FINRA SIE STUDY GUIDE PRACTICE 75
QUESTIONS WITH COMPLETE SOLUTIONS
2026 GRADED A+
⩥default risk.
Answer: the risk that the borrower will not pay the face value of a bond
on the maturity date
⩥interest rate risk.
Answer: the risk that arises for bond owners from fluctuating interest
rates
⩥Purchasing power risk (inflation risk).
Answer: risk attached to the potential purchasing power of the expected
cash flow
⩥Collateral Trust Bonds.
Answer: Bonds backed by financial assets (securities)
⩥Debentures.
Answer: unsecured bonds backed only by the credit worthiness of the
bond issuer
, ⩥Income Bonds (Adjustment Bonds).
Answer: When a corporation goes bankrupt and reorganizes existing
debt may be replaced by this kind of bond
⩥Order of Liquidation.
Answer: 1) Secured Debt Holders
2) Unsecured debt (debentures) and general creditors
3) Subordinated debt (debentures)
4) Preferred stockholders
5) Common stockholders
⩥GO Bonds ( general obligation ).
Answer: safest muni credit
backed by raising taxes if necessary. Used for capital improvements that
benefit entire community
⩥T-bills (treasury bills).
Answer: short-term debt obligations the U.S. government sells to raise
money. Maturities of 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52
weeks
⩥STRIPS (Separate Trading of Registered Interest and Principal
Securities).
QUESTIONS WITH COMPLETE SOLUTIONS
2026 GRADED A+
⩥default risk.
Answer: the risk that the borrower will not pay the face value of a bond
on the maturity date
⩥interest rate risk.
Answer: the risk that arises for bond owners from fluctuating interest
rates
⩥Purchasing power risk (inflation risk).
Answer: risk attached to the potential purchasing power of the expected
cash flow
⩥Collateral Trust Bonds.
Answer: Bonds backed by financial assets (securities)
⩥Debentures.
Answer: unsecured bonds backed only by the credit worthiness of the
bond issuer
, ⩥Income Bonds (Adjustment Bonds).
Answer: When a corporation goes bankrupt and reorganizes existing
debt may be replaced by this kind of bond
⩥Order of Liquidation.
Answer: 1) Secured Debt Holders
2) Unsecured debt (debentures) and general creditors
3) Subordinated debt (debentures)
4) Preferred stockholders
5) Common stockholders
⩥GO Bonds ( general obligation ).
Answer: safest muni credit
backed by raising taxes if necessary. Used for capital improvements that
benefit entire community
⩥T-bills (treasury bills).
Answer: short-term debt obligations the U.S. government sells to raise
money. Maturities of 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52
weeks
⩥STRIPS (Separate Trading of Registered Interest and Principal
Securities).
