FINRA SIE Exam Questions and
Answers | Latest Version | 2025/2026 |
Correct & Verified
What is a primary market?
✔✔A market where new securities are issued
What is a secondary market?
✔✔A market where previously issued securities are traded
What is the function of a broker‑dealer?
✔✔Facilitate buying and selling of securities
What is a security?
✔✔A financial instrument that holds monetary value
Define a stock certificate.
✔✔A document representing ownership in a corporation
What is an IPO?
✔✔Initial Public Offering of a company’s stock
What is an ETF?
1
,✔✔Exchange‑Traded Fund
What does “liquidity” refer to in investments?
✔✔How easily an asset can be converted to cash
What is a bond?
✔✔A debt instrument issued by a corporation or government
What is a dividend?
✔✔A distribution of profits to shareholders
What is market capitalization?
✔✔Total market value of a company’s outstanding shares
What does “volatility” mean?
✔✔Price fluctuation of a security over time
Define a mutual fund.
✔✔An investment vehicle pooling money from many investors
What is a yield?
✔✔Return on investment expressed as a percentage
2
,What is the role of the SEC?
✔✔Regulate and enforce federal securities laws
What is a registered representative?
✔✔An individual licensed to sell securities
What is FINRA?
✔✔Financial Industry Regulatory Authority
What is a margin account?
✔✔An account that allows trading with borrowed funds
What is a prospectus?
✔✔A document that provides details about a security offering
What does “underwriter” mean?
✔✔A firm that helps a company issue new securities
What is a corporate bond?
✔✔Debt issued by a corporation to raise capital
3
, What is a municipal bond?
✔✔Debt issued by a city or state government
What is a yield to maturity?
✔✔Total return if a bond is held until it matures
What does “diversification” help reduce?
✔✔Investment risk
What is an annuity?
✔✔A contract that provides periodic payments in exchange for a lump sum
What is the definition of a call option?
✔✔The right to buy a security at a set price
What is the definition of a put option?
✔✔The right to sell a security at a set price
What does “underwriting spread” refer to?
✔✔The difference between what the underwriter pays and what the public pays
Define insider trading.
4
Answers | Latest Version | 2025/2026 |
Correct & Verified
What is a primary market?
✔✔A market where new securities are issued
What is a secondary market?
✔✔A market where previously issued securities are traded
What is the function of a broker‑dealer?
✔✔Facilitate buying and selling of securities
What is a security?
✔✔A financial instrument that holds monetary value
Define a stock certificate.
✔✔A document representing ownership in a corporation
What is an IPO?
✔✔Initial Public Offering of a company’s stock
What is an ETF?
1
,✔✔Exchange‑Traded Fund
What does “liquidity” refer to in investments?
✔✔How easily an asset can be converted to cash
What is a bond?
✔✔A debt instrument issued by a corporation or government
What is a dividend?
✔✔A distribution of profits to shareholders
What is market capitalization?
✔✔Total market value of a company’s outstanding shares
What does “volatility” mean?
✔✔Price fluctuation of a security over time
Define a mutual fund.
✔✔An investment vehicle pooling money from many investors
What is a yield?
✔✔Return on investment expressed as a percentage
2
,What is the role of the SEC?
✔✔Regulate and enforce federal securities laws
What is a registered representative?
✔✔An individual licensed to sell securities
What is FINRA?
✔✔Financial Industry Regulatory Authority
What is a margin account?
✔✔An account that allows trading with borrowed funds
What is a prospectus?
✔✔A document that provides details about a security offering
What does “underwriter” mean?
✔✔A firm that helps a company issue new securities
What is a corporate bond?
✔✔Debt issued by a corporation to raise capital
3
, What is a municipal bond?
✔✔Debt issued by a city or state government
What is a yield to maturity?
✔✔Total return if a bond is held until it matures
What does “diversification” help reduce?
✔✔Investment risk
What is an annuity?
✔✔A contract that provides periodic payments in exchange for a lump sum
What is the definition of a call option?
✔✔The right to buy a security at a set price
What is the definition of a put option?
✔✔The right to sell a security at a set price
What does “underwriting spread” refer to?
✔✔The difference between what the underwriter pays and what the public pays
Define insider trading.
4
