STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

Taking the Securities Industry Essentials Exam soon? Then be prepared for questions on Types of Orders, such as market orders, limit orders and stop orders. FINRA publishes an SIE Test Content Outline, and in Section 3.1.1 lists Types of Orders. Bob Eder presents a full treatment of Types of Orders  in his Study for the Securities Industry Essentials (SIE) Exam . Here is a brief sample of Bob Eder's discussion: "Stop Orders (3.1.1) "A stop order is really a market order that waits, or depends, on some other trade execution in the same stock to first happen before the stop order can be executed. "Stop Orders Have Triggers "A stop order is "activated," "triggered," or "elected" once the indicated stop price is reached or breached by some other trade. Once a trade touches the stop price or there has been a "trade-through" (i.e., a trade below the stop price on a sell stop order, or a trade above the stop price on a buy ...

Plan on taking the SIE Exam soon? Make sure that you understand the various risks associated with investments. FINRA publishes a Content Outline for the SIE Exam which lists the various investment risks in Section 2.2. Consider currency risk. This is a risk that U.S. investors take when they purchase securities of foreign companies that are denominated in currencies other than the U.S. dollar. Here's an example. Mr. Roberts purchases 100 shares of France Telecom for 75 euros per share, when the euro is at a parity with the U.S. dollar. Mr. Roberts pays US $75 per share. Mr. Roberts holds the shares for six months and France Telecom still is selling for 75 euros. In the meantime, however, the euro declines in value vis-a-vis the U.S. dollar. The result is, Mr. Roberts' investment in France Telecom is worth less than what he paid in terms of U.S. dollars. Bob Eder has devoted a whole chapter in his Study for the Securities Industry Essentials (SIE) Exam to Risks of Investing. He...

The Securities Industry Essentials (SIE) Exam asks questions regarding options. FINRA's Content Outline for the SIE Exam includes questions on options in Section 2.1.3, including questions on when an option is "in the money," "out of the money," or "at the money." Bob Eder discusses Options and their characteristics in his Study for the Securities Industry Essentials Exam . Here is a sample of Bob Eder's treatment: "When Options Are "In the Money" (2.1.3) A call option is in the money when the stock price is above the strike price of the call. A put option is in the money when the stock price is below the strike price of the put. "EXAMPLE #1 Johnny purchases three calls XYZ June 60 for three when XYZ stock is at 62. This call is in the money because the stock price (62) is higher than the strike price of XYZ call (60).   "EXAMPLE #2 Joan purchases one put ABC Aug 50 for four when ABC stock is at 49. This put is...

Okay, so you are becoming licensed as a securities representative. Before you may open a new account, you must first obtain important information about that customer. This gathering of information is required by the U.S. Patriot Act to prevent criminal money laundering and/or tax avoidance. In accord with the Patriot Act, the U.S. Treasury and the SEC have established a Customer Identification Program (CIP) that controls brokers when opening new accounts. FINRA's Content Outline for the Securities Industry Essentials (SIE) Exam includes customer screening and Customer Identification Program in the Rules following Section 3.3.3. Consequently, SIE candidates should expect to see questions on these topics on the test and should prepare for them. Bob Eder covers these rules in detail in his  Study for the Securities Industry Essentials (SIE) Exam . Here is a sample of Bob Eder's treatment: "Non-Documentary Verification "A broker/dealer, such as Ajax, may use non-documen...

Over the years there have been some securities professionals whom the SEC has accused of illegally using inside information to make gains on trading stocks. Don't allow yourself to fall into this trap. It could ruin your career in the securities business, as well as subject you to fines, civil penalties, and even criminal convictions. FINRA specifies in its Content Outline for the Securities Industry Essentials exam that you should expect questions about Insider Trading on the exam. See SIE Content Outline, Section 3.3.2. Bob Eder discusses insider trading in detail in his Study for the Securities Industry Essentials Exam . Here is a sample of Bob Eder's treatment of using inside information: EXAMPLE Jason, a hedge fund manager, is managing several billions of client monies. He asks for and receives confidential information about XYZ Corp.’s forthcoming earnings from Bill, a friend, who happens to be on XYZ’s board. Bill tells Jason that XYZ will unexpectedly report very good...