Free SIE practice test with answers
This free SIE practice test has 15 original questions at real exam difficulty. They follow the exam's four sections in proportion, so 7 of the 15 cover products and their risks. The answer sits under each question, with the reasoning and the source behind it.
Three habits get the most out of it:
- Answer before you read on. The answer box sits right under the options, so pick yours first.
- Keep the real pace. The SIE allows about 79 seconds a question. Give yourself 20 minutes for all 15.
- Read every explanation. Each wrong option is built on a common mistake, so the explanations teach even when you're right.
How to read your SIE practice test score
Treat your score out of 15 as a rough guide, not a prediction. Each question is almost 7% of the total, so one lucky guess moves your score a lot.
| Your score | What it suggests |
|---|---|
| 12 to 15 | 80% or more. A good sign, but confirm it on full-length, timed practice. |
| 9 to 11 | 60% to 73%. Close to the line, so find your weak sections and work on them. |
| 0 to 8 | Under 60%. Below the line for now, so study the topic behind each miss. |
For a second check on questions you haven't seen, take our free 20-question SIE diagnostic. It scores each section, so it shows where to focus first. FINRA's own practice test is another good check.
SIE practice questions: capital markets
Section 1 is 16% of the SIE: 12 questions. It covers the regulators, how markets work, the economy and how new securities are sold. These two test who owes a bond issuer what, and what a market maker may not be paid for.
Section 1: capital markets
Original questions, written to match real exam difficulty
Question 1
A school district hires an independent municipal advisor for a new bond issue. It picks a broker-dealer to underwrite the bonds. Which statement about the duties these firms owe the district is accurate?
- ABoth firms owe the district a fiduciary duty, because both are paid in connection with the bond issue
- BThe underwriter owes the district a fiduciary duty, because it sets the price the district receives for the bonds
- CThe municipal advisor owes the district a fiduciary duty, and the underwriter deals with it at arm's length
- DNeither firm owes the district any duty, because MSRB rules protect investors rather than issuers
Answer: C
A municipal advisor works for the municipal entity that hires it. MSRB Rule G-42 puts it under a fiduciary duty to that client, with a duty of loyalty and a duty of care.
An underwriter sits on the other side of the deal. It buys the bonds to resell them, so it deals with the issuer at arm's length. MSRB guidance under Rule G-17 makes the underwriter tell the issuer this, and that it has no fiduciary duty to the issuer. It still owes the issuer fair dealing.
Source: MSRB Rule G-42 (municipal advisors: fiduciary duty of loyalty and care to municipal entity clients); MSRB Rule G-17 interpretive notice on underwriters' duties to issuers (arm's-length role, no fiduciary duty); FINRA SIE content outline, Section 1.1.4 (municipal advisors)
Question 2
A small company's stock is quoted over the counter, but few firms make a market in it. The CEO offers a broker-dealer $5,000 a month to start quoting the stock as a market maker. Under FINRA rules, the broker-dealer:
- AMay not accept, because a firm can't take payment from an issuer for making a market
- BMay accept, as long as it discloses the payments on every customer confirmation
- CMay accept, as long as it keeps a two-sided quote in the stock for at least 30 days
- DMay accept, but only after a principal approves the arrangement in writing
Answer: A
FINRA Rule 5250 bars a member from taking any payment from an issuer for publishing a quote or acting as a market maker. The ban also covers payments from the issuer's affiliates and promoters. A market maker's quote should reflect its own interest in trading, not the issuer's money.
Disclosure, a minimum quoting period or a principal's sign-off doesn't cure it. The rule's exceptions are narrow, such as fees for genuine investment banking services or reimbursement of registration and listing fees.
Source: FINRA Rule 5250 (Payments for Market Making); FINRA SIE content outline, Section 1 rules
SIE practice questions: products and their risks
Section 2 is the biggest part of the SIE: 44%, or 33 questions. It covers the main investment products and the risks each one carries. The seven questions below run from stock voting and bonds to options, funds, 529 plans and foreign investing risk.
Section 2: products and their risks
Question 3
A company has two classes of common stock. Class A trades on an exchange and carries one vote per share. Class B is held by the founders and carries ten votes per share. An investor who buys Class A shares:
- AHas more voting power per share than the founders, because public shares outrank insider shares
- BGets the same voting power per share as a Class B holder, because all common stock votes equally
- CHas no ownership interest in the company, only a right to any dividends the board declares
- DOwns part of the company but has less say per share than the founders in electing directors
Answer: D
A company may issue more than one class of common stock with different voting rights. Here each Class B share carries ten votes. So the founders may control board elections even if they own far fewer shares than the public.
