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.
Q21Taj has purchased a bond that has a $1000 par value. Because interest rates have risen, this bond was priced at a discount when Taj bought it.<br/><br/>How much did Taj pay for the bond?
✓ Correct answer: D. less than $1000
A bond that is priced below the par value is said to be priced at a discount.
Q22Which of the following regarding income is TRUE?
✓ Correct answer: A. Salary or bonuses are earned income; interest and dividends are investment income.
While someone’s salary or bonus would be earned income, investment income is that which is earned from one’s investments. Sometimes called portfolio income, it would include dividends, interest, and capital gains derived from the sale of securities.
Q23100 common shares of ABC are being liquidated by a customer at the market. If the inner market is currently between 904.78 and 905.57, the client’s transaction will occur disregarding commissions and other charges at:
✓ Correct answer: D. 904.78
The price at which a client's liquidation (sell) order will be executed is the best (inside) bid.
Q24An investor has held shares of a mutual fund for 8 months and receives a long-term capital gains distribution.<br/><br/>How is the distribution taxed to the investor?
✓ Correct answer: D. Long-term capital gain
Although the investor has held the fund for 1 year or less, distributions received from the fund are taxed based on how long the fund held the securities before selling them. Therefore, the investor may claim the distributions as long term gains.
Q25In terms of front running, which of the following is/are not true?<br/><br/>I. A broker or trader who makes deals just before a large, unpublicized order in an effort to acquire a competitive advantage is known as front-running.<br/><br/>II. Because it makes use of private information that is not generally available, front-running is illegal and unethical.<br/><br/>III. The price of an asset can be affected by front running.<br/><br/>IV. Front running is a legal practice and Brokers and dealers benefit greatly from front running.
✓ Correct answer: C. IV only
According to FINRA rule no 5270. Front Running of Block Transactions<br/><br/>This rule is applicable to orders that are made to be executed for any account in which the member or anyone connected to the member has an interest, any account for which the member or anyone connected to the member exercises investment discretion, or for the accounts of the member's customers or affiliates who have been given such material, non-public market information by the member or anyone connected to the member.<br/><br/>No member or person connected to a member shall cause the execution of an order to buy or sell a security or a related financial instrument if the member or person connected to a member causing the execution of the order has material, non-public market information regarding an impending block transaction in the security, the related financial instrument, or the security underlying the related financial instrument before information regarding the impending block transaction becomes public.
Q26Each Member must update its plan when necessary and must periodically review the plan and keep a record of the review. Your firm should distribute and explain the following except? <br/><br/>I. maintain copies of the plan at one or more off-site locations that are readily accessible to key employees <br/><br/>II. communicate the essential parts of the plan to all employees <br/><br/>III. the contact essential parties for identifying ways to minimize financial impact <br/><br/>IV. the plan to key employees
✓ Correct answer: D. I, II, & IV
Each Member must update its plan when necessary and must periodically review the plan and keep a record of the review. Your firm should distribute and explain the plan to key employees, communicate the essential parts of the plan to all employees, and maintain copies of the plan at one or more off-site locations that are readily accessible to key employees.
Q27Upon application for registration as a registered representative to ensure that any criminal past might be discovered by the employing firm, the Securities and Exchange Commission (SEC) requires
✓ Correct answer: D. the filing of a fingerprint card with the U.S. Attorney General
A fingerprint card is required to be filed with the U.S. Attorney General to ensure that any criminal past that might result in statutory disqualification from association with a member firm is discovered.
Q28Which of the following is not required information that must be included in the U4?
✓ Correct answer: C. All current investment assets
The form U4 is required to be filled out during the hiring process and there is U5 for the termination process. It requires basic clerical information like name, address, and any known aliases along with the aforementioned information. <br/><br/>Any changes to this information needs to be reported within 30 days of the change.
Q29Hiro owns a financial services company. Many of his salespeople take financial advisors and investors out for meals and events. In order to stay compliant with FINRA Rule 3222, Hiro needs to <code>_____</code>.
✓ Correct answer: D. have a written policy on business entertainment
FINRA Rule 3222 says that each company needs a written policy on business entertainment that stresses the importance of keeping business entertainment expenses reasonable.
Q30CTFC Regulation 5.10 (ii.c) states that FDMs must establish and maintain internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities including systems and policies for supervising, monitoring, reporting and reviewing trading activities in which of the following?<br/><br/> I. securities<br/><br/> II. forex transactions<br/><br/> III. futures contracts<br/><br/> IV. commodity options
✓ Correct answer: C. All of the above
CTFC Regulation 5.10 (ii.c) – establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities, including systems and policies for supervising, monitoring, reporting and reviewing trading activities in forex transactions, securities, futures contracts, commodity options, forward contracts and financial instruments; policies for hedging or managing risks created by trading activities or supervising accounts carried for affiliates, including a description of the types of reviews conducted to monitor positions; and policies relating to restrictions or limitations on trading activities.
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