SIE EXAM COVERS CONVERTIBLE SECURITIES, SO BE PREPARED FOR QUESTIONS ON CONVERTIBLES

Lots of topics and subjects are covered by the Securities Industry Essentials (SIE) exam. One of the topics concerns convertible securities. "Convertible" means that the security, whether a preferred share or a corporate bond may be converted into shares of the company's common stock at the option of the convertible owner.

Consider this example of convertible bonds issued by ABC Corporation. Each bond has a par value of $1,000. That means that the face value of each bond is $1,000. Assume that each ABC convertible bond is able to be converted into 20 shares of ABC common. For this example, assume that each ABC common sells for $52.

Be prepared to see questions that ask for the following: 1) the conversion price of ABC bonds; 2) the parity price of ABC common; 3) the parity price of ABC bonds; 4) the conversion ratio of ABC bonds; and 5) whether a customer who owns ABC convertible bonds would profit upon converting into common shares.

Bob Eder's Study for the Securities Industry Essentials (SIE) Exam has a full treatment of convertible bonds that allows an applicant to correctly answer all of the questions above in the example.

Here is the link to FINRA's Content Outline for the SIE exam. See the references to convertibles under section 2.1.1 of FINRA's Content Outline.

Study for the Securities Industry Essentials (SIE) Exam is available from Amazon in both paperback and Kindle e-book versions. 

Here is the link to Bob Eder's book on Amazon.

See Bob Eder's Author Page on Amazon.com.

For questions about Bob Eder's SIE manual, Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE exam, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law in 2001.