SIE Exam Meetings with Saachi

Unit 1: Securities & Exchange Commission

  • They don’t make the laws, but they enforce them; they’re kinda like theSupreme Courtt in the finance industry

  • FINRA: Financial Industry Regulatory Authority (they’re like the police of the FINRA)

Primary Vs Secondary Market:

  • Primary: When people can directly buy into the market themselves (someone going to buy Apple stock)

  • Secondary: Investors trade securities among themselves (someone going to Max Mintz to have him do some trading in the market)

Common Stock: APPL, GOOG, etc., are all examples of common stocks. Voting rights, limited liability, and people that hold common stock are always last in line to get paid (like if the company goes bankrupt). True ownership

  • Large CAP: Bigger companies

  • Mid CAP: Medium Companies

  • Small CAP: Small Companies

Preferred Stock: Kinda like a bond, you get paid dividends. Dividends can be in the form of cash or stock. The stock as dividends is always tax free. Johnson and Johnson is a preferred stock because it offeres dividends.

American Depository Receipts (ADR’s): A vessel that allows americans (common people) to buy foreign shares on the stock exchange

Debt Instruments:

  1. Treasurys: Backed by the US gov, have a interest risk

  2. Coorporate:

  3. Municipal: Mostly issued by local governments (you odnt have to pay interest on these)

  4. Money Markets: Short term, very liquid

Mutual Funds & ETF’s:

Mutual Funds: Don’t trade on exchanges, you can’t buy them and sell them like regular stocks and you can only do them once a day. (Mutual Funds are made up of many things and you own a piece of the fund. Its a good way of diversification because your investing in multiple things so you’re not putting all of your eggs in one basket.)

ETF’s: Trade like regular stocks, lower expense ratios and more tax efficient

Risk:

  1. Systematic Risk (Risks that can’t be avoided) : When the market goes down you can’t diversify your way out (COVID, recessions)

  2. Non Systematic Risks (things that can be avoided ): These are like Business Specific Risks (The CEO being in a scandal)