Finra Series-6 Exam - Topic 2 Question 109 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 109
Topic #: 2

The Federal Reserve announces that it plans to buy $3.89 billion in Treasury securities on the open market. All else equal, which of the following is a likely result of this Fed action?

AInterest rates will rise, causing security prices to fall.

BMoney supply will increase, causing interest rates to fall.

CStock and bond prices should increase.

DBoth B and C are likely results of this Fed action.

Show Suggested Answer

Suggested Answer: D

If the Federal Reserve buys Treasury bills on the open market, the money supply is increased, which causes interest rates to fall, and a decrease in interest rates results in an increase in stock and bond prices, all else equal.

by Marguerita at Nov 19, 2025, 04:02 PM

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Ciara

1 month ago

C is also a good pick. Higher demand for bonds raises prices.

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Miesha

2 months ago

I feel A is wrong. Buying securities should lower rates, not raise them.

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Hyman

2 months ago

Definitely D! Increased money supply usually boosts prices.

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Carolynn

2 months ago

I’m leaning towards D. Both B and C seem likely.

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Lorita

2 months ago

I don't know, A seems possible too. Prices could drop.

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Lucina

2 months ago

Interest rates falling is a given with this move.

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Ernest

2 months ago

Really? Buying that much won't just inflate prices?

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Herman

3 months ago

I think D makes the most sense. Both B and C are likely.

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Janna

3 months ago

B is definitely the right answer. More money in the system!

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Lauran

3 months ago

D all the way! The Fed's got a magic wand that can make interest rates and prices go up and down at the same time.

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Lottie

4 months ago

Hmm, this is a tricky one. I'm torn between B and D. Gotta love those Fed shenanigans!

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Lajuana

4 months ago

Haha, the Fed buying bonds? That's like trying to put out a fire with gasoline! C is the way to go.

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Charlene

4 months ago

I'm going with B. The Fed buying bonds will definitely increase the money supply and drive down interest rates.

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Amos

4 months ago

D seems like the right answer. The Fed buying bonds will increase the money supply and lower interest rates, which should boost stock and bond prices.

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Huey

4 months ago

I feel like I’ve seen questions where buying Treasury securities leads to rising prices in both stocks and bonds. So, D could be the answer, but I’m not completely confident.

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Man

4 months ago

I practiced a similar question where the Fed's actions led to increased liquidity. I think B and C both make sense, but I’m still a bit confused about which one is more likely.

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Dorothea

5 months ago

I’m not entirely sure, but I think if interest rates fall, that could lead to higher stock and bond prices too. Maybe D is the right answer?

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Elbert

5 months ago

I'm a little stuck on this question. I know the Fed buying Treasuries affects the money supply and interest rates, but I'm not sure of the exact relationship. I'll have to think it through carefully before answering.

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Avery

5 months ago

I'm feeling pretty confident about this one. The Fed buying Treasuries is an expansionary monetary policy that will increase the money supply and lower interest rates. That should lead to higher stock and bond prices. D is the right answer.

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Annice

5 months ago

I remember that when the Fed buys securities, it usually increases the money supply, which tends to lower interest rates. So, I think B might be correct.

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Julene

5 months ago

I think B is the best choice. More money supply means lower interest rates.

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Eulah

5 months ago

Okay, I've got this. The Fed buying Treasuries will increase the money supply, which should push down interest rates. And lower rates mean higher bond and stock prices. I'm going with D.

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Kristin

6 months ago

I agree, B makes sense. It’s all about liquidity.

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Kimberely

6 months ago

Hmm, I'm a little unsure about this one. I know the Fed buying Treasuries increases the money supply, but I'm not sure if that means interest rates will fall or if stock/bond prices will rise.

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