Investment Products and Their Risks

In this section

• Equity Securities
  Review common and preferred stock, rights, warrants, and ADRs.
  • Common Stock
    Understand common stock ownership, shareholder rights, and basic equity risks.
  • Preferred Stock
    Review preferred stock features, dividend priority, and common risks.
  • Rights and Warrants
    Understand stock rights and warrants, including dilution, timing, and investor risk.
  • American Depositary Receipts (ADRs)
    Review how ADRs let U.S. investors access foreign issuers and what risks they carry.
• Debt Securities
  Study corporate, government, municipal, agency, and money market debt instruments.
  • Corporate Bonds
    Study corporate bond structure, issuer risk, yield, and credit quality.
  • U.S. Government Securities
    Review Treasury bills, notes, bonds, and TIPS for SIE coverage.
  • Municipal Bonds
    Understand municipal bond types, tax treatment, and basic risk factors.
  • Agency Securities
    Review federal agency and GSE debt instruments and their guarantees.
  • Money Market Instruments
    Study short-term debt instruments such as T-bills, commercial paper, and bankers acceptances.
• Packaged Products
  Review mutual funds, ETFs, closed-end funds, UITs, and REITs.
  • Mutual Funds
    Review mutual fund structure, pricing, share classes, fees, and risks.
  • Exchange-Traded Funds (ETFs)
    Understand ETF structure, intraday trading, creation and redemption, and common risks.
  • Closed-End Funds
    Review closed-end fund structure, exchange trading, and premium or discount behavior.
  • Unit Investment Trusts (UITs)
    Study unit investment trusts, fixed portfolios, and how UITs differ from mutual funds.
  • Real Estate Investment Trusts (REITs)
    Understand REIT structure, income distribution rules, and basic real-estate risks.
• Options
  Review option contract basics, terminology, and common strategy patterns.
  • Basics of Options Contracts
    Review option contract terms, rights, obligations, and basic option mechanics.
  • Options Strategies
    Understand basic option strategies and how calls, puts, spreads, and straddles behave.
• Annuities and Insurance Products
  Review fixed annuities, variable annuities, and life insurance products.
  • Fixed Annuities
    Study fixed annuity features, guarantees, surrender charges, and core suitability issues.
  • Variable Annuities
    Review variable annuity structure, separate accounts, tax treatment, and risks.
  • Life Insurance Policies
    Understand core life insurance policy types and where they appear in SIE product coverage.
• Alternative Investments
  Study hedge funds, private equity, DPPs, commodities, futures, and digital assets.
  • Hedge Funds
    Review hedge fund structure, investor access, liquidity limits, and strategy risk.
  • Private Equity and Venture Capital
    Understand private equity and venture capital structures, investor profile, and liquidity risk.
  • Direct Participation Programs (DPPs)
    Study direct participation programs, pass-through features, illiquidity, and suitability concerns.
  • Commodities and Futures
    Review commodity exposure, futures basics, leverage, and major product risks.
  • Cryptocurrencies and Digital Assets
    Understand digital asset basics, custody issues, volatility, and regulatory risk.
• Other Investment Products
  Review structured products, ETNs, and asset-backed securities.
  • Structured Products
    Review structured product features, payoff customization, and issuer risk.
  • Exchange-Traded Notes (ETNs)
    Understand ETN structure, credit exposure, and how ETNs differ from ETFs.
  • Asset-Backed Securities (ABS)
    Study asset-backed securities, cash-flow structure, and common ABS risks.
• Risks Associated with Investment Products
  Review the core market, credit, liquidity, inflation, and other product risks tested on the SIE.
  • Market Risk
    Review broad market risk and how diversification can reduce unsystematic exposure.
  • Credit Risk
    Understand default risk, downgrades, and credit-spread sensitivity.
  • Interest Rate Risk
    Study how rate changes affect bond prices, duration, and fixed-income holdings.
  • Inflation Risk
    Review purchasing-power risk and which products are most exposed to inflation.
  • Liquidity Risk
    Understand how thin trading and limited buyers can affect price and execution.
  • Currency Risk
    Study exchange-rate risk in foreign securities and international investments.
  • Political and Legislative Risk
    Review how policy changes and political events can affect securities values.
  • Reinvestment Risk
    Understand the risk of reinvesting cash flows at lower yields.
  • Prepayment and Extension Risk
    Study cash-flow timing risk in mortgage-backed and similar products.
  • Concentration Risk
    Review how overexposure to one issuer, sector, or asset class increases portfolio risk.