STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

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...

Planning to sit for the SIE exam soon? Don't go into the test without familiarizing yourself with fee-based accounts. These are securities accounts where the broker charges one yearly fee that includes commissions, investment advice, and pretty much all other miscellaneous fees and expenses. T he brokerage firm charges a percentage fee on the daily assets in the account. Thus the calculation of fees is made daily, but deducted usually on a quarterly basis. For example if the annual percentage fee for an account is two percent, the brokerage firm will calculate a daily fee using 1/365 times two percent, or .02, times the assets in the account as of the close of trading on any given day. This fee is also charged for Saturdays and Sundays, and also for other non-business days, such as holidays. The SEC includes fee-based accounts as one of its targets for its broker inspection and visitation. It has found many cases where brokers have enrolled customers in fee-based accounts, also...

Do you want to get a good grade on the SIE Exam? Make sure you know the little stuff, for example, know the characteristics of hedge funds. Here's what Bob Eder says in his text, Study for the Securities Industry Essentials Exam , about hedge funds: "A key characteristic of hedge funds is that they are almost always set up as limited partnerships, the investment manager being the fund’s general partner. Monies paid out to the investment manager are almost always considered long-term capital gains, subject to a maximum tax rate of only 20 percent for those with high taxable income. When hedge fund managers talk about "carried interest," this is jargon for their share of realized long-term capital gains, on which they will pay maximum tax of only 20 percent." We indicate here only a small example  on Hedge Funds. Bob Eder's book  covers hedge funds in Chapter 7 on Alternate Investments.  Bob Eder's book,  Study for the Securities Industry...

If you are planning to take the Securities Industry Essentials (SIE) Exam, you need to know where the test puts its oompf and emphasis. It is Section 2 on Understanding Products and Their Risks. Section 2 comprises 44 percent of the SIE's questions, or 33 questions out of 75, the largest section of all. In this post, I want to talk about investment risks. Section 2.2 indicates that its questions cover the definition and identification of certain risks. For example, if a customer asks you about capital risk, how would you respond? You should know that capital risk means that a person could lose all or a good chunk of his/her investment capital. So Joe Schlobodnick invests $100,000, his life savings and all his IRA monies, into common stock of XYZ Corp. at $100 per share. Shortly thereafter, XYZ common shares fall to zero! Improbable? Maybe, but happenings like this are not rare. Joe Schlobodnick has lost all of his invested capital. This is capital risk. The SIE exam asks abou...

A big chunk of the 75 questions on the Securities Industry Essentials exam is on understanding trading, customer accounts, and prohibited activity. There are 23 questions comprising 31 percent of all questions. For example, Section 3.1.1 of FINRA's Content Outline includes knowledge of types of orders, such as stop orders, limit orders, and market orders, good-till-cancelled orders, discretionary orders, and solicited/unsolicited orders. If you are new to the securities industry, you probably have a hazy idea of these types of orders. However, hazy is not good enough to pass the SIE exam. You need to achieve a clear bright picture of when to use stop orders, when to use limit orders, etc. We indicate here only a few of the topics covered in the SIE's section on trading, customer accounts, and prohibited activities. Bob Eder's  Study for the Securities Industry Essentials (SIE) Exam   covers the subject in detail.  Study for the Securities Industry Essentials (SIE)...

If you plan to sit for the SIE exam, be aware that you need to be prepared for questions on public and private offerings of securities. For example, you must be able to explain the difference between primary and secondary offerings. A primary offering is an offering of securities or shares that have never been issued before. A secondary offering on the other hand involves securities already owned and now being re-sold. Make sure that you can articulate the difference between types of underwriting by underwriting syndicates. There are two main types—best efforts and firm commitment. And don't go into the test without familiarity with shelf offerings—what they are and why companies find them useful. We indicate here only a few of the topics covered in the SIE's section on Offerings. Bob Eder's  Study for the Securities Industry Essentials (SIE) Exam   covers the subject in detail.  Bob Eder's book,  Study for the Securities Industry Essentials (SIE) Exam , ca...

There are many books on the market dealing with the Securities Industry Essentials (SIE) exam. However, they are not of equal quality or usefulness when it comes to studying and preparing to take the SIE exam. Many just group questions that have been floating around for the Series 7 or Series 6 exam, without first making sure that these questions are appropriate for the SIE exam. So a student could spend hours taking practice questions and wrestling with them, all to little avail, because their subject matter is not asked on the test. Be careful in selecting the right study aid for the SIE exam! For example, Bob Eder J.D. has created a study text that list reference outline numbers prepared by FINRA, the Financial Industry Regulatory Authority, the keeper of the SIE test. For example in Chapter 1, the Securities Markets, Bob Eder talks about Introducing Brokers, and next to this heading, he lists "(1.1.4)," the reference number in FINRA's Content Outline. This is he...