Lecture Notes: SIE Exam 2025/2026 Overview

Introduction

• The SIE (Securities Industry Essentials) Exam is a prerequisite for becoming a securities professional.
• Requires passing both the SIE exam and a top-off exam for licensing.
• Emphasizes the importance of preparation due to the challenging nature of the exam.

Part 1: Starting Your SIE Journey

Chapter 1: Introducing the SIE Exam

• Purpose: Test basic knowledge of the securities industry.
• Eligibility: Open to anyone over 18; no requirement to be associated with a securities firm.
• Structure: 75 questions, 105 minutes, 70% passing score.
• Registration: Through FINRA and administered by Prometric.

Chapter 2: Preparing for the SIE Exam

• Study Materials: Use textbooks, online tests, and prep courses.
• Study Strategy: Develop a routine, use breaks wisely, focus on test-taking skills.
• Practice: Take multiple practice exams to ensure readiness.

Chapter 3: Mastering Question Types

• Question Formats: Closed-stem, open-stem, exceptions, and Roman numeral questions.
• Strategy: Eliminate wrong answers, focus on key information.

Chapter 4: Surviving Test Day

• Preparation: Rest well, arrive early, avoid last-minute cramming.
• Exam Day: Understand test center rules, manage time effectively.

Part 2: Basic Security Investments

Chapter 5: Securities Underwriting

• Process: Involves registration with SEC, cooling-off period, and due diligence meetings.
• Types of Offerings: IPO, primary and secondary offerings.
• Exemptions: Certain securities and transactions are exempt from SEC registration.

Chapter 6: Equity Securities

• Common Stock: Voting rights, dividends, and corporate actions.
• Preferred Stock: Characteristics, types, and dividend priority.

Chapter 7: Debt Securities

• Bonds: Terminology, types (secured/unsecured), maturity.
• U.S. Government Securities: T-bills, T-notes, T-bonds, TIPS.
• Calculations: Yield, current yield, yield to maturity.

Chapter 8: Municipal Bonds

• Types: General Obligation and Revenue bonds.
• Tax Advantages: Interest is often federally tax-free.
• Marketability: Influenced by credit ratings and market conditions.

Part 3: More Complex Securities

Chapter 9: Packaged Securities

• Investment Companies: Open-end (mutual funds) vs. closed-end funds.
• Annuities: Fixed vs. variable annuities, payout options.

Chapter 10: DPPs and REITs

• Direct Participation Programs: Real estate, oil and gas, equipment leasing.
• REITs: Investment in real estate, types include equity and mortgage REITs.

Chapter 11: Options

• Basics: Call and put options, in-the-money, out-of-the-money.
• Calculations: Premium, intrinsic value, time value.
• Strategies: Buying and selling options, covered positions.

Conclusion

• Test Preparation: Emphasizes thorough preparation and understanding of materials.
• Key Resources: Utilize all available study aids and practice tests to ensure success.