SIE practice questionmediumFDIC vs. SIPC
A customer has a savings account at a bank and a brokerage account at a broker-dealer. Which statement is TRUE regarding protection of these accounts?
- ABoth accounts are protected by FDIC
- BNeither account has any government-backed protection
- CBoth accounts are protected by SIPC
- DThe bank account is protected by FDIC; the brokerage account is protected by SIPC✓ Correct answer
Explanation
Why D — The bank account is protected by FDIC; the brokerage account is protected by SIPC
FDIC protects bank deposits (savings, checking, CDs) up to $250,000 per depositor per bank. SIPC protects brokerage accounts up to $500,000 (with a $250,000 cash sublimit) if the broker-dealer fails. These protections are separate and distinct — FDIC does not cover brokerage accounts, and SIPC does not cover bank deposits. Neither protects against investment losses.
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