A Class A buyer still owns common stock. That means a claim on the company's earnings and assets after creditors and preferred holders, plus a vote. It's just a smaller vote per share. One vote per share is common, but it isn't required.
Source: Delaware General Corporation Law, 8 Del. C. § 151(a) (classes of stock may have full, limited or no voting powers); FINRA SIE content outline, Section 2.1.1 (common stock; voting rights)
Question 4
A bank pools thousands of its car loans in a trust. The trust sells investors securities that are paid from the borrowers' monthly loan payments. Which statement about these securities is accurate?
- AThey are mortgage-backed securities, so a Ginnie Mae guarantee stands behind their payments
- BThey are asset-backed securities, and investors depend on the car buyers repaying their loans
- CThey are general obligations of the bank, so the bank's whole balance sheet backs every payment
- DThey are money market instruments, because each car loan in the pool matures within a year
Answer: B
Securities paid from a pool of loans or receivables are asset-backed securities. Car loans, credit card balances and student loans are common examples. The SEC defines an asset-backed security as one serviced mainly by the cash flows of a discrete pool of financial assets.
So the investor's payments depend on the car buyers. If many of them default, the payments shrink. Investors look to the pool in the trust, not to the bank's general credit. There's no government guarantee either: Ginnie Mae backs certain mortgage pools, not car loans.
Source: SEC Regulation AB, 17 CFR 229.1101(c) (definition of asset-backed security); FINRA SIE content outline, Section 2.1.2 (asset-backed and mortgage-backed securities)
Question 5
A retiree keeps her cash in a government money market fund. Over the past year, short-term interest rates rose sharply. How did the rise most likely reach her?
- AThrough larger dividends, while the fund's share price stayed at $1.00
- BThrough a share price above $1.00, because the fund's holdings gained value
- CThrough smaller dividends, because rising rates cut the fund's income
- DThrough a share price below $1.00, because rising rates pushed down bond prices
Answer: A
A money market fund holds very short-term, high-quality debt. A government money market fund aims to keep its price at $1.00 a share, so its return comes as dividends. Its holdings mature, on average, within 60 days. As they mature, the fund reinvests the money at the new rates. So rising short-term rates show up quickly as larger dividends.
The short maturities also keep the price steady. A sharp rate rise hurts a long-term bond's price, but it barely touches debt that matures this soon. The $1.00 price is still a goal, not a guarantee: the fund's prospectus must say you could lose money.
Source: SEC Rule 2a-7, 17 CFR 270.2a-7 (stable share price methods; average maturity of 60 days or less; government money market fund defined); money market fund disclosures required by SEC Form N-1A, as in the Vanguard Federal Money Market Fund prospectus (Dec. 2024); FINRA SIE content outline, Section 2.1.4 (open-end funds; net asset value)
Question 6
An investor owns 100 shares of each of two stocks, both trading at $50. One is a steady utility. The other is a biotech stock whose price swings sharply. She plans to write one 50 call, expiring next month, against one of the positions. Which call will bring in more premium?
- AThe utility call, because a steady stock is less likely to be called away from her
- BNeither, because the two calls share the same strike, stock price and expiration
- CThe biotech call, because buyers pay more when a large price move is more likely
- DThe utility call, because buyers pay more when a call's outcome is easier to predict
Answer: C
Both calls are at the money, so neither has intrinsic value. Their whole premium is time value. Time value depends partly on how far the stock might move before expiration. A volatile stock has a better chance of a big rise, and a call buyer gains from that. A big drop costs the buyer no more than the premium. So buyers pay more for calls on volatile stocks.
The writer takes on more risk for that extra premium. The biotech shares are more likely to be called away, or to fall. A steady stock's call offers the buyer less upside, so it sells for less.
Source: FINRA SIE content outline, Section 2.1.3 (premium; in the money and out of the money)
Question 7
An ETF tracks a broad stock index and holds every stock in the index in the same weights. Last year the index returned 10.0% and the ETF returned 9.8%. What most likely explains the gap?
