SIE practice questions and answers 2026. Tap an option to test yourself — you'll see the correct answer and a plain-English explanation for every question. Free, no login.
Q1When a corporation announces that it is seeking additional equity capital through a sale of additional authorized but unissued shares,
✓ Correct answer: D. this is a primary distribution
The ‘trick’ with this question is that anytime a company is selling NEW previously unissued shares from their Authorized shares maximum, those shares are NEW ---- Primary distribution means the shares being sold are NEW, never before issued, not previously owned by anyone.
Q2Which of the following is TRUE regarding the primary market?
✓ Correct answer: C. Issuer transactions occur in the primary market.
The primary market is where securities are sold to the investing public through issuer transactions. It is regulated by the Securities Act of 1933. The NYSE is an example of a secondary market where price is determined by supply and demand.
Q3When did the Congress establish the Securities & Exchange Commission (SEC)?
✓ Correct answer: C. 1934
Congress established the Securities & Exchange Commission (SEC) in 1934.
Q4The smallest portion of an underwriting spread is the:
✓ Correct answer: A. Manager's fee
The manager's fee is the amount received by the managing underwriter for each security sold by any brokerage firm involved in the offering. The manager's fee is the smallest portion of the underwriting spread.
Q5Which of the following is a theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate?
✓ Correct answer: B. Interest rate parity
Interest rate parity (IRP) is a theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.
Q6Which of the following is the formula to determine "exercise settlement amount"?
✓ Correct answer: C. difference between the "aggregate exercise price" and the "aggregate current index value"
Rule no 4210. Margin requirements<br/><br/>The difference between the aggregate exercise price and the "aggregate current index value" is referred to as the "exercise settlement amount" (as such terms are defined in the pertinent By-Laws of The Options Clearing Corporation).
Q7As defined by Standard & Poors rating service, which of the following is the higher credit rating in the speculative category?
✓ Correct answer: D. BB+
Ratings for investment grade are terminated at BBB. Below that are speculative grade ratings. BB+ would be the higher speculative rating from among these answers. Ba1 is a rating by Moody, not S&P.
Q8Which of the following is involved in a customer investment profile?<br/><br/>I. Liquidity needs<br/><br/>II. Risk tolerance<br/><br/>III. Customer's marital status<br/><br/>IV. Investment objectives
✓ Correct answer: C. I, II & IV
Rule no 211. Suitability<br/><br/>Based on the data gathered through the member's or associated person's reasonable diligence to ascertain the customer's investment profile, the member or associated person must have a reasonable basis to believe that the recommended transaction or investment strategy involving a security or securities is suitable for the customer. <br/><br/>Age, other investments, financial situation and needs, tax status, investment goals, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information a customer may disclose to a member or associated person in connection with such recommendation are all included in a customer's investment profile.
Q9Which of the following mutual fund shares offer breakpoints for large dollar investments?
✓ Correct answer: A. Class A
Class A shares of mutual funds charge sales charges on purchases (front-end load). Since investors pay sales charges when they buy shares, only class A shares may offer breakpoints.
Q10Restrictions for stockholders may include:
✓ Correct answer: B. becoming a member of the Board of Directors.
A restriction would, generally, not include unpleasant consequences for the stockholders. However, there may be a clause the allows the preferred stockholder to become a member of the Board of Directors.
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Theory