STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

Bob Eder is pleased to announce that the price for Study for the Securities Industry Essentials (SIE) now costs only $21.99 from Amazon and other book sellers. Our content includes 417  pages, 17 chapters, including a full Glossary and Index. Here is the  link to FINRA's Content Outline for the SIE Exam . Bob Eder's  Study for the SIE Exam  closely follows FINRA's Content Outline so that you don't waste time in studying material not required by the SIE Exam. 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 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.  See   Bob Eder's A...

  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...

FINRA publishes a Content Outline for the Securities Industry Essentials (SIE) Exam, and Section 1.4 covers types of offerings, role of participants, and Shelf Offerings and Shelf Registrations. FINRA thus tells SIE candidates that questions on Shelf Offerings may appear on their exams. Bob Eder discusses Shelf Offerings in his Study for the Securities Industry Essentials (SIE) Exam . Here is a sample of Bob Eder's treatment: "Shelf Registrations —The SEC allows many companies to register new issues called "shelf registrations." These shelf registrations allow companies to file all the new-issue paperwork with the SEC, and then to issue shares at any time during a three-year window. Shelf registrations utilize Form S-3 to file new issues. Shelf registrations have both good features and bad features. They allow a company to quickly issue new shares, given that the new issue paperwork is already on file with the SEC, but they can cause existing shareholders to suffer a...

If you plan to take the Securities Industry Essentials (SIE) Exam, you should make sure that you study and know about the rules of Securities Investor Protection Corporation, or SIPC. Why do you need to know about SIPC? The answer is that rules of SIPC are included in FINRA's Content Outline for the SIE Exam. You need to know what is covered by SIPC protection, how it is covered, and to what extent. For example, are money market funds covered? Here is what SIPC itself says about money market funds: "ARE MONEY MARKET MUTUAL FUNDS PROTECTED BY SIPC? ARE THEY SUBJECT TO THE $250,000 CASH LIMIT? "Money market mutual fund shares held in a customer’s account at a brokerage firm qualify as “securities” under the Securities Investor Protection Act (SIPA) and therefore are subject to the $500,000 limit of protection, not the $250,000 limit applicable to cash. It is important to remember that, although many investors treat money market funds like cash, they are securities and, as...

Why should you study the rules of SIPC if you are taking the Securities Industry Essentials (SIE) Exam? The answer is that exam questions about SIPC could likely show up on your exam. Why do I say this? I say it because FINRA publishes a 2024 Content Outline for the Securities Industry Essentials Exam, and FINRA specifically mentions SIPC rules  in Section 1.1.3 of the Content Outline. According to SIPC rules, the following persons are not eligible for SIPC relief in the event that they hold an account with a brokerage firm that goes into SIPC liquidation. Here is what SIPC says about those ineligible: "Most customers with cash and securities missing from customer accounts are eligible for SIPC protection. SIPC's funds may not be used to pay the claim of any customer of a brokerage firm in liquidation under the Securities Investor Protection Act if that customer is: A general partner, officer, or director of the firm. The beneficial owner of five percent or more of any class o...