SIE practice questioneasySIPC Protection
The Securities Investor Protection Corporation (SIPC) protects customers against:
- AInvestment losses due to market decline
- BLoss of securities and cash when a broker-dealer fails financially✓ Correct answer
- CInflation eroding the value of investments
- DFraud committed by a registered representative
Explanation
Why B — Loss of securities and cash when a broker-dealer fails financially
SIPC protects customers against loss of cash and securities (up to $500,000, including $250,000 for cash) held at a broker-dealer that fails financially or becomes insolvent. SIPC does NOT protect against market losses (A), fraud (C), or inflation (D). It also does not cover commodity futures, fixed annuities, or investments in limited partnerships that are not registered. SIPC is not a government agency — it's a nonprofit funded by its member broker-dealers.
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