Introduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 2 Beyond the Book 2 Where to Go from Here 3 Part 1: Getting Started with the SIE Exam 5 Chapter 1: Introducing the SIE (Securities Industry Essentials) Exam 7 What is the SIE Exam, Anyway? 7 Profiling the SIE Exam-Taker 8 One''s Not Enough: Tackling the Co-Requisite Exams 8 Series 6: Investment Company and Variable Products Representative Exam 9 Series 7: General Securities Representative Exam 9 Series 22: DPP Representative Exam 9 Series 57: Securities Trader Exam 9 Series 79: Investment Banking Representative Exam 9 Series 82: Private Securities Offerings Representative Exam 9 Series 7 + Series 86 + Series 87: Research Analyst Exam 10 Series 99: Operations Professional Exam 10 Signing Up 10 Filling out an application to enroll 10 It''s a date! Scheduling your exam 10 Planning ahead for special accommodations 11 Just in case: Cancelling as an option 13 Taking a Peek at the Tested Topics 13 Understanding the Exam Format and Other Exam Details 14 Reviewing the exam basics 14 Practicing on ten additional trial questions 14 Mastering the computerized format and features 15 Viewing exhibits 16 Instant gratification: Receiving and evaluating your score 16 Chapter 2: Preparing for the SIE Exam 19 Courses and Training Materials: Determining the Best Way to Study 19 Back to school: Attending a prep course 19 Selecting prep material to study on your own 21 Managing Your Study Time Wisely 22 Blocking out some time to study 23 It''s a plan: Getting into a study routine 23 Give it a rest: Taking short breaks 24 Staying focused from day to day 24 Devoting time to practice tests 25 Avoiding study groups 25 Staying in shape 26 Exploring Study Strategies 26 Developing Solid Test-Taking Skills 27 Read the question carefully 27 Look for phrases that lead to the topic tested 27 Work with what you have 27 Don''t obsess; mark for review 27 Keep track of time 28 Master the process of elimination 28 Maintain your concentration 28 Think carefully before changing your answers 29 Use the scrap paper wisely 29 Knowing When You''re Ready 30 Chapter 3: Examining and Mastering Question Types 31 Familiarizing Yourself with Question Formats 31 Working with the straight shooters: The straightforward types 32 Encountering quirky questions with qualifiers 33 Roman hell: Complex multiple choice 34 Looking at exhibits: Diagram questions 36 Shredding the Questions: Tips and Tricks 37 Focusing on key information 38 Answer me this: Picking the correct answer 38 Don''t make the same mistake twice 41 Chapter 4: Surviving Test Day 43 Composing Yourself the Day Before 43 Making the Most of the Morning 45 Arriving on the Scene 45 Taking advantage of one last chance to cram 45 Signing in 45 Getting seated 46 Tackling the SIE 46 Getting the Results: Drum Roll, Please 47 Part 2: Mastering Basic Security Investments 49 Chapter 5: Underwriting Securities 51 Bringing New Issues to the Market 51 Starting out: What the issuer does 51 Role call: Introducing the team players 55 Getting the skinny on the issue and issuer: The prospectus 56 Counting the securities along the way 57 Getting Up to Speed on the Types of Securities Offerings 57 Reviewing Exemptions 58 Exempt securities 58 Exempt transactions 59 Testing Your Knowledge 60 Answers and Explanations 63 Chapter 6: Corporate Ownership: Equity Securities 65 Beginning with the Basics: Common Stock 65 Understanding a stockholder''s voting rights 66 Categorizing shares corporations can sell 68 Considering the par value of common stock 68 Corporate actions 69 Splitting common stock 69 Sharing corporate profits through dividends 71 Getting Preferential Treatment: Preferred Stock 73 Considering characteristics of preferred stock 73 Getting familiar with types of preferred stock 74 Securities with a Twist 76 Opening national borders: ADRs 76 Rights: The right to buy new shares at a discount 76 Warrants: The right to buy stock at a fixed price 77 Testing Your Knowledge 77 Answers and Explanations 80 Chapter 7: Debt Securities: Corporate and U.S Government Loans 83 Tackling Bond Terms, Types, and Traits 83 Remembering bond