FINRA Practice Exam 2025 – All-in-One Guide to Succeed in Financial Industry Certification!

An accredited investor is defined primarily by their financial situation and experience, which makes option B the accurate representation. To be considered an accredited investor, individuals must meet specific criteria set by the Securities and Exchange Commission (SEC). This often includes having a high income, specifically an annual income of over $200,000 in each of the last two years (or $300,000 together with a spouse) or a net worth exceeding $1 million, either individually or jointly with a spouse, excluding the value of their primary residence.

In addition to income and net worth thresholds, having substantial investment experience can enhance an individual's understanding of investments, which is crucial as accredited investors typically have access to investment opportunities that are not available to the general public. This comprehension helps them navigate complex investments where the risks may be higher.

The other choices do not fully capture the requirements or the conceptual framework for defining accredited investors. A narrow focus solely on investment experience or high net worth without considering income and the combination of both does not meet the comprehensive definition outlined by appropriate regulatory bodies.