SIE Securities Industry Essentials Exam Practice Test

Free 5-question sample test with instant feedback. See how ready you are.

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Sample Questions

Question 1

What type of account allows two or more individuals to share ownership with equal rights to the assets, and upon death of one owner, that owner's share passes to their estate?

Answer: Tenants in Common (TIC). Each owner holds a specified percentage of the account, and their share is passed to their heirs, not the surviving owners.

Question 2

In a Joint Tenants with Rights of Survivorship (JTWROS) account, what happens to a deceased owner's share of the assets?

Answer: The deceased owner's share automatically passes to the surviving joint owner(s), bypassing the estate and probate process.

Question 3

What is a custodial account opened under the Uniform Transfers to Minors Act (UTMA), and who controls it?

Answer: A UTMA account is an account opened in a minor's name managed by an adult custodian. The custodian controls the assets until the minor reaches the age of majority (typically 18 or 21 depending on the state).

Question 4

What is the key tax disadvantage of a UGMA/UTMA custodial account?

Answer: The 'kiddie tax' rule applies — unearned income above a threshold is taxed at the parent's (higher) tax rate, not the child's rate.

Question 5

What type of account is established by a legal document in which one party (the grantor) transfers assets to a second party (the trustee) for the benefit of a third party (the beneficiary)?

Answer: A trust account. The trustee has a fiduciary duty to manage the assets according to the trust agreement for the benefit of the beneficiary.