:
- A.Filled at the day's closing price only
- B.Fully filled at once or canceled
- C.Filled in part, rest left open
- D.Held until the end of the day
Answer: B. FOK means execute the whole order immediately or cancel it. Immediate-or-cancel allows a partial fill; all-or-none allows time.
9. An order marked GTC remains open until:
- A.The close of the week
- B.It is filled or canceled
- C.The end of the trading day
- D.The next settlement date
Answer: B. Good-til-canceled orders stay on the books until executed or canceled, subject to the firm's periodic confirmation rules.
10. What is the maximum potential loss on a short sale of stock?
- A.The margin deposit
- B.The stock's par value
- C.The sale proceeds
- D.Unlimited
Answer: D. A short seller must buy the stock back later, and there is no ceiling on how high its price can go.
Practice all 32 trading & settlement questions, and the rest of the 200-question bank, in the free SIE training sets. Questions you miss come back until you have mastered them.
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