FINRA SIE TEST FINAL EXAM AND PRACTICE EXAM
QUESTIONS 2026 COMPLETE EXAM QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT
ANSWERS) | ALREADY GRADED A+
INTRODUCTION:
FINRA SIE 2026 Exam Preparation Package is designed for candidates preparing for the
Securities Industry Essentials examination scheduled for 2026. The package includes both a
comprehensive practice exam and a simulated final exam that reflect the latest FINRA content
outline, regulatory updates, and testing format anticipated for 2026. All questions are crafted to
test knowledge of capital markets, investment products, risks, trading processes, customer
accounts, prohibited activities, and regulatory frameworks as outlined by FINRA for the SIE
examination.
PRACTICE EXAM QUESTIONS (75 TOTAL - PART 1):
1. Under FINRA rules, what is the maximum timeframe for settling a regular-way transaction for
corporate securities in 2026?
A. T+1
B. T+2
C. T+3
D. T+4
Answer: A
Rationale: SEC Rule 15c6-1(a) was amended to shorten the standard settlement cycle from T+2
to T+1, effective May 28, 2024. FINRA Rule 11140 and related uniform practice rules were
conformed to reflect this T+1 standard for regular-way transactions.
2. Which of the following investments is generally considered to have the highest risk for loss of
principal?
A. U.S. Treasury bonds
B. Investment-grade corporate bonds
C. Blue-chip stocks
,D. Options on volatile stocks
Answer: D
Rationale: Options are derivative instruments with leverage and time decay characteristics.
Unlike the underlying securities, options can expire worthless, and options on volatile stocks
carry amplified risk due to price swings, creating the highest potential for loss of principal
among the choices.
3. A registered representative receives an order from a customer to buy 100 shares of XYZ stock
at the best available price. This type of order is known as:
A. A limit order
B. A stop order
C. A market order
D. A stop-limit order
Answer: C
Rationale: A market order is an order to buy or sell a security immediately at the best available
current price. It prioritizes execution speed over price control, unlike limit orders which specify a
maximum or minimum price.
4. Which of the following represents the primary purpose of the Securities Act of 1933?
A. To regulate trading of securities in the secondary market
B. To prevent fraud and market manipulation
C. To ensure full and fair disclosure of information for new securities offerings
D. To establish the Securities and Exchange Commission
Answer: C
Rationale: The Securities Act of 1933, often called the "truth in securities" law, requires that
investors receive financial and other significant information concerning securities being offered
for public sale, and prohibits deceit, misrepresentations, and other fraud in the sale of
securities.
5. Under FINRA Rule 2165 (Financial Exploitation of Specified Adults), a member firm is
permitted to place a temporary hold on the disbursement of funds or securities from the
account of a specified adult if:
,A. The firm has a reasonable belief that financial exploitation has occurred or will occur
B. The adult requests a withdrawal exceeding $10,000
C. The firm suspects insider trading activity
D. The account has been dormant for more than six months
Answer: A
Rationale: FINRA Rule 2165 permits firms to place a temporary hold (up to 15 business days,
extendable) when there is a reasonable belief of financial exploitation of a specified adult (age
65+ or age 18+ with mental or physical impairment). The rule provides safe harbor for firms
acting in good faith.
6. Which market structure facilitates trading of securities that are not listed on a national
securities exchange?
A. Primary market
B. Over-the-counter (OTC) market
C. Third market
D. Fourth market
Answer: B
Rationale: The over-the-counter (OTC) market is a decentralized market where market makers
quote prices for securities not listed on formal exchanges. Trading occurs via dealer networks
rather than through a centralized exchange floor.
7. What is the maximum percentage of a customer's portfolio that can be concentrated in a
single equity security under FINRA's maintenance margin requirements for margin accounts?
A. 25%
B. 50%
C. There is no specific percentage limit for concentration
D. 75%
Answer: C
Rationale: FINRA Rule 4210 establishes maintenance margin requirements (25% for long equity
securities) but does not impose specific portfolio percentage limits on concentration. However,
firms may impose house rules requiring additional margin for concentrated positions.
, 8. A customer sells short 500 shares of ABC stock at $40 per share. The initial margin
requirement is 50%. What is the required equity deposit?
A. $5,000
B. $10,000
C. $15,000
D. $20,000
Answer: B
Rationale: Under Regulation T, short sales require 150% of the market value (100% proceeds +
50% initial margin). For 500 shares at $40 ($20,000 market value), the customer must deposit
$10,000 (50% of $20,000) in addition to the $20,000 proceeds held by the firm.
9. Which of the following is considered a municipal security?
A. Treasury bond issued by the U.S. Department of the Treasury
B. General obligation bond issued by a city
C. Commercial paper issued by a corporation
D. Certificate of deposit issued by a bank
Answer: B
Rationale: Municipal securities are debt obligations issued by states, cities, counties, and other
governmental entities below the federal level. General obligation bonds are backed by the full
faith and credit (taxing power) of the issuing municipality.
10. Under the USA PATRIOT Act, which form is used to report suspicious transactions that might
involve money laundering or terrorist financing?