- AThe fund's manager picked stocks that did worse than the index
- BThe ETF pays operating expenses each year, and the index itself bears no costs
- CThe ETF pays income tax on its gains before passing them on, and the index doesn't
- DETF buyers pay a front-end sales load, which the fund deducts from its return
Answer: B
An index is just a calculation. It has no manager, trading costs or fees to pay. A fund that tracks it does, and those costs come out of the fund's return. They're the usual reason a fund that holds the whole index trails it.
This fund holds every index stock in the same weights, so stock picking isn't the cause. Funds pass their gains to shareholders rather than paying tax on them. ETFs don't charge sales loads either. A buyer may pay a brokerage commission, but that cost sits outside the fund's reported return.
Source: SEC Investor Bulletin: Exchange-Traded Funds (operating fees and expenses affect performance; brokerage commissions); FINRA SIE content outline, Section 2.1.9 (fee considerations; active vs. passive)
Question 8
A parent wants to open a 529 college savings plan. She can buy a direct-sold plan straight from the plan, or an adviser-sold plan through her broker. Which statement is accurate?
- AOnly the adviser-sold plan lets her change the beneficiary to another family member later
- BShe may only buy the plan her own state sponsors, because 529 plans are limited to residents
- COnly the direct-sold plan grows tax-deferred, because adviser-sold plans are taxable accounts
- DThe direct-sold plan may cost less, but it may not come with an investment professional's advice
Answer: D
Some states let investors buy their 529 plan directly, with no dealer involved. Fees may be lower, but the investor may not get advice from an investment professional. An adviser-sold plan is bought through a broker and may carry sales charges, such as a front-end load on Class A shares.
The 529 rules are the same either way. Both get the same federal tax treatment, and the account owner controls the beneficiary in both. She also isn't limited to her own state's plan. Some state tax benefits may go only to residents of the state that sponsors the plan.
Source: MSRB, Investing in 529 Plans (direct-sold plans, sales charges, plans of other states); FINRA SIE content outline, Section 2.1.5 (direct or adviser sold)
Question 9
A US investor owns shares of a mining company based in another country. After an election, the new government threatens to take over foreign-owned mines without paying full value. The threat is an example of which risk?
- APolitical risk
- BCurrency risk
- CMarket risk
- DInflation risk
Answer: A
Political risk is the chance that government action in a country hurts an investment there. Seizing businesses, new taxes on foreign owners and limits on moving money abroad are typical examples. Investors in foreign companies face it on top of the usual business risks.
Owning a foreign stock does carry currency risk, but that comes from exchange rates moving, not from a government's plans for one industry. Market risk is a broad decline that hits most stocks at once, so diversifying can't remove it. Inflation risk is rising prices eating into returns.
Source: FINRA SIE content outline, Section 2.2 (investment risks: political, currency, market/systematic, inflationary)
SIE practice questions: trading, accounts and prohibited activities
Section 3 is 31% of the SIE: 23 questions. It tests how trades work, how accounts are set up and what's off limits. The five questions below run from market indexes and proxy voting to account safeguards and retirement plans.
Section 3: trading, accounts and prohibited activities
Question 10
On the same day, two stocks in the Dow Jones Industrial Average each rise 10%. One trades at $400 a share and the other at $40. Which statement about their effect on the Dow is accurate?
- ABoth move the Dow by the same number of points, because they rose by the same percentage
- BThe $40 stock moves the Dow more, because the Dow gives lower-priced stocks more weight
- CThe $400 stock moves the Dow about ten times as much, because the Dow is weighted by price
- DThe company with the larger total market value moves the Dow more, whatever its share price
Answer: C
The Dow is a price-weighted average. It adds up the share prices of its 30 stocks and divides by a divisor. So the $40 rise in the $400 stock moves the Dow ten times as much as the $4 rise in the $40 stock. Company size plays no part.
The S&P 500 works differently. It's weighted by market capitalization, so the biggest companies move it most. Share price and company size aren't the same thing: a high-priced stock can belong to a smaller company.
Source: Dow Jones Industrial Average description in Royal Bank of Canada, Underlying Supplement No. 1A, filed with the SEC May 16, 2024 (price-weighted; sum of prices divided by a divisor); SEC Investor Bulletin: Exchange-Traded Funds (the S&P 500 is capitalization weighted); FINRA SIE content outline, Section 3.1.2 (benchmarks and indices)
Question 11
A customer holds 300 shares of a company in street name at her broker-dealer. The company is holding its annual meeting and sends out proxy materials. How does she get a say in the vote?
