Question 1
An investor in the 32% federal tax bracket can buy a municipal bond yielding 3.4%. What taxable yield would give her the same after-tax return?
The math on the SIE exam
The SIE has a handful of calculation types, all short. Learn the formula for each and check your units.
| Formulas given | None: learn them |
|---|---|
| Calculation types | Yields, breakevens, NAV and sales charges, margin, splits |
The formulas
- Current yield = annual interest ÷ market price
- Tax-equivalent yield = municipal yield ÷ (1 − tax rate)
- Call breakeven = strike + premium; put breakeven = strike − premium
- NAV = (assets − liabilities) ÷ shares; sales charge % = (offering price − NAV) ÷ offering price
- Regulation T deposit = 50% of the purchase, with a $2,000 minimum to open margin
Try 3 questions
Question 2
A Class A fund has a NAV of $19 and a public offering price of $20. What is its sales charge as a percent of the offering price?
Question 3
An investor owns 100 shares bought for $60 each. The company does a 3-for-2 split. What does she own afterward?
Next step
Questions people ask
Which formula matters most?
Learn current yield and option breakevens first: both are short and turn up in several topics.
How many math questions are there?
Only a few. Most SIE questions test knowledge, not arithmetic.