Foundational securities industry knowledge - capital markets, products and risks, trading, accounts, and the regulatory framework - for the FINRA SIE exam, with a worked explanation on every practice question.
Free sample questions
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lock_openFree sampleUnderstanding Products and Their Riskshard
Which statement best describes how a US Treasury bill (T-bill) provides a return to the investor who holds it to maturity?
- AIt is issued at a discount to face value and pays no periodic interest, the return being the difference between purchase price and the face value paid at maturity.check_circle Correct
- BIt pays a fixed coupon every six months and returns its face value at maturity.
- CIt pays a floating rate that resets quarterly against a reference index until maturity.
- DIt pays interest monthly that is exempt from federal income tax but taxable by the state of residence.
Treasury bills are short-term discount instruments whose return is the gap between a below-par purchase price and par at maturity. A T-bill has no coupon; it is sold below par and redeemed at par, so the investor's yield is realised entirely as the accreted discount received when the face value is paid at maturity.
Why A is correct: Correct: T-bills are pure discount instruments, so an investor pays less than par and receives par at maturity, and that spread is the entire yield.
Why B is wrong: This tempts candidates who blur T-bills with Treasury notes and bonds, but semi-annual coupons describe those longer instruments, not bills, which carry no coupon at all.
Why C is wrong: This mirrors a Treasury floating-rate note, so it feels current, but a standard T-bill has no periodic payment and no rate reset; the return is fixed the moment it is bought.
Why D is wrong: This inverts the true tax treatment and adds a false monthly coupon; Treasury interest is taxable federally and exempt at the state level, and bills pay no periodic interest.
lock_openFree sampleKnowledge of Capital Marketsmedium
What best describes the defining feature of a transaction in the primary market?
- AAn investor buys outstanding shares from another investor through an exchange
- BA market maker adjusts its quoted bid and ask to reflect current supply and demand
- CA large institution trades directly with another institution away from an exchange
- DAn issuer sells newly created securities and receives the proceeds of the salecheck_circle Correct
The primary market is where an issuer sells new securities and receives the proceeds. A primary market transaction is defined by the issuer selling newly issued securities and collecting the capital raised; once those securities change hands again, subsequent trades occur in the secondary market.
Why A is wrong: This is tempting because most trading candidates observe happens this way, but buying already-issued shares from another holder is a secondary market trade, not a primary market one.
Why B is wrong: Market makers quoting two-sided prices is real activity, but it describes dealing in already-outstanding securities in the secondary market, so it does not define the primary market.
Why C is wrong: Direct institution-to-institution trading is plausible because it also happens off-exchange, but that is the fourth market and involves existing securities, not a new issue.
Why D is correct: Correct. In the primary market the issuer raises capital by selling securities for the first time, so the sale proceeds flow to the issuer rather than to a prior holder.
lock_openFree sampleOverview of the Regulatory Frameworkmedium
Which statement best describes an associated person of a FINRA member firm for registration purposes?
- AAny retail customer who has opened a securities account and placed at least one trade with the member firm
- BOnly a registered principal who supervises the firm's producing representatives and approves new accounts
- CA natural person engaged in the investment banking or securities business who is controlled by, controlling, or under common control with the member firmcheck_circle Correct
- DAn outside vendor that provides software services to the firm under a written commercial contract
An associated person is an individual engaged in a member's securities business through a control relationship with the firm. The definition turns on a control relationship and involvement in the securities or investment banking business, which is what makes such individuals subject to SRO registration and qualification requirements rather than the firm's customers or outside vendors.
Why A is wrong: This is tempting because customers interact closely with the firm, but a customer is a client of the firm, not a person engaged in and controlled by the firm's securities business, so this is wrong.
Why B is wrong: Principals are associated persons, but the term is far broader than principals alone, so limiting it to supervisors describes only one subset and is wrong.
Why C is correct: This captures the definition used by FINRA: an associated person is an individual involved in the securities business of the firm through a control relationship, which is why such persons must register unless a specific exclusion applies.
Why D is wrong: A vendor may support the firm, but it is a separate business rather than a person engaged in the securities business under the firm's control, so it does not meet the definition.
More free SIE practice questions with worked answersFrequently asked questions
- How many questions are on the SIE exam?
- The FINRA Securities Industry Essentials (SIE) exam has 75 (plus 5 unscored) questions and runs for 105 minutes. The format is multiple choice, closed book.
- What score do I need to pass SIE?
- The pass mark is 70 / 100. Examworthy gives you a per-domain readiness score so you can see which domains are holding you back before you book.
- How much does the SIE exam cost?
- The exam costs 100 USD to sit. Practising on Examworthy is free to start, with a worked explanation on every question.
- Is there a SIE practice exam?
- Yes. Examworthy's exam mode runs a timed SIE practice exam (mock) paced to match the real exam, scored per domain so you can see exactly where you stand against the blueprint. Timed mocks are free with an account.
- How does Examworthy help me prepare for SIE?
- Every practice question carries a worked explanation and a per-distractor rationale, mapped to the official blueprint domains. You learn why each answer is right or wrong, not just the letter.
- Is Examworthy affiliated with FINRA?
- No. Examworthy is not affiliated with or endorsed by FINRA. Our questions are original, blueprint-aligned practice material; we never reproduce live exam items.
Examworthy is not affiliated with or endorsed by FINRA. All questions are original, blueprint-aligned practice material. We never reproduce live exam items. SIE and related marks belong to their respective owners.
