FINRA SIE

Resources

Common stock represents partial ownership in a company, profiting through capital appreciation or cash dividends, as seen with Netflix and McDonald's shares.

A practice question asks which short-term security lets a company's shareholders buy stock below market price, working through warrants, call options, rights, and convertible preferred stock to find the answer.

Forward stock splits lower share price without losing value, shown through Apple's 2014 seven-for-one split and the stock split factor calculation.

Reverse stock splits raise a low share price by shrinking share count, shown through a split-factor calculation turning 1000 $4 shares into 100 $40 shares. Because they alter par value, they need shareholder approval.

Works through a practice question contrasting market risk, which hits the whole market and can't be diversified away, with financial, business, and liquidity risk, which hit specific companies and can be.

Negotiable securities like stocks and bonds trade between investors at market price with commissions, while redeemable ones like mutual funds trade directly with the issuer at net asset value with sales charges.

Cash dividends share company profits with shareholders, unlike growth companies that reinvest profits for capital appreciation instead. Larger, established firms past their growth phase, such as Ford, typically pay them.

Walks through a practice question on a callable bond with three call dates and premiums, showing that call protection is simply the earliest date the issuer can call, ignoring the other numbers given.

Bond price swings most with long maturities and low coupons, and stays stable with short maturities and high coupons, shown through a practice question comparing four bonds including a zero-coupon strip.

A practice question decodes a bond quote's coupon and price, then finds current yield by dividing annual interest by market price.

A long call quote is broken into its parts, showing how strike price, expiration and premium set the right to buy 100 shares. The call up put down rule splits that premium into intrinsic value and time value.

Selling a call obligates the seller to sell 100 shares at the strike price, while the premium splits into intrinsic and time value via the call up rule.

A long put quote shows the right to sell stock at a strike price, then its premium is split into intrinsic and time value using call up put down.

A short put quote is decoded piece by piece, showing why selling it obligates the seller to buy stock at the strike price. The 'call up, put down' rule splits the premium into intrinsic and time value.

Agency trades connect buyers and sellers for a commission, while principal (dealer) trades fill orders from the firm's own inventory with a markup or markdown.

Works through a long-stock-plus-long-put hedge, using a t-chart and the call up put down rule to find maximum gain, maximum loss, breakeven, and profit at given stock prices.

Works through a covered call example, buying stock at 60 and selling a 75 call, to find maximum gain, maximum loss, and breakeven using a T-chart. Shows why the position is a bull-neutral, partial-hedge strategy rather than a pure hedge.

Covered calls and covered puts sell an option against a stock position for premium income, yet the stock position can still lose significant money.

Hedging pairs long stock with a long put, or short stock with a long call, using the option as insurance at the cost of its premium.

Shareholder voting for the board, shown via a real proxy statement, contrasts statutory voting's per-seat cap with cumulative voting's pooled votes.

Total return divides dividends, interest, and capital appreciation by the original investment, worked through a question that filters out an irrelevant CPI figure.

Walks through the declaration, record, ex-dividend, and payable dates, showing how T+1 settlement makes the ex-dividend date match the record date.

A 70 call worth $5 when the market hits 75 shows the call up rule, and premium splits into intrinsic plus time value; good for longs, bad for short sellers.

Puts gain intrinsic value as market price falls below strike price (put down), distinct from premium; an example computes the resulting gain or loss.

A market maker's inside quote has customers selling at the bid and buying at the ask, with size capping shares at that price. An example order shows when a request exceeds it.

Market orders guarantee execution at the next available price, not a set price, and always default to a day timeframe, never good-till-cancel.

Buy limit orders execute only at the specified price or lower, trading guaranteed price for uncertain execution, and run as day or GTC orders. A ticker-tape practice question shows how to spot the first price meeting that threshold.

Sell limit orders set a minimum acceptable price, guaranteeing that price but not execution if the market falls instead of rising.

Buy stop orders protect short stock positions, triggering a market order once price hits the stop price or above, with no guaranteed fill price.

A sell stop order triggers once price falls to the stop level, then fills as a market order at the next available price, not a guaranteed one.

Buy stop limit orders combine a stop trigger with a buy limit to cap losses on a short position, using SLOBS vs BLISS to track when the order triggers then executes.

Sell stop limit orders protect a long position, triggering at the stop price then executing only as a limit order at that price or better.

A short stock and long call hedge is solved with a T-chart for max gain, max loss, and break-even, showing the call caps losses above the strike.

Works a margin account example where a stock rises from 80 to 90, finding equity, equity percentage, and the 25% minimum maintenance level for long accounts.

Equity in a margin account combines long market value minus debit plus credit minus short market value, with a worked example plugging in numbers to find the total.

A short stock position paired with a short put shows how breakeven, max gain, and max loss play out using a T-chart, revealing that max loss stays unlimited despite the strategy's name.