Module 2
Understanding Products and Their Risks: Free SIE Lessons
Compare securities and packaged products, then connect each investment to its return profile and risks.
11 lessonsAbout 150 minProducts and Risks44% of exam
Module overview
This is the largest exam section. Study what each product represents, how it produces returns, where it trades, and which risks matter most to its owner.
Module 2
Lessons in order
Complete written lessons are open without an account.
- 2.1Common and Preferred StockCommon stock gives you ownership, a vote, and the last claim on assets. Preferred stock gives you a fixed dividend and priority over common, and this lesson shows how the exam tests the difference.13 min read
- 2.2Rights, Warrants, and ADRsRights and warrants both let you buy stock at a set price, but they differ in who gets them, what they cost, and how long they last. This lesson also covers ADRs and the Rule 144 limits on control and restricted stock.13 min read
- 2.3Treasury and Agency SecuritiesU.S. Treasury securities are the federal government's debt, and agency securities come from federal agencies and from the companies Congress chartered to support lending. The exam tests each Treasury's maturity, which agency carries a government guarantee, and the prepayment risk that belongs to loan pools.14 min read
- 2.4Corporate Bonds and the Language of DebtA corporate bond is a loan to a company, priced by three numbers and graded by a rating agency. This lesson covers par, coupon, and maturity, the yields, the call and conversion features, and where a bondholder stands if the company fails.14 min read
- 2.5Municipal SecuritiesMunicipal securities are the bonds and notes that states, cities, and counties sell to pay for public spending. This lesson sorts them by what repays you, explains the federal tax exemption, and names the official statement as the disclosure document.13 min read
- 2.6Money Market InstrumentsThe money market is where Treasury, banks, and corporations borrow for a year or less. This lesson covers T-bills, commercial paper, bankers' acceptances, and negotiable CDs, and shows which ones sell at a discount.12 min read
- 2.7Options: Puts, Calls, and How They WorkAn option gives one side a right and hands the other side an obligation. This lesson covers calls and puts, the three contract terms, moneyness, equity versus index contracts, covered versus uncovered writing, and how exercise and assignment run through the OCC.14 min read
- 2.8Mutual Funds and Investment CompaniesOpen-end funds, closed-end funds, and unit investment trusts hold pooled portfolios, but they price and charge for shares in different ways. This lesson covers NAV, loads and share classes, the three breakpoint discounts, annual fees, and what the fund must give the buyer.14 min read
- 2.9Variable Annuities, 529 Plans, and ABLE AccountsA variable annuity holds its investments in a separate account and charges the investor to leave early. Municipal fund securities, meaning 529 plans, LGIPs, and ABLE accounts, are issued by states and restrict what the money may buy.16 min read
- 2.10DPPs, REITs, Hedge Funds, and ETPsThis lesson covers four products outside the mutual fund family: direct participation programs, real estate investment trusts, hedge funds, and exchange-traded products. For each one it gives the tax treatment, who may buy it, and how easily an investor can get out.15 min read
- 2.11Investment Risks and How to Manage ThemThe eleven risks the exam names, the trigger that identifies each one, and the products that carry them. It closes with the three ways to reduce risk: diversification, rebalancing, and hedging.12 min read