The SIE Exam: What You Need to Know About Accounts

Written by

The SIE exam is coming up soon, and if you’re like most candidates, you’re probably wondering what to expect. This blog post will provide an overview of the types of accounts that are covered on the exam, as well as their characteristics. 

We’ll also discuss discretionary vs. non-discretionary accounts, fee-based vs. commission accounts, and educational accounts. By understanding these concepts, you’ll be better prepared to pass the SIE exam!

The SIE Exam What You Need to Know About Accounts

Cash Accounts are among the most common types of accounts on the SIE exam. These accounts involve buying and selling financial securities, such as stocks, bonds, and mutual funds, using only cash. Cash Accounts are typically characterized by low fees, the ability to trade quickly and easily, and minimal risk.

Margin Accounts are also quite common on the SIE exam. With a Margin Account, you can borrow money from your brokerage firm to purchase securities, in order to increase your buying power. However, these accounts typically come with higher fees and more risk than Cash Accounts. Margin Accounts are also sometimes referred to as Leveraged Accounts. This is because they allow you to leverage your investments, increasing the potential returns while also increasing the risk.

Options Accounts are another type of account that may be covered on the SIE exam. These types of accounts allow traders to buy or sell options contracts for specific amounts of time at predetermined prices. Options trading can be quite risky, and as such it is typically only suitable for advanced traders who understand the market well. Options trading can be tricky because of the number of different factors that can affect the value of an options contract, including interest rates and market volatility.

Discretionary vs. non-discretionary accounts:

Discretionary Accounts are managed by an investment adviser or broker, who makes decisions about buying and selling securities on behalf of the account holder. Non-discretionary accounts, on the other hand, allow the account holder to make their own trading decisions. Both types of accounts may be covered on the SIE exam.

Fee-based vs. commission accounts:

A fee-based account charges a flat fee for each trade that is made in the account, whereas a commission-based account charges based on a percentage of the total value traded with each transaction. Both types of accounts may be covered on the SIE exam, and understanding how they work will help you better navigate the financial markets.

Finally, educational accounts are often discussed on the SIE exam, as they are often used by beginning investors to learn more about financial markets and trading. These accounts typically offer reduced fees or commission rates, allowing investors to practice trading without having to risk too much money. Whether you’re new to the world of finance or an experienced trader looking for a refresher, understanding these account types and their key characteristics can help you prepare for the SIE exam! These topics as well as many others will be covered on the SIE Exam. Achievable offers free SIE practice questions to prepare you for the SIE Exam. Visit Achievable’s website to get started.

More about business Planning