A. Form U4
B. Form BD
C. FinCEN Form 104 (SAR)
D. Form 8-K
Answer: C
QUESTIONS 2026 COMPLETE EXAM QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT
ANSWERS) | ALREADY GRADED A+
INTRODUCTION:
FINRA SIE 2026 Exam Preparation Package is designed for candidates preparing for the
Securities Industry Essentials examination scheduled for 2026. The package includes both a
comprehensive practice exam and a simulated final exam that reflect the latest FINRA content
outline, regulatory updates, and testing format anticipated for 2026. All questions are crafted to
test knowledge of capital markets, investment products, risks, trading processes, customer
accounts, prohibited activities, and regulatory frameworks as outlined by FINRA for the SIE
examination.
PRACTICE EXAM QUESTIONS (75 TOTAL - PART 1):
1. Under FINRA rules, what is the maximum timeframe for settling a regular-way transaction for
corporate securities in 2026?
A. T+1
B. T+2
C. T+3
D. T+4
Answer: A
Rationale: SEC Rule 15c6-1(a) was amended to shorten the standard settlement cycle from T+2
to T+1, effective May 28, 2024. FINRA Rule 11140 and related uniform practice rules were
conformed to reflect this T+1 standard for regular-way transactions.
2. Which of the following investments is generally considered to have the highest risk for loss of
principal?
A. U.S. Treasury bonds
B. Investment-grade corporate bonds
C. Blue-chip stocks
,D. Options on volatile stocks
Answer: D
Rationale: Options are derivative instruments with leverage and time decay characteristics.
Unlike the underlying securities, options can expire worthless, and options on volatile stocks
carry amplified risk due to price swings, creating the highest potential for loss of principal
among the choices.
3. A registered representative receives an order from a customer to buy 100 shares of XYZ stock
at the best available price. This type of order is known as:
A. A limit order
B. A stop order
C. A market order
D. A stop-limit order
Answer: C
Rationale: A market order is an order to buy or sell a security immediately at the best available
current price. It prioritizes execution speed over price control, unlike limit orders which specify a
maximum or minimum price.
4. Which of the following represents the primary purpose of the Securities Act of 1933?
A. To regulate trading of securities in the secondary market
B. To prevent fraud and market manipulation
C. To ensure full and fair disclosure of information for new securities offerings
D. To establish the Securities and Exchange Commission
Answer: C
Rationale: The Securities Act of 1933, often called the "truth in securities" law, requires that
investors receive financial and other significant information concerning securities being offered
for public sale, and prohibits deceit, misrepresentations, and other fraud in the sale of
securities.
5. Under FINRA Rule 2165 (Financial Exploitation of Specified Adults), a member firm is
permitted to place a temporary hold on the disbursement of funds or securities from the
account of a specified adult if:
,A. The firm has a reasonable belief that financial exploitation has occurred or will occur
B. The adult requests a withdrawal exceeding $10,000
C. The firm suspects insider trading activity
D. The account has been dormant for more than six months
Answer: A
Rationale: FINRA Rule 2165 permits firms to place a temporary hold (up to 15 business days,
extendable) when there is a reasonable belief of financial exploitation of a specified adult (age
65+ or age 18+ with mental or physical impairment). The rule provides safe harbor for firms
acting in good faith.
6. Which market structure facilitates trading of securities that are not listed on a national
securities exchange?
A. Primary market
B. Over-the-counter (OTC) market
C. Third market
D. Fourth market
Answer: B
Rationale: The over-the-counter (OTC) market is a decentralized market where market makers
quote prices for securities not listed on formal exchanges. Trading occurs via dealer networks
rather than through a centralized exchange floor.
7. What is the maximum percentage of a customer's portfolio that can be concentrated in a
single equity security under FINRA's maintenance margin requirements for margin accounts?
A. 25%
B. 50%
C. There is no specific percentage limit for concentration
D. 75%
Answer: C
Rationale: FINRA Rule 4210 establishes maintenance margin requirements (25% for long equity
securities) but does not impose specific portfolio percentage limits on concentration. However,
firms may impose house rules requiring additional margin for concentrated positions.
, 8. A customer sells short 500 shares of ABC stock at $40 per share. The initial margin
requirement is 50%. What is the required equity deposit?
A. $5,000
B. $10,000
C. $15,000
D. $20,000
Answer: B
Rationale: Under Regulation T, short sales require 150% of the market value (100% proceeds +
50% initial margin). For 500 shares at $40 ($20,000 market value), the customer must deposit
$10,000 (50% of $20,000) in addition to the $20,000 proceeds held by the firm.
9. Which of the following is considered a municipal security?
A. Treasury bond issued by the U.S. Department of the Treasury
B. General obligation bond issued by a city
C. Commercial paper issued by a corporation
D. Certificate of deposit issued by a bank
Answer: B
Rationale: Municipal securities are debt obligations issued by states, cities, counties, and other
governmental entities below the federal level. General obligation bonds are backed by the full
faith and credit (taxing power) of the issuing municipality.
10. Under the USA PATRIOT Act, which form is used to report suspicious transactions that might
involve money laundering or terrorist financing?
A. Form U4
B. Form BD
C. FinCEN Form 104 (SAR)
D. Form 8-K
Answer: C