- AShe doesn't, because the shares are in the firm's name and the firm votes them as it sees fit
- BShe doesn't, because only owners of record may vote at a shareholder meeting
- CShe must first move the shares out of street name and into her own name
- DThe firm forwards the proxy materials to her, so she can decide how her shares are voted
Answer: D
Street name means the shares are registered to the firm, but the customer is the beneficial owner. FINRA Rule 2251 makes the firm forward the issuer's proxy materials and annual reports to her. The issuer has to ask and assure the firm its costs will be paid. She then decides how her shares are voted.
The firm can't simply vote the shares as it likes. It may vote without her instructions only where exchange rules allow it. She doesn't need to move the shares into her own name to have her say.
Source: FINRA Rule 2251(a), (b), (c) and (e) (forwarding proxy and other issuer-related materials to beneficial owners; voting stock registered in the member's name); FINRA SIE content outline, Section 3.1.4 (proxies and proxy voting)
Question 12
A 70-year-old retiree is opening an individual brokerage account. The representative asks for the name of a trusted contact person, but the customer declines to give one. What should the firm do?
- ARefuse to open the account until the customer names a trusted contact
- BOpen the account, as long as it made a reasonable effort to get a trusted contact
- COpen the account, but accept only unsolicited orders until a contact is named
- DRecord the customer's closest relative as the trusted contact by default
Answer: B
FINRA Rule 4512 has firms ask for a trusted contact person, age 18 or older, on each account other than an institutional account. The contact gives the firm someone to call if it has concerns, such as possible financial exploitation.
The customer doesn't have to name anyone. Under the rule, a missing trusted contact doesn't stop a firm from opening or keeping an account, provided it made reasonable efforts to get one. The rule calls for no trading limits. It asks the firm to obtain the name, not to pick a contact for the customer.
Source: FINRA Rule 4512(a)(1)(F) and Supplementary Material .06 (trusted contact person; reasonable efforts); FINRA SIE content outline, Section 3.3.3 (financial exploitation of seniors)
Question 13
The owner of a small design firm sets up a SEP for herself and her three employees. One employee asks how the plan works. Which statement is accurate?
- AEmployees fund the plan through payroll deductions, and the employer may match them
- BEmployees earn ownership of the employer's contributions gradually over six years
- COnly the employer contributes, and each employee owns the money in the SEP-IRA at once
- DThe employer must contribute every year, even in a year when the business makes no profit
Answer: C
A SEP is funded by the employer alone. Contributions go into an IRA set up for each eligible worker, called a SEP-IRA. Employees can't add salary deferrals of their own. That sets a SEP apart from a 401(k).
Employees are always 100% vested in SEP-IRA money, so there's no vesting schedule. The employer also doesn't have to contribute every year.
Source: IRS, Simplified Employee Pension Plan (SEP) (employer-only contributions; 100% vesting; no contribution required every year); FINRA SIE content outline, Section 3.2.2 (retirement accounts)
Question 14
A customer pays in full for 500 shares in her cash account and leaves them with her broker-dealer in street name. Under the SEC's customer protection rule, what must the firm do with those shares?
- AKeep them in its possession or control, apart from the firm's own securities
- BPledge them as collateral for a bank loan only after notifying the customer
- CLend them to short sellers freely, because shares in street name belong to the firm
- DSend the customer a physical certificate within 30 days of settlement
Answer: A
SEC Rule 15c3-3, the customer protection rule, makes a firm promptly obtain and keep possession or control of customers' fully paid securities. The shares stay the customer's property, kept apart from the firm's own. The firm can't use them to fund its business, for example by pledging them for a loan.
Street name only means the firm holds the shares for the customer. The firm may borrow fully paid shares only under a separate written agreement with the customer that meets the rule's terms. Most shares today are held in book-entry form, so no certificate is required.
Source: SEC Rule 15c3-3(b)(1) and (b)(3), 17 CFR 240.15c3-3 (possession or control of fully paid securities; written agreement to borrow them); FINRA SIE content outline, Section 3.2.4 (customer protection and custody of assets)
SIE practice questions: the regulatory framework
Section 4 is the smallest part of the SIE: 9%, or 7 questions. It covers registration, continuing education, the forms behind a representative's public record and what must be reported. One question keeps this test in proportion.
Section 4: the regulatory framework
Question 15
A member firm carries accounts for retail customers. What must it send each customer in writing under FINRA Rule 2267, and how often?
