STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

  If you plan to sit for the  SIE Exam, be sure that you know examples of different types of common stock, such as shares looking for income, defensive shares, defense shares, growth shares. And make sure that you know examples of each type. For example, lets talk about defensive stock. The term defensive means stock of a company in a industry that does well in both good economic times as well as in economic downturns. Good examples of defensive industries are tobacco companies, supermarkets, liquor and beer manufacturers, and cosmetics. Even in recessions and depressions, earnings of these companies or industries do not change very much. Defensive does not refer to defense stocks. Defense stocks are stocks of companies like General Dynamics, Boeing, Lockheed Martin, and Northrup Grumman. These companies manufacture instruments of war. Defense stocks depend on countries wishing to wage war or defend their national territories. No war, then sales of armaments go down. Lots...

  The Securities Industry Essentials (SIE) Exam covers SEC Rules, including Regulation S-P on the privacy of consumer financial information and the safeguarding of customers' personal information. FINRA specifically lists Regulation S-P in its SIE Content Outline in Section 3.2.4. Recently the SEC has amended Regulation S-P "to address the expanded use of technology and corresponding risks that have emerged since the Commission originally adopted Regulation S-P in 2000. " The amendments cover situations where computer hackers unlawfully view, copy or steal  a firm's customer accounts records . Brokerage and advisory firms, including mutual fund firms, are required to detail steps in writing to be taken when a brokerage firm suffers such a break-in. Firms must also report such events to the SEC as soon as possible, but no later than 30 days of occurrence. Furthermore, firms must notify customers whose accounts are, or reasonably likely to be, among those breached or s...

   If you intend to sit for the Securities Industry Essentials (SIE) Exam, make sure that you are familiar with securities in the Money Market and the Capital Markets. The Money Market means the market for short-term debt securities, such as T Bills, commercial paper, brokered certificates of deposit, and bankers acceptances. In contrast, the Capital Markets designate the markets for long-term debt and equity securities. FINRA publishes a Content Outline for the Securities Industry Essentials (SIE) Exam, and, in Section 2.1 and 2.2, FINRA requires  knowledge of equity securities and debt instruments, such as Treasury securities, other money market instruments, and U.S. government agency securities. Bob Eder in his  Study for the  Securities Industry Essentials (SIE) Exam  devotes Chapter 4 to  Debt Securities in both the Money Market and the Capital Markets, including Treasury Securities, U.S. Agency Securities, Money Market Instruments, Corporate Debt...

Plan on taking the SIE Exam? Watch out for questions dealing with Options, such as what is the maximum profit, maximum loss, and breakeven point on an options position. Consider James, a customer who believes in writing covered calls. Writing covered calls means that James buys or owns 100 XYZ shares at 48, and then writes one call XYZ June 50 for a premium of 6. James has established a position of writing a covered call on XYZ shares. A typical question that you may see is what is the maximum profit on James' position? To answer this question correctly, you need to apply the formula for Writing Covered Calls: Maximum Profit equals the strike price minus the stock cost plus the premium received. Or, 50 minus 48 plus 6. This equals 8 points, or $800, which is the maximum profit on this position. Here's another possible question on Writing Covered Calls. Consider Harriet who purchases 100 ABC shares for 52 1/2, and writes 1 call ABC July 50 for 7. What is the maximum profit on th...

Taking the Securities Industry Essentials (SIE) Exam in the near future? If so, then you should know that the SEC has changed the rules governing Regular-Way Settlement from two business days to only one business day.  Regular-Way Settlement  will be T+1, not T+2. The effective date of this rule change is one week from tomorrow, or May 28, 2024. Furthermore, the rules of the Fed for payment in both cash and margin accounts now becomes three business days following trade date, or T+3. The former Fed rule was T+4. Make sure that you know these new rules for the SIE Exam. FINRA publishes a Content Outline for the   SIE Exam , and you can find the provisions of Regular-Way Settlement in Section 3.1.3.    You should expect questions about Regular Way Settlement on the SIE Exam. Section 3.1.3 specifically indicates that knowledge of Trade Settlement is important for SIE Candidates to study and to know. Bob Eder covers Trade Settlement in his  Study for the Securi...

In sitting for the Securities Industry Essentials (SIE) Exam, sometimes candidates, in their desire to cover all bases, fail to learn about the terminology of buying and selling securities. For example, every securities trade is either an opening trade or a closing trade. This applies not only to trading stocks, but to all other types of securities such as options and bonds. An opening trade is when Trader Joe purchases 100 shares of XYZ Corp for $50 per share. Before the trade, Trader Joe had no financial interest in XYZ stock. Now, after this opening trade, he has a long position of 100 XYZ shares. With a long position in XYZ stock, Trader Joe hopes the share price of XYZ goes up. Thus Trader Joe has initiated a bullish position. Assume thereafter that XYZ shares do rise in value to $90. Trader Joe decides to take his profits, so he sells his XYZ shares at 90. This sale is called a closing trade or a closing transaction. Why "closing"? Because the sell transaction closes ou...