ARE YOU TAKING THE SIE EXAM? KNOW ABOUT VARIOUS INVESTMENT RISKS SUCH AS CURRENCY RISK

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.

Here is the link to FINRA's Content Outline for the SIE Exam. See the references to Investment Risks in FINRA's Content Outline, in Section 2.2.

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.

For questions about Bob Eder's Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE exam, or about Risks of Investing, 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. See Bob Eder's Author Page on Amazon.com.

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