Sample Questions

SIE Sample Questions

6 practice questions with complete answer explanations.

Sample Questions

Question 1regulation

Which regulatory body oversees broker-dealers in the United States?

A.FINRA✓ Correct

B.FDIC

C.OCC

D.CFPB

Explanation

FINRA (Financial Industry Regulatory Authority) is the self-regulatory organization for broker-dealers.

Question 2options

An investor buys a call option with a $50 strike price for a $3 premium. The stock must rise above what price for the investor to break even at expiration?

A.$53✓ Correct

B.$50

C.$47

D.$56

Explanation

Call break-even = strike + premium = $50 + $3 = $53.

Question 3prohibited-practices

A broker-dealer executes trades in a customer's account primarily to generate commissions. This is called:

A.Churning✓ Correct

B.Front-running

C.Painting the tape

D.Spoofing

Explanation

Churning is excessive trading for commissions — prohibited under FINRA Rule 2111.

Question 4customer-protection

SIPC protects customer accounts up to:

A.$500,000 ($250,000 cash)✓ Correct

B.$250,000 ($100,000 cash)

C.$1,000,000 (all securities)

D.$500,000 (all cash)

Explanation

SIPC covers up to $500,000 per customer, with a $250,000 cash sublimit.

Question 5fixed-income

Which of the following is a characteristic of a municipal bond?

A.Interest is typically exempt from federal income tax✓ Correct

B.It is backed by the full faith and credit of the federal government

C.It pays higher yields than comparable corporate bonds

D.It is always exempt from state taxes

Explanation

Municipal bond interest is generally exempt from federal taxes. It is NOT federally guaranteed — that's Treasuries.

Question 6order-types

A market order to buy is executed at:

A.The best available ask price✓ Correct

B.The closing price of the prior session

C.The bid price

D.A price specified by the customer

Explanation

A market buy order executes at the current best ask (offer) price in the market.

Test-Taking Tips

1.Focus on the four exam sections proportionally — Knowledge of Capital Markets is the largest.
2.Learn the key FINRA rules by number: 2111 (suitability), 4370 (business continuity), 3110 (supervision).
3.Options math is commonly tested — master break-even, max gain, max loss for calls and puts.
4.Use Kaplan or Securities Institute of America (SIA) materials.
5.Take multiple full-length practice tests — 75 questions in 1h45m is fast-paced.

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