UniGeniusSIE

SIE exam

SIE section 2: Understanding Products and Their Risks

The largest section, 33 of 75 questions. It covers what each product is, how it pays and what can go wrong.

Questions33 of 75 (44%)
Main topicsEquity, debt, options, packaged products, investment risks

What comes up

  • Common and preferred stock, rights, warrants and ADRs
  • Treasury, agency, corporate and municipal bonds; price and yield
  • Calls and puts: breakevens, maximum gain and loss
  • Mutual funds, ETFs, UITs, variable annuities, 529 plans, DPPs, REITs and hedge funds
  • Credit, interest rate, reinvestment, inflation, liquidity and market risk

Where marks go

  • Bond prices fall when rates rise
  • A put breaks even at strike minus premium
  • A sales charge is a percent of the offering price, not of NAV

Try 3 questions

Question 1

Market interest rates rise. What happens to the prices of existing fixed-rate bonds?

Question 2

An investor buys one 40 put at a premium of 4. What is her maximum possible gain?

Question 3

A fund holds $52 million of assets, owes $2 million and has 2.5 million shares outstanding. What is its NAV per share?

Next step

Take the free diagnosticStart the free options lesson

FINRA's SIE content outline (PDF)

Questions people ask

How much options math is on the SIE?

Expect basic questions: breakevens, maximum gain and loss, and in or out of the money. The Series 7 goes further.

Why is this section so large?

FINRA's outline puts 44% of the exam on products and their risks, so it deserves the most study time.