SIE (Securities Industry Essentials) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Ace your Securities Industry Essentials (SIE) Exam with Examzify! Our practice exam features flashcards, multiple-choice questions with detailed explanations, and insightful tips to ensure your success.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

In the business of underwriting, when a firm adopts a firm commitment, it acts as a:

Broker
Dealer
Custodian
Advisor

The correct answer is: Dealer

In the business of underwriting, when a firm adopts a firm commitment, it acts as a dealer. This means that the firm purchases securities from the issuing company and then resells them to investors at a higher price, making a profit from the difference. Therefore, options A, C, and D are all incorrect as they do not accurately describe the role of a dealer in underwriting. A broker simply facilitates the buying and selling of securities between investors, while a custodian holds and safeguards assets on behalf of clients. An advisor may provide guidance and recommendations for investments, but does not have the direct role of a dealer in the underwriting process.