Comprehensive SIE Practice Exam
Questions and Answers | Latest Version
| 2025/2026 | Correct & Verified
What is the primary purpose of the Securities Industry Essentials (SIE) exam?
✔✔To test basic knowledge of the securities industry, products, risks, and regulations.
What type of exam is the SIE considered?
✔✔An introductory knowledge exam that does not require firm sponsorship.
What must a candidate pass in addition to the SIE to become registered?
✔✔A specialized qualification exam and firm sponsorship.
What does a share of common stock represent?
✔✔Ownership in a corporation.
What right typically comes with owning common stock?
✔✔The right to vote on corporate matters.
What type of stock usually pays fixed dividends?
✔✔Preferred stock.
What is a bond?
1
,✔✔A debt security representing a loan to an issuer.
Who is the issuer in a bond transaction?
✔✔The borrower.
Who is the investor in a bond transaction?
✔✔The lender.
What is the maturity date of a bond?
✔✔The date when the principal is repaid.
What is par value of a bond?
✔✔The amount returned to the investor at maturity.
What does a bond’s coupon rate indicate?
✔✔The annual interest rate paid on the bond.
What happens to bond prices when interest rates rise?
✔✔Bond prices fall.
What happens to bond prices when interest rates fall?
✔✔Bond prices rise.
2
,What is credit risk?
✔✔The risk that an issuer will fail to make payments.
What type of bond is backed by the full faith and credit of the U.S. government?
✔✔A U.S. Treasury bond.
What type of municipal bond is backed by tax revenues?
✔✔A general obligation bond.
What type of municipal bond is backed by project revenue?
✔✔A revenue bond.
What is default risk?
✔✔The risk that an issuer will not pay interest or principal.
What is reinvestment risk?
✔✔The risk of reinvesting income at lower interest rates.
What is market risk?
✔✔The risk of loss due to market price fluctuations.
3
, What is inflation risk?
✔✔The risk that inflation reduces purchasing power.
What is diversification?
✔✔Spreading investments to reduce risk.
What does an ETF trade like?
✔✔A stock on an exchange.
What is a mutual fund?
✔✔A pooled investment managed by professionals.
How are mutual fund shares priced?
✔✔At net asset value (NAV).
When is a mutual fund’s NAV calculated?
✔✔At the end of each trading day.
What is a load in a mutual fund?
✔✔A sales charge.
What is a no-load mutual fund?
4
Questions and Answers | Latest Version
| 2025/2026 | Correct & Verified
What is the primary purpose of the Securities Industry Essentials (SIE) exam?
✔✔To test basic knowledge of the securities industry, products, risks, and regulations.
What type of exam is the SIE considered?
✔✔An introductory knowledge exam that does not require firm sponsorship.
What must a candidate pass in addition to the SIE to become registered?
✔✔A specialized qualification exam and firm sponsorship.
What does a share of common stock represent?
✔✔Ownership in a corporation.
What right typically comes with owning common stock?
✔✔The right to vote on corporate matters.
What type of stock usually pays fixed dividends?
✔✔Preferred stock.
What is a bond?
1
,✔✔A debt security representing a loan to an issuer.
Who is the issuer in a bond transaction?
✔✔The borrower.
Who is the investor in a bond transaction?
✔✔The lender.
What is the maturity date of a bond?
✔✔The date when the principal is repaid.
What is par value of a bond?
✔✔The amount returned to the investor at maturity.
What does a bond’s coupon rate indicate?
✔✔The annual interest rate paid on the bond.
What happens to bond prices when interest rates rise?
✔✔Bond prices fall.
What happens to bond prices when interest rates fall?
✔✔Bond prices rise.
2
,What is credit risk?
✔✔The risk that an issuer will fail to make payments.
What type of bond is backed by the full faith and credit of the U.S. government?
✔✔A U.S. Treasury bond.
What type of municipal bond is backed by tax revenues?
✔✔A general obligation bond.
What type of municipal bond is backed by project revenue?
✔✔A revenue bond.
What is default risk?
✔✔The risk that an issuer will not pay interest or principal.
What is reinvestment risk?
✔✔The risk of reinvesting income at lower interest rates.
What is market risk?
✔✔The risk of loss due to market price fluctuations.
3
, What is inflation risk?
✔✔The risk that inflation reduces purchasing power.
What is diversification?
✔✔Spreading investments to reduce risk.
What does an ETF trade like?
✔✔A stock on an exchange.
What is a mutual fund?
✔✔A pooled investment managed by professionals.
How are mutual fund shares priced?
✔✔At net asset value (NAV).
When is a mutual fund’s NAV calculated?
✔✔At the end of each trading day.
What is a load in a mutual fund?
✔✔A sales charge.
What is a no-load mutual fund?
4
