Free SIE Practice Test: 10 Questions with Explanations

Looking for free SIE practice questions? Below are 10 original questions with answers and plain-English explanations, spread across all four parts of the exam. Think of it as a short warm-up lap, with fewer shin splints.

First, a quick look at the real test.

What the SIE is

The SIE is the Securities Industry Essentials exam. FINRA (the Financial Industry Regulatory Authority, which oversees U.S. broker-dealers) writes and runs it. It checks basic industry knowledge: products, risks, markets, regulators, and banned practices.

Anyone 18 or older can take it. You don’t need a job at a firm, and results stay valid for four years. Passing the SIE alone does not let you sell securities. You still need to join a FINRA member firm and pass a qualification exam for your job, such as the Series 7.

Want the full numbers? See the SIE exam format and passing score explained.

The exam format

• 75 scored multiple-choice questions, each with four answer choices.
• 10 unscored pretest questions mixed in at random, so you see 85 items and can’t tell which ones don’t count.
• 1 hour and 45 minutes (105 minutes) to finish.
• Passing score: 70 on a 0 to 100 scale.
• No penalty for guessing, so answer every question.
• Fee: $100.

That 70 is not “70% of the questions right.” FINRA adjusts scores for small difficulty differences between question sets, so everyone meets the same standard.

Sources: FINRA SIE exam page, FINRA SIE FAQ, and the SIE Content Outline (PDF), as of Oct 22, 2026.

What the exam covers

FINRA splits the 75 scored questions into four sections:

• Knowledge of Capital Markets: 16% (12 questions)
• Understanding Products and Their Risks: 44% (33 questions)
• Understanding Trading, Customer Accounts and Prohibited Activities: 31% (23 questions)
• Overview of Regulatory Framework: 9% (7 questions)

Our 10 questions follow roughly that mix: 2, 4, 3, and 1.

Source: FINRA SIE exam page, as of Oct 22, 2026.

How to use this practice set

• Time yourself. 105 minutes for 85 items is about 74 seconds each, so give these 10 about 12 minutes.
• Answer before you peek. Scrolling ahead “just to check” is the study version of reading the last page of a mystery first.
• Read every explanation, even on ones you got right.

10 free SIE practice questions

These are original questions written for this post. They are not from any real FINRA exam.

1. (Capital markets) Which of these is a primary market transaction?

A. An investor buys shares of a listed company from another investor on an exchange
B. A company sells newly issued shares to the public in its initial public offering
C. A mutual fund sells a stock it has held for five years
D. Two dealers trade an existing corporate bond with each other

Answer: B. The primary market is where an issuer sells new securities and gets the money. An initial public offering (IPO) is the classic example. The rest are trades of existing securities, the secondary market.

2. (Capital markets) The Federal Reserve wants to slow the economy and reduce the money supply. Which open market action fits?

A. Buying U.S. Treasury securities
B. Selling U.S. Treasury securities
C. Lowering the discount rate
D. Lowering bank reserve requirements

Answer: B. When the Fed sells Treasuries, buyers pay with money that leaves the banking system, so less is available to lend. The other three choices loosen money instead.

Products and risks: the heavyweight section

This is 44% of the scored exam, so it gets four questions here. Bring snacks.

3. (Products) Market interest rates rise sharply. What usually happens to the price of a bond someone already owns?

A. It rises
B. It falls
C. It stays at par until maturity
D. It moves only if the issuer’s credit rating changes

Answer: B. Bond prices and interest rates move in opposite directions. New bonds now pay more, so an older bond with a lower coupon is worth less to buyers. Longer maturities feel this interest rate risk more.

4. (Products) Compared with common stockholders, preferred stockholders usually:

A. Vote on every board election
B. Get paid dividends and liquidation money before common holders
C. Have a claim ahead of the company’s bondholders
D. Are guaranteed a dividend every year

Answer: B. Preferred stock sits ahead of common stock for dividends and in a liquidation, but behind creditors such as bondholders. Preferred holders usually don’t vote, and a company can skip a preferred dividend.

5. (Products) An investor buys 1 call option on XYZ stock with a $50 strike price and pays a premium of $3 per share. One standard contract covers 100 shares. What is the most the investor can lose?

A. $3
B. $300
C. $5,000
D. Unlimited

Answer: B. An option buyer can lose no more than the premium paid: $3 × 100 shares = $300. The breakeven is the strike plus the premium, or $53.

6. (Products) What usually backs a municipal revenue bond?

A. The full taxing power of the city that issued it
B. Income from the project it paid for, such as toll road fees
C. The U.S. Treasury
D. FDIC insurance

Answer: B. A revenue bond is repaid from the income of the facility it financed. A general obligation (GO) bond is the one backed by the issuer’s taxing power.

Trading, accounts, and the stuff that gets people fired

7. (Trading) A customer enters a buy limit order at $40 on a stock trading at $42. Which statement is true?

A. The order fills right away at $42
B. The order can only fill at $40 or lower
C. The order can fill at any price above $40
D. The order becomes a market order once the stock hits $40

Answer: B. A buy limit sets the highest price the customer will pay. Choice D describes a buy stop order.

8. (Prohibited activities) A rep learns a customer is about to place a very large buy order for a stock and buys shares for their own account first, hoping to profit when the price rises. This is:

A. Churning
B. Front running
C. Market making
D. Dollar-cost averaging

Answer: B. Front running means trading ahead of a customer’s order using knowledge of that order, and it’s prohibited. Churning is excessive trading in a customer’s account to generate commissions.

9. (Customer accounts) A rep wants to choose which securities to buy for a customer without asking the customer before each trade. What is needed first?

A. A phone call from the customer saying it’s fine
B. Written discretionary authority from the customer, accepted by the firm
C. Nothing, as long as the trades are profitable
D. Approval from FINRA

Answer: B. Discretion means the rep picks the security or the amount without asking first. That needs the customer’s prior written authorization and the firm’s acceptance.

Regulatory framework: small section, easy points

10. (Regulators) Which of these is a self-regulatory organization (SRO), meaning an industry body that writes and enforces rules for its members?

A. The Securities and Exchange Commission (SEC)
B. FINRA
C. The Federal Reserve
D. The U.S. Treasury

Answer: B. FINRA is an SRO that oversees broker-dealers, under the oversight of the SEC. The SEC, the Fed, and the Treasury are government bodies, not SROs.

How to score yourself

Count your correct answers, then note where the misses came from. The pattern matters more than the total.

• Missed 1–2: review primary vs. secondary markets and Fed tools.
• Missed 3–6: review bonds, stock types, options, and munis.
• Missed 7–9: review order types, account rules, and prohibited practices.
• Missed 10: review who regulates whom.

Ten questions can’t predict your result. Use practice scores as a trend and move to longer timed sets as exam day gets close.

If the first try doesn’t go your way

Right now, the wait after a first or second failed attempt is 30 days, and after a third it’s 180 days. FINRA has amended its rules to cut those waits to 15 days and 60 days starting January 19, 2027. Each attempt is a new $100 enrollment.

Sources: FINRA SIE FAQ and the FINRA SIE exam page, as of Oct 22, 2026.

The bottom line

The SIE is 75 scored questions plus 10 pretest items in 1 hour and 45 minutes, with a passing score of 70 on FINRA’s scaled 0 to 100 range and a $100 fee. Products and risks make up almost half the scored exam, so that’s where most of your practice should go.

Exam facts checked against FINRA’s SIE exam page, SIE FAQ, and SIE Content Outline as of Oct 22, 2026. Rules can change, so always confirm with FINRA before you test. ebooklessons.com is an independent study aid and is not affiliated with FINRA.