SIE Securities Exam Questions & Answers 2026 (1–10)

Question 1

Which federal law created the Securities and Exchange Commission (SEC)?

TheoryPractice · Accepted Answer

The Securities Exchange Act of 1934. The Securities Exchange Act of 1934 created the SEC to regulate the secondary market and enforce the federal securities laws. The 1933 Act governs new issues but did not create the SEC.

Question 2

The Securities Act of 1933 primarily regulates which of the following?

TheoryPractice · Accepted Answer

The issuance of new securities to the public. The Securities Act of 1933 is the 'paper act' governing the primary market — registration and disclosure for new issues. Secondary trading is covered by the 1934 Act.

Question 3

FINRA is best described as which type of organization?

TheoryPractice · Accepted Answer

A self-regulatory organization (SRO). FINRA is a self-regulatory organization that oversees broker-dealers. It is not a government agency; it operates under SEC oversight.

Question 4

Which entity is primarily responsible for regulating broker-dealers and registered representatives in the over-the-counter market?

TheoryPractice · Accepted Answer

FINRA. FINRA is the primary SRO regulating broker-dealers and their associated persons. It writes rules, administers exams, and enforces conduct standards under SEC oversight.

Question 5

In which market do issuers raise new capital by selling securities for the first time?

TheoryPractice · Accepted Answer

The primary market. The primary market is where issuers sell newly created securities to investors, raising capital for the issuer. Subsequent trading among investors occurs in the secondary market.

Question 6

When an investor sells previously issued shares to another investor on an exchange, this transaction occurs in the:

TheoryPractice · Accepted Answer

Secondary market. The secondary market is where investors trade outstanding securities among themselves. The issuing company does not receive proceeds from these trades.

Question 7

A company offering its shares to the public for the very first time is conducting a(n):

TheoryPractice · Accepted Answer

Initial public offering (IPO). An IPO is the first sale of a company's stock to the public, a primary market transaction. After the IPO, the shares trade in the secondary market.

Question 8

The NYSE is an example of which type of market?

TheoryPractice · Accepted Answer

An exchange (auction) market. The NYSE is an auction market where buyers and sellers compete to obtain the best price. Designated market makers help maintain orderly trading in listed securities.

Question 9

A broker acts in which capacity when executing a customer order?

TheoryPractice · Accepted Answer

As an agent, matching buyers and sellers for a commission. A broker acts as an agent, arranging trades between buyers and sellers and charging a commission. It does not take ownership of the securities.

Question 10

A dealer (market maker) earns compensation primarily through:

TheoryPractice · Accepted Answer

A markup or markdown on principal trades. A dealer trades as principal from its own inventory and is compensated by the markup (when selling to a customer) or markdown (when buying from a customer). Brokers, by contrast, charge commissions.

SIE Securities Exam Questions & Answers 2026 (1–10)

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