terminology 84 Following bond issue and maturity schedules 85 Comparing secured and unsecured bonds 86 Making Basic Bond Price and Yield Calculations 87 Nominal yield (coupon rate) 88 Current yield 88 Yield to maturity (basis) 88 Yield to call 89 Yield to worst 89 Total return 89 Basis point 89 Determining the Best Investment: Comparing Bonds 90 Considering bond credit ratings 90 Contrasting callable and put bonds 91 Popping the top on convertible bonds 92 Exploring U.S Government Securities 93 Understanding the types of U.S government securities 93 Looking at agency securities 93 Playing It Safe: Short-Term Loans or Money Market Instruments 95 Testing Your Knowledge 96 Answers and Explanations 99 Chapter 8: Municipal Bonds: Local Government Securities 101 General Obligation Bonds: Backing Bonds with Taxes 101 General characteristics of GOs 102 Analyzing GO bonds 102 Dealing with Revenue Bonds: Raising Money for Utilities and Such 103 General characteristics of revenue bonds 104 Analyzing revenue bonds 104 The Primary Market: Bringing New Municipal Bonds to Market 105 Allocation of orders 106 Definitions for new issues 106 Examining Other Types of Municipal Bonds on the Test 107 Taxable Municipal Bonds 108 Don''t Forget Municipal Notes! 108 Municipal Fund Securities 109 Section 529 plans 109 ABLE accounts 110 Local Government Investment Pools 110 Understanding the Taxes on Municipal Bonds 111 Comparing municipal and corporate bonds equally 111 Scot-free! Taking a look at triple tax-free municipal bonds 112 Following Municipal Bond Rules 112 Confirmations 112 Advertising and record keeping 113 Gifts 113 Commissions 113 Gathering Municipal Bond Info 114 The bond resolution (indenture) 114 Legal opinion 114 Official statement 114 "G" That''s a Whole Lot of Rules 115 Testing Your Knowledge 117 Answers and Explanations 121 Part 3: Delving Deeper: Security Investments with a Twist 123 Chapter 9: Delivering Diversification with Packaged Securities 125 Looking at Investment Company Registration 125 Diversifying through Management Investment Companies 126 Comparing open- and closed-end funds 126 Keeping your customer''s investment objectives in mind 128 Dealing with discounts 130 Figuring the sales charge and public offering price of open-end funds 132 Considering Other Investment Company Options 134 Face-amount certificate companies 134 Unit investment trusts (UITs) 134 Exchange-traded products (ETPs) 135 Investment company rules 17a-6 and 17a-7 136 Adding Annuities to a Portfolio 136 Looking at fixed annuities 136 Checking out variable annuities 137 Putting money into (and receiving money from) annuities 137 Exploring Variable Life and Variable Universal Life Insurance 139 Testing Your Knowledge 139 Answers and Explanations 143 Chapter 10: Working with Direct Participation Programs and REITs 145 Searching for Identity: What DPPs Are (and Aren''t) 146 The DPP Characters: General and Limited Partners 146 Pushing through Partnership Paperwork 147 Partnership agreement 147 Certificate of limited partnership 148 Subscription agreement 148 Passive Income and Losses: Looking at Taxes on Partnerships 148 Evaluating Direct Participation Programs 149 Checking Out Types of Partnerships 149 Building on real-estate partnership info 149 Gearing up with equipment leasing 150 Strengthening your grasp on oil and gas 151 Reducing Real-Estate Risk with REITs 152 Private (private placement) REITs 153 Registered non-listed REITs 153 Listed REITs 153 Testing Your Knowledge 153 Answers and Explanations 156 Chapter 11: Options: The Right to Buy or Sell at a Fixed Price 157 Brushing Up on Option Basics 157 Reading an option 158 Looking at call options: The right to buy 159 Checking out put options: The right to sell 159 Getting your money back: Options in-, at-, or out-of-the-money 159 Paying the premium: The cost of an option 161 Incorporating Standard Option Math 162 Calls same: Buying or selling call options 163 Puts switch: Buying or selling put options 165 Trading options: Opening and closing transactions 168 Gaining Additional Option Info 170 Clearing through the OCC 170 That''s ODD: Options risk.