1
FINRA SECURITIES INDUSTRY ESSENTIALS
(SIE) PRACTICE EXAM — 100 QUESTIONS AND
ANSWERS 2026 JUST RELEASED VERSION
SECTION A — Capital Markets (1–25)
1. The primary purpose of the securities markets is to:
A. Increase corporate taxes
B. Facilitate capital formation
C. Reduce stock prices
D. Discourage investment
Answer: B
Rationale: Securities markets channel capital from savers to
businesses and governments.
2. A primary market transaction involves:
A. Trading between investors
B. Issuance of new securities
C. Redemption at maturity only
D. Margin trading only
Answer: B
Rationale: Primary markets involve new issues sold to investors.
3. Which entity regulates the issuance of municipal bonds?
A. FINRA only
B. Municipal Securities Rulemaking Board (MSRB)
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C. IRS
D. Federal Reserve
Answer: B
Rationale: The MSRB writes rules for municipal securities
dealers and advisors.
4. An initial public offering (IPO) occurs when a company:
A. Buys back shares
B. Offers stock to the public for the first time
C. Issues bonds
D. Merges with another company
Answer: B
Rationale: IPO is first public sale of stock.
5. Secondary market trades occur:
A. Only during IPOs
B. Between investors after issuance
C. Only in bonds
D. Only at exchanges
Answer: B
Rationale: Secondary markets involve investor-to-investor
trades.
6. Which of the following is a money market instrument?
A. Common stock
B. Treasury bill
C. Corporate bond
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D. Preferred stock
Answer: B
Rationale: T-Bills mature within one year, classifying them as
money market instruments.
7. Equity securities represent:
A. Debt obligations
B. Ownership in a corporation
C. Guaranteed returns
D. Federal loans
Answer: B
Rationale: Equity holders are part-owners of the company.
8. The bid price is:
A. The price a buyer will pay
B. The price seller wants
C. The next dividend amount
D. The par value
Answer: A
Rationale: Bid is buyer’s offer to purchase.
9. The ask price is:
A. The highest future price
B. The price at which a seller will sell
C. A dividend rate
D. Always below bid
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Answer: B
Rationale: Ask (offer) is seller’s selling price.
10. A narrow spread indicates:
A. Low liquidity
B. High volatility
C. High liquidity
D. Unregulated market
Answer: C
Rationale: Narrow spread suggests high trading activity and
liquidity.
11. Blue-chip stocks are known for:
A. High volatility only
B. Long history of stable earnings
C. Short-term bonds
D. No dividend payments
Answer: B
Rationale: Blue chips are large, stable, financially sound
companies.
12. A corporate bond’s par value is typically:
A. 10
B. 100
C. 1,000
D. 10,000
FINRA SECURITIES INDUSTRY ESSENTIALS
(SIE) PRACTICE EXAM — 100 QUESTIONS AND
ANSWERS 2026 JUST RELEASED VERSION
SECTION A — Capital Markets (1–25)
1. The primary purpose of the securities markets is to:
A. Increase corporate taxes
B. Facilitate capital formation
C. Reduce stock prices
D. Discourage investment
Answer: B
Rationale: Securities markets channel capital from savers to
businesses and governments.
2. A primary market transaction involves:
A. Trading between investors
B. Issuance of new securities
C. Redemption at maturity only
D. Margin trading only
Answer: B
Rationale: Primary markets involve new issues sold to investors.
3. Which entity regulates the issuance of municipal bonds?
A. FINRA only
B. Municipal Securities Rulemaking Board (MSRB)
,2
C. IRS
D. Federal Reserve
Answer: B
Rationale: The MSRB writes rules for municipal securities
dealers and advisors.
4. An initial public offering (IPO) occurs when a company:
A. Buys back shares
B. Offers stock to the public for the first time
C. Issues bonds
D. Merges with another company
Answer: B
Rationale: IPO is first public sale of stock.
5. Secondary market trades occur:
A. Only during IPOs
B. Between investors after issuance
C. Only in bonds
D. Only at exchanges
Answer: B
Rationale: Secondary markets involve investor-to-investor
trades.
6. Which of the following is a money market instrument?
A. Common stock
B. Treasury bill
C. Corporate bond
,3
D. Preferred stock
Answer: B
Rationale: T-Bills mature within one year, classifying them as
money market instruments.
7. Equity securities represent:
A. Debt obligations
B. Ownership in a corporation
C. Guaranteed returns
D. Federal loans
Answer: B
Rationale: Equity holders are part-owners of the company.
8. The bid price is:
A. The price a buyer will pay
B. The price seller wants
C. The next dividend amount
D. The par value
Answer: A
Rationale: Bid is buyer’s offer to purchase.
9. The ask price is:
A. The highest future price
B. The price at which a seller will sell
C. A dividend rate
D. Always below bid
, 4
Answer: B
Rationale: Ask (offer) is seller’s selling price.
10. A narrow spread indicates:
A. Low liquidity
B. High volatility
C. High liquidity
D. Unregulated market
Answer: C
Rationale: Narrow spread suggests high trading activity and
liquidity.
11. Blue-chip stocks are known for:
A. High volatility only
B. Long history of stable earnings
C. Short-term bonds
D. No dividend payments
Answer: B
Rationale: Blue chips are large, stable, financially sound
companies.
12. A corporate bond’s par value is typically:
A. 10
B. 100
C. 1,000
D. 10,000
