STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

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 Securitie...

One of the valuable study aids for the Securities Industry Essentials (SIE) exam is the Content Outline published by FINRA. It lists all the topics that the SIE exam covers, meaning that if you plan to take the test, you should be prepared to answer. For example, Section 2.1.1 of the Content Outline lists order of liquidation for a company declaring Chapter 11 bankruptcy, types of voting rights, benefits of convertible securities, and securities that can only be sold under SEC Rule 144. Bob Eder J.D. has a study guide for the test, covering all of the above topics. For example, his book,  Study for the Securities Industry Essentials (SIE) Exam , covers order of liquidation beginning on page 39 of Chapter 3 on Equity Securities. At the end of the section, Bob Eder inserts a question on who gets what first for a company in bankruptcy. Also in its Chapter 3, Study for the Securities Industry Essentials (SIE) Exam also covers types of rights, explaining the difference between st...