FINRA SIE Exam | Verified Questions and
100% Correct Answers | A+ Graded Study
Guide | 2025/2026 Edition
Section 1: Introduction
This document includes 100% correct and verified questions and answers from the FINRA
Securities Industry Essentials (SIE) Exam, updated for the 2025/2026 testing cycle. It covers
key exam domains including knowledge of capital markets, understanding products and their
risks, trading and customer accounts, and regulatory frameworks. This A+ graded guide
reflects the actual structure and rigor of the SIE, making it an ideal resource for candidates
seeking licensing success.
Section 2: Exam Questions and Answers
Section 1: Knowledge of Capital Markets (12 questions)
1. What is the primary role of the Securities and Exchange Commission (SEC)?
A. To regulate banking institutions
B. To protect investors and maintain fair markets
C. To set monetary policy
D. To issue corporate bonds
Correct Answer: B. To protect investors and maintain fair markets
Rationale: The SEC oversees securities markets to ensure investor protection, market
integrity, and capital formation.
2. Which organization is a self-regulatory organization (SRO) for the securities
industry?
A. Federal Reserve
B. FINRA
C. FDIC
D. CFTC
Correct Answer: B. FINRA
Rationale: FINRA regulates broker-dealers and their activities as an SRO under SEC
oversight.
3. What is the primary market?
A. Where securities are traded among investors
B. Where new securities are issued to the public
C. Where derivatives are exchanged
D. Where bonds are repurchased by issuers
Correct Answer: B. Where new securities are issued to the public
Rationale: The primary market involves the issuance of new securities, such as IPOs,
to raise capital.
4. Which index tracks the performance of 500 large U.S. companies?
A. Dow Jones Industrial Average
B. NASDAQ Composite
, C. S&P 500
D. Russell 2000
Correct Answer: C. S&P 500
Rationale: The S&P 500 is a broad-based index of 500 large-cap U.S. stocks.
5. What is the role of an underwriter in an IPO?
A. To trade securities on the secondary market
B. To purchase securities from the issuer and sell to the public
C. To regulate the securities offering
D. To provide tax advice to investors
Correct Answer: B. To purchase securities from the issuer and sell to the public
Rationale: Underwriters facilitate IPOs by buying shares from the issuer and
distributing them to investors.
6. Which market structure allows trading directly between buyers and sellers
without an exchange?
A. Auction market
B. Over-the-counter (OTC) market
C. Primary market
D. Specialist market
Correct Answer: B. Over-the-counter (OTC) market
Rationale: OTC markets involve decentralized trading through dealers, unlike
exchange-based auction markets.
7. What is the purpose of the Federal Reserve’s monetary policy?
A. To regulate securities exchanges
B. To control inflation and stabilize the economy
C. To enforce securities laws
D. To issue government bonds
Correct Answer: B. To control inflation and stabilize the economy
Rationale: The Federal Reserve uses monetary policy to manage economic stability.
8. Which entity clears and settles securities trades in the U.S.?
A. FINRA
B. SEC
C. Depository Trust & Clearing Corporation (DTCC)
D. NYSE
Correct Answer: C. Depository Trust & Clearing Corporation (DTCC)
Rationale: The DTCC ensures the efficient clearing and settlement of securities
transactions.
9. What is a bear market?
A. A market with rising prices
B. A market with declining prices
C. A market with stable prices
D. A market with high volatility
Correct Answer: B. A market with declining prices
Rationale: A bear market is characterized by a prolonged decline in securities prices
(typically 20% or more).
10. Which type of economic indicator lags behind the business cycle?
A. Leading indicator
B. Coincident indicator
C. Lagging indicator
D. Predictive indicator
Correct Answer: C. Lagging indicator
100% Correct Answers | A+ Graded Study
Guide | 2025/2026 Edition
Section 1: Introduction
This document includes 100% correct and verified questions and answers from the FINRA
Securities Industry Essentials (SIE) Exam, updated for the 2025/2026 testing cycle. It covers
key exam domains including knowledge of capital markets, understanding products and their
risks, trading and customer accounts, and regulatory frameworks. This A+ graded guide
reflects the actual structure and rigor of the SIE, making it an ideal resource for candidates
seeking licensing success.
Section 2: Exam Questions and Answers
Section 1: Knowledge of Capital Markets (12 questions)
1. What is the primary role of the Securities and Exchange Commission (SEC)?
A. To regulate banking institutions
B. To protect investors and maintain fair markets
C. To set monetary policy
D. To issue corporate bonds
Correct Answer: B. To protect investors and maintain fair markets
Rationale: The SEC oversees securities markets to ensure investor protection, market
integrity, and capital formation.
2. Which organization is a self-regulatory organization (SRO) for the securities
industry?
A. Federal Reserve
B. FINRA
C. FDIC
D. CFTC
Correct Answer: B. FINRA
Rationale: FINRA regulates broker-dealers and their activities as an SRO under SEC
oversight.
3. What is the primary market?
A. Where securities are traded among investors
B. Where new securities are issued to the public
C. Where derivatives are exchanged
D. Where bonds are repurchased by issuers
Correct Answer: B. Where new securities are issued to the public
Rationale: The primary market involves the issuance of new securities, such as IPOs,
to raise capital.
4. Which index tracks the performance of 500 large U.S. companies?
A. Dow Jones Industrial Average
B. NASDAQ Composite
, C. S&P 500
D. Russell 2000
Correct Answer: C. S&P 500
Rationale: The S&P 500 is a broad-based index of 500 large-cap U.S. stocks.
5. What is the role of an underwriter in an IPO?
A. To trade securities on the secondary market
B. To purchase securities from the issuer and sell to the public
C. To regulate the securities offering
D. To provide tax advice to investors
Correct Answer: B. To purchase securities from the issuer and sell to the public
Rationale: Underwriters facilitate IPOs by buying shares from the issuer and
distributing them to investors.
6. Which market structure allows trading directly between buyers and sellers
without an exchange?
A. Auction market
B. Over-the-counter (OTC) market
C. Primary market
D. Specialist market
Correct Answer: B. Over-the-counter (OTC) market
Rationale: OTC markets involve decentralized trading through dealers, unlike
exchange-based auction markets.
7. What is the purpose of the Federal Reserve’s monetary policy?
A. To regulate securities exchanges
B. To control inflation and stabilize the economy
C. To enforce securities laws
D. To issue government bonds
Correct Answer: B. To control inflation and stabilize the economy
Rationale: The Federal Reserve uses monetary policy to manage economic stability.
8. Which entity clears and settles securities trades in the U.S.?
A. FINRA
B. SEC
C. Depository Trust & Clearing Corporation (DTCC)
D. NYSE
Correct Answer: C. Depository Trust & Clearing Corporation (DTCC)
Rationale: The DTCC ensures the efficient clearing and settlement of securities
transactions.
9. What is a bear market?
A. A market with rising prices
B. A market with declining prices
C. A market with stable prices
D. A market with high volatility
Correct Answer: B. A market with declining prices
Rationale: A bear market is characterized by a prolonged decline in securities prices
(typically 20% or more).
10. Which type of economic indicator lags behind the business cycle?
A. Leading indicator
B. Coincident indicator
C. Lagging indicator
D. Predictive indicator
Correct Answer: C. Lagging indicator
