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All SIE Formulas
Understanding Products and Their Risks
6 items
Mutual fund sales charge percentage
, POP = public offering price (ask), NAV = net asset value (bid). Trap: divide by POP, not NAV.
Mutual fund NAV per share
, Assets = total fund assets, Liabilities = total fund liabilities, Shares = shares outstanding
Current yield (bond)
, uses current price (not par). Discount: nominal < CY < YTM; order reverses at a premium.
Mutual fund public offering price from NAV
, POP = public offering price, NAV = net asset value per share, SC = sales charge as a decimal. Ex:
Options intrinsic value and breakeven
Call: , BE = Strike + Premium. Put: , BE = Strike - Premium. IV is never negative and is above zero only when in-the-money. Premium = Intrinsic + Time value.
Dividend yield (stock)
, Annual Dividend = sum of dividends paid per share over a year; result expressed as a percentage.
SIE Limits and Thresholds
Knowledge of Capital Markets
12 items
IAR registration in most states requires the Series 65 exam or the Series 7 plus Series 66 combination.
Among other routes, a natural person is accredited with income over $200,000 ($300,000 joint) in each of the last two years, with the same expected this year, or net worth over $1M excluding primary residence.
FDIC insures bank deposits up to $250,000 per depositor, per insured bank, per ownership category.
Generally, an investment adviser may register with the SEC at $100 million in AUM and must register once AUM reaches $110 million.
The SEC was created by the Securities Exchange Act of 1934, while the Federal Reserve was created in 1913 and SIPC in 1970.
The Federal Reserve writes Regulation T setting equity initial margin at 50%, while Regulation U covers bank loans to buy or carry margin stock when secured directly or indirectly by margin stock.
Regulation A Tier 2 permits exempt offerings up to $75M over 12 months.
SIPC covers $500,000 per customer at a failed broker-dealer, with a $250,000 cash sub-limit.
A recession is commonly described as GDP shrinking for two or more consecutive quarters, while the four phases of the business cycle are expansion, peak, contraction, and trough.
The third market is listed securities traded OTC, while the fourth market is institution-to-institution trading, often through ECNs and dark pools, which are alternative trading systems registered as broker-dealers.
The Fed reduced reserve requirements to zero in 2020 and has not restored them since.
The yield curve spread, a leading indicator, is measured as the 10-year minus 3-month (or 10-year minus 2-year) Treasury yield.
Understanding Products and Their Risks
23 items
Rights typically expire in 30-45 days with strikes below market, while warrants last 5+ years with strikes above market at issue.
Modern portfolio theory shows 20 to 30 well-chosen stocks capture most diversification benefit, reducing unsystematic risk.
Tax-equivalent yield equals the muni yield divided by (1 − tax rate).
The conversion ratio equals par divided by conversion price, so a $1,000 bond with a $50 conversion price converts into 20 shares.
T-notes mature in 2, 3, 5, 7, and 10 years, while T-bonds mature in 20 and 30 years.
Commercial paper has a maximum maturity of 270 days, and negotiable CDs require a $100,000 minimum.
Investment grade ends at BBB- (S&P/Fitch) or Baa3 (Moody's); anything below is high-yield or junk.
T-bills are sold at a discount with maturities of 4, 6, 8, 13, 17, 26, or 52 weeks and pay no coupon.
Standard listed equity options expire the third Friday of the expiration month, and an open-end fund must redeem shares within seven days under Section 22(e).
A REIT must distribute at least 90% of taxable income, excluding net capital gain, and hold at least 75% of total asset value in real estate assets, cash and cash items, and government securities to retain REIT tax status.
One standard equity option contract covers 100 shares, and open-end mutual fund NAV is calculated once daily after the 4:00 PM ET market close.
Index options settle in cash using a $100 multiplier, while equity options settle by physical delivery of 100 shares one business day (T+1) after exercise.
A 529 donor may front-load $95,000 via 5-year gift-tax averaging using the annual exclusion of $19,000 per donor.
Variable annuity withdrawals before age 59½ trigger a 10% IRS penalty on earnings, and surrender charges (CDSC) typically decline over 6 to 8 years.