- AEach representative's Form U4 disclosures, at least once every calendar year
- BFINRA BrokerCheck's hotline number and website address, at least once every calendar year
- CFINRA BrokerCheck's hotline number and website address, only when the account is opened
- DEach representative's Form U4 disclosures, only when the customer asks for them
Answer: B
Rule 2267 makes a member give each customer three items in writing, at least once every calendar year. They are the BrokerCheck hotline number, FINRA's website address and a statement that an investor brochure about BrokerCheck is available. Electronic delivery counts.
BrokerCheck is where the public looks up a representative's record. Much of it comes from Forms U4 and U5, such as past employers, customer complaints and disciplinary actions. The firm points customers to that tool. It doesn't mail them the forms.
Source: FINRA Rule 2267 (Investor Education and Protection); FINRA SIE content outline, Section 4 rules and Section 4.2.1 (Forms U4 and U5)
FINRA SIE practice exam: the official free test
FINRA offers its own free SIE practice test with 75 questions. It comes from the same organization that writes the SIE, so it's worth taking. Three things help you use it well:
- Time it yourself. FINRA's test has no time limit, but the SIE does. Give yourself about 100 minutes to match exam pace.
- Save it for later. A full-length test tells you more once you've studied all four sections.
- Read the result with care. FINRA says your score shouldn't be taken as an absolute prediction of how you'll do on the SIE itself.
How many questions are on the SIE exam?
The SIE has 80 questions, and you get 1 hour and 45 minutes. Seventy-five are scored. The other five are unscored test questions, mixed in at random. You need a scaled score of 70 to pass.
Answer every question. There's no penalty for guessing, so a blank only costs you. Our guide to the SIE exam covers the full format and booking. For how many people pass and what that means for you, see our SIE pass rate guide.
SIE practice test FAQs
Will these questions be on my SIE?
No. We wrote these 15 questions for this page. They cover the same topics as the real exam.
What score do you need to pass the SIE?
A scaled score of 70. FINRA doesn't say how many correct answers that takes. It adjusts scores between versions of the exam, so a harder version isn't penalized.
Is the SIE exam hard?
About one in four people fail it on their first try, based on FINRA's 2019 figures. The topics are basic, but there are a lot of them.
Do I need a sponsor to take the SIE?
No. Anyone 18 or older can take it without working for a firm. The exam costs $100.
Is there a free SIE practice test PDF?
FINRA's free 75-question practice test is online only. You can print this page: every question, answer and source is on it.
Related SIE guides
Sources
- FINRA, Practice Test for the Securities Industry Essentials Exam (SIE): 75 questions, untimed, free
- FINRA, SIE Content Outline (2025): section weights, 80 items with 5 unscored, time allowed, no guessing penalty
- FINRA, Securities Industry Essentials (SIE) Exam: passing score, fee and eligibility
- MSRB Rule G-42: a municipal advisor's fiduciary duty to municipal entity clients
- MSRB Rule G-17 interpretive notice (2021): an underwriter's arm's-length role and no fiduciary duty to the issuer
- FINRA Rule 5250: payments for market making
- Delaware General Corporation Law, 8 Del. C. § 151(a): classes of stock may have full, limited or no voting powers
- SEC Regulation AB, 17 CFR 229.1101(c): definition of an asset-backed security
- SEC Rule 2a-7 (17 CFR 270.2a-7): money market funds, stable share price methods and the 60-day average maturity limit
- Vanguard Federal Money Market Fund prospectus, filed with the SEC Dec. 2024: $1.00 share price not guaranteed, income risk, daily dividends
- SEC Investor Bulletin: Exchange-Traded Funds (ETFs): fees, expenses and index weighting
- MSRB, Investing in 529 Plans: direct-sold plans, sales charges and plans of other states
- Royal Bank of Canada, Underlying Supplement No. 1A, filed with the SEC May 16, 2024: the Dow Jones Industrial Average is price-weighted
- FINRA Rule 2251: forwarding proxy and other issuer-related materials to beneficial owners
- FINRA Rule 4512 and Supplementary Material .06: trusted contact person
- IRS, Simplified Employee Pension Plan (SEP): employer-only contributions and full vesting
- SEC Rule 15c3-3 (17 CFR 240.15c3-3): possession or control of customers' fully paid securities
- FINRA Rule 2267: investor education and protection (annual BrokerCheck notice)
Every answer on this page is checked against the source it cites. Spotted an error? Tell us through the contact page and we'll fix it.