Securities Industry Essentials Exam For Dummies Cheat Sheet - dummies
Cheat Sheet

Securities Industry Essentials Exam For Dummies Cheat Sheet

From Securities Industry Essentials Exam For Dummies with Online Practice

By Steven M. Rice

The Securities Industry Essentials (SIE) exam tests your basic knowledge of the securities industry. This exam is a co-requisite exam for people who want to become an investment company representative, a general securities representative, a direct participation programs (DPP) representative, a securities trader, an investment banking representative, a private securities offerings representative, a research analyst, or an operations professional.

Securities Industry Essentials Exam Topics

The Securities Industry Essentials (SIE) Exam requires you to master vocabulary, handle customer accounts, understand the rules and regulations that govern the securities industry, and yes, work with some math formulas (although very few). Here’s an overview of what to expect on the Securities Industry Essentials exam:

  • The underwriting process (how new securities come to market)
  • Common and preferred stock
  • Corporate bonds and U.S. government securities
  • Securities issued by local governments (municipal bonds)
  • Investment companies (including mutual and closed-end funds)
  • Direct participation programs (limited partnerships)
  • Options
  • Customer accounts
  • Analyzing the benefits and risks associated with investments; making appropriate recommendations to customers
  • Following how new securities are brought to the market and how existing securities are traded in the market
  • Risk considerations and income-tax implications that stock market investors face
  • Rules and regulations governing the purchase and sale of securities and the registered representative’s responsibility for maintaining accurate record-keeping

The following table lists the number of questions devoted to each topic.

Distribution of SIE Exam Questions
Topic Number of Questions Percent of Exam
Knowledge of capital markets 12 16%
Understanding products and their risks 33 44%
Understanding trading, customer accounts, and prohibited activities 23 31%
Overview of regulatory framework 7 9%
Total 75 100%

Each of these topics falls under multiple areas of study. For example, to correctly answer questions that address the topic of handling customer accounts, you have to know enough about different types of stocks, bonds, and so on to be able to guide your customers, including which investments are more beneficial to retirees and which work better for investors who are just entering the workforce.

10 Great Study Habits for Securities Industry Essentials Exam Prep

Make no mistake, the Securities Industry Essentials exam is not easy. What compounds the difficulty of this exam is the fact that you may be working full time while studying, and you may have to take the exam in a relatively short amount of time. Using correct study habits will greatly increase your chances of passing the SIE exam the first time and will let you put it in the rearview mirror. These ten study habits can help you along your way:

  • Put in the hours: The SIE exam is a bear of an exam and will require a lot of hours on your part. Set yourself session and daily goals (such as finishing a chapter, finishing and reviewing a test, and so on).
  • Study every single day: Most of the information on this exam is going to be new to you (and most other people), so don’t take any days off unless absolutely necessary because the information will be too easy to forget.
  • Take and review lots of practice questions: It’s one thing to know the information on the exam but another thing to know how to answer questions. I would suggest that once you have a relatively good handle on the information, you spend half of your study time taking and reviewing tests and half of your study time reading your book.
  • Use sticky notes: Use sticky notes as placeholders in your SIE exam study book. Put sticky notes in every location in your book where you need additional work. In the beginning, your book will be covered in notes. Once you fully understand the information next to your sticky note, remove that note and go to the next one. Keep working your way through the book, focusing on studying the areas next to the sticky notes. Hopefully, prior to your exam, there will only be a few (or no) sticky notes left in your book.
  • Find a quiet place with no distractions: You really need to focus on this exam if you stand any chance of passing. Get away from the TV, family members, your phone, and your computer (unless you are using it to study for the SIE exam). Lock yourself in your room, go to the library, sit in your car, or go wherever you need to go to be able to focus.
  • Carry a review book or equivalent with you everywhere: Time management is very important. You never know when you are going to squeeze in an extra 10 or 20 minutes of study time. If you have your book or flashcards with you, you can take advantage of that time.
  • Make your own flashcards: Make flashcards of the information you need to commit to memory. Keep them with you all the time so that you can look at them when you have extra time. When you fully understand (and will remember) the information on one flashcard, take it out of your stack.
  • Take short breaks: They say that most people are good at focusing for about 20 minutes at a time. Obviously, everyone is different and you may find that you can focus for an hour or so. However, once you get to the point where you’ve just read a paragraph or question and you need to read it again because you forgot what you just read, take a break because you are wasting time. A 5 to10 minute break will usually be enough to get you back on track.
  • Know what you don’t know: Don’t waste your time studying material that you fully understand. Spend your time focusing on the material you don’t understand.
  • If possible, record your notes for playback: There are applications for your smartphone, tablet, and computer that allow you to record audio. When you get tired of looking at your notes or sampling practice questions, take some time to record yourself reading your notes or sections of your book. Then put on your headphones and listen to the recordings when you have extra time or are just tired of looking at your book.