FINRA's maximum mutual fund sales load is 8.5%, and total 12b-1 fees must stay at or below 0.25% for a fund to call itself "no-load."
A Letter of Intent pledges the breakpoint amount within 13 months and can be backdated up to 90 days, while Rights of Accumulation have no time limit.
Hedge funds avoid 1940 Act registration under 3(c)(1) (≤100 beneficial owners, no public offering) or 3(c)(7) (qualified purchasers, no public offering) and charge fees on a '2 and 20' model.
A qualified purchaser holds at least $5M in investments individually or $25M for institutions.
ABLE accounts require disability onset before age 46 (raised from 26 effective 2026), cap annual base contributions at $20,000 (2026), and exclude balances up to $100,000 from SSI resource limits.
529 plans allow up to $20,000/year per beneficiary for K-12 expenses (2026) and up to $10,000 lifetime for student loan repayment.
Within a diversified fund's 75% asset basket, each nonexempt issuer is capped at 5% of total fund assets and 10% of that issuer's voting securities.
Non-qualified 529 withdrawals generally incur ordinary income tax plus a 10% additional tax on earnings only.
An affiliate must file Form 144 when planned stock sales within three months exceed 5,000 shares or $50,000 in value.
Understanding Trading, Customer Accounts and Prohibited Activities
14 items
FINRA's 5% Policy guides fair commissions, markups and markdowns, but charges below that percentage can still be unfair.
Regulation T's cash-account payment period is the standard settlement cycle plus 2 business days.
Tender offers must remain open at least 20 business days and at least 10 business days after notice of a change in price or percentage sought.
Reg T initial margin is 50%, FINRA maintenance is 25% long and, for short stock at $5 a share or more, the greater of $5 a share or 30%, with minimum equity of $2,000 to open (never more than the purchase cost).
Traditional IRA RMDs begin at age 73 under SECURE 2.0 (75 if born in 1960 or later), and early withdrawals before age 59½ trigger a 10% penalty plus tax.
CIP identifying information must be retained for 5 years after account closure and must include name, DOB, physical address, and SSN/ID number.
CTRs must be filed within 15 days for cash over $10,000, while SARs must be filed within 30 days of detection (60 days if no suspect).
Regular-way settlement for stocks, corporate bonds, munis, ETFs, options, and Treasuries is T+1 (cash T+0), and a dividend under 25% of the stock's value normally goes ex on the record date itself when that is a business day.
CTRs are filed on FinCEN Form 112 while SARs are filed on FinCEN Form 111.
Under FINRA Rule 2210, a retail communication is a written or electronic communication distributed or made available to more than 25 retail investors within any 30 calendar-day period.
A broker-dealer must file a SAR for qualifying suspicious transactions conducted or attempted through the firm involving at least $5,000 in aggregate.
FINRA Rule 5130 permits IPO purchases when restricted ownership is 10% or less and an eligibility representation was obtained in the prior 12 months.
A one-percentage-point yield change equals 100 basis points.
A wash sale disallows a loss when substantially identical securities are purchased within 30 days before or after the loss sale.
Overview of the Regulatory Framework
8 items
FINRA Rule 3220 caps business gifts at $300 per person per year, and freeriding triggers a 90-day cash-account freeze.
Under SEC Rule 17a-4, blotters and ledgers are kept 6 years and trial balances 3 years, the first 2 years easily accessible in both cases.
FINRA Rule 2165 permits a temporary hold of 15 business days on a senior's disbursement, extendable by 10, and by 30 more (55 in all) once the firm reports its belief to a state regulator, agency or court.
Insider trading civil penalties reach three times the profit gained or loss avoided and criminal penalties reach 20 years imprisonment with $5M individual / $25M entity fines.
MSRB Rule G-37's de minimis lets an MFP give up to $250 per election to a candidate they can vote for; exceeding it triggers a two-year ban on negotiated muni business with that candidate's issuer.
Form U4 amendments are due within 30 days of learning new facts, or 10 days after a statutory disqualification occurs.
FINRA's Regulatory Element is due annually by December 31, and registrations terminate after 2 consecutive years of CE inactivity.
Any felony or specified misdemeanor conviction within 10 years before a registration application's filing date triggers statutory disqualification.
