IF YOU PLAN TO TAKE THE SIE EXAM, KNOW THE IMPORTANT DIFFERENCES BETWEEN SHORT TERM AND LONG TERM BONDS

If you are going to take and pass the Securities Industry Essentials Exam, make sure that you study and know the differences between Short Term Bonds or debt and Long Term Bonds or debt. Why? Because the SIE Exam includes questions on this topic. How do I know? FINRA publishes a Content Outline for the SIE, and Section 2.1.2 lists as required knowledge the Characteristics of Short Term vs Long Term Debt.

Bob Eder in his SIE guide, Study for the Securities Industry Essentials (SIE) Exam, discusses major Short and Long Term Bond Characteristics. Here is a sample of Bob Eder's discussion:

Bond Duration vs. Maturity      (2.1.2)

A bond’s dollar price will change when interest rates go up or down. The longer the maturity of the bond, the greater will be the percentage price change when interest rates change. However, it is more exact to substitute "duration" for maturity. The greater the duration, the greater the price change when interest rates move up or down. Duration gives us a more accurate measurement of price change than does maturity. Duration represents the midpoint on a time line where the present value of principal repayment and payment of interest is equal on both sides. 

Here is the link to FINRA's Content Outline for the SIE Exam. See the references to Short and Long Term Bond Characteristics in FINRA's Content Outline, Section 2.1.2.

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 Short and Long Term Bond Characteristics, 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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