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SIE Investment Returns

Investment returns is the most arithmetic-heavy topic on the SIE. It tests current yield, yield to maturity, total return, and the relationship between a bond’s price and its yields — plus how dividends, capital gains and cost basis combine into what an investor actually earned.

Practise this topic freeSee the full outline
Understanding Trading, Customer Accounts and Prohibited Activities · 31%51 questions24% hard
31%of the exam is Understanding Trading, Customer Accounts and Prohibited Activities, the section this topic sits in.
51questions on this topic in the PrepScore bank.
45%are apply-level questions — the dominant cognitive demand here.
0are EXCEPT / NOT items, where the answer is the odd one out.
What the SIE asks

What you actually need to know

  • Current yield as annual income divided by market price.
  • Why current yield falls when a bond’s price rises.
  • The order of nominal yield, current yield and yield to maturity at a discount and at a premium.
  • Total return: income plus appreciation, against the original cost.
How this topic behaves

What 51 questions on it look like

32 of the 51 questions require arithmetic — 63% of the topic, against a low single-digit share across most of the exam. Practise these with a pen, not by reading.

24% of the bank for this topic is rated hard — well above the exam average. Budget more time here than its blueprint weight alone suggests.

calculation100%

Question-type mix across the 51 questions in this topic.

From the bank

Three real investment returns questions

With the explanation — which is the part that teaches.

calculation · medium · understand

A bond's market price rises while its fixed coupon stays the same. What happens to the bond's current yield?

  1. AIt increases, because a higher price raises every measure of yield.
  2. BIt cannot be determined without knowing years to maturity.
  3. CIt decreases, because the same coupon is divided by a larger price.correct
  4. DIt stays the same, because the coupon never changes.
Why C is correct

Current yield equals annual coupon divided by current market price. With the coupon fixed, a higher price increases the denominator, so current yield falls. Price and yield move inversely.

calculation · medium · understand

A fixed-coupon bond is trading at a discount, and interest rates in the market then decline so the bond's price climbs toward par. All else equal, the bond's current yield will:

  1. ARise, because the bond is getting closer to par value.
  2. BRise, because falling rates always raise current yield.
  3. CRemain unchanged, because the coupon rate is fixed.
  4. DFall, because price and current yield move in opposite directions.correct
Why D is correct

When market rates fall, bond prices rise. Because current yield is the fixed coupon divided by price, a higher price produces a lower current yield. Price and yield are inversely related.

calculation · medium · apply

Two identical bonds have the same $50 annual coupon. Bond X trades at $1,100 and Bond Y trades at $900. Which statement about their current yields is correct?

  1. ABond X has the higher current yield because it has the higher price.
  2. BCurrent yield cannot be compared without knowing the maturity dates.
  3. CBoth bonds have the same current yield because the coupon is identical.
  4. DBond Y has the higher current yield because it trades at the lower price.correct
Why D is correct

With identical coupons, the bond with the lower price has the higher current yield (coupon divided by a smaller number). Bond Y at $900 therefore has the greater current yield, illustrating the inverse price-yield relationship.

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FAQ

Investment Returns questions

What happens to current yield when a bond’s price rises?

It falls. The coupon is fixed, so dividing the same income by a higher price gives a lower yield.

How is current yield calculated?

Annual coupon income divided by the current market price of the bond.

Which yield is highest on a discount bond?

Yield to maturity, then current yield, then the nominal (coupon) yield. At a premium the order reverses.
Last reviewed 2026-08-28. Exam facts sourced to FINRA’s SIE exam page and the FINRA SIE content outline. Question counts describe the PrepScore bank, not the exam.
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Practise investment returns until the rule is automatic.

Real-format questions, an explanation on every answer, and a mistake bank that only clears when you get it right.

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