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Wiley FINRA Series 3 Exam Review 2017: The National Commodities Futures Examination

Wiley FINRA Series 3 Exam Review 2017: The National Commodities Futures Examination


ISBN: 978-1-119-39997-1

Feb 2017

228 pages



The go-to guide for the Series 3, with practice, examples, strategies, and more

Wiley Series 3 Exam Review 2017 + Test Bank is a comprehensive study guide for the FINRA Series 3 exam, which qualifies candidates to sell commodities or futures contracts. Created by the experts at The Securities Institute of America, Inc., this useful guide provides the information and practice you need to ace the exam. The book is designed to help you build and fine-tune your knowledge of each subject area covered, giving you the confidence you need to perform at your best. Work through review questions, study examples, and develop a strategy for the exam itself. You'll even find guidance toward effective studying methods that allow you to enter the exam fully mentally prepared.

The National Commodities Futures Examination (Series 3) tests your knowledge of rules and statutes applicable to the markets. This intense two and a half hour test is a must for aspiring financial professionals, as passing means registration to conduct business in commodity futures and options. This book provides a valuable opportunity to test your knowledge and bring weak areas up to par, with complete coverage of exam topics.

  • Review practice questions taken from each subject area covered by the exam
  • Study hundreds of examples to clarify complex concepts and techniques
  • Gain insight into the best strategies and tips for taking the Series 3
  • Develop an effective study plan to stay focused and keep stress to a minimum

Although the exam is entry-level, the stakes are high and the subject matter is complex. Don't muddle through it alone and assume you're prepared – this guide helps you be sure. For the Series 3 candidate serious about success, Wiley Series 3 Exam Review 2017 is your ticket to passing with flying colors – the first time.

About the Series 3 Exam xi

About This Book xv

About the Test Bank xvii

About the Securities Institute of America xix

Chapter 1 Futures and Forwards 1

The Spot Market 1

Forward Contracts 2

Futures 3

Trading Futures on the Floor of the Exchange 4

Clearinghouse 5

Clearing Member Margin Calculations 7

Basis Grade 8

Pretest 11

Chapter 2 Trading Commodity Futures 15

Types of Orders 15

Market Orders 16

Buy Limit Orders 16

Sell Limit Orders 16

Stop Orders/Stop Loss Orders 17

Buy Stop Orders 18

Sell Stop Orders 18

Stop Limit Orders 19

Other Types of Orders 19

Pretest 29

Chapter 3 Futures Pricing 31

Contract Sizes and Pricing 31

U.S. Treasury Futures 35

Stock Index Futures 36

Index Future Settlement 37

Single Stock Futures 37

Foreign Currency Futures 39

Pretest 41

Chapter 4 Price Forecasting 45

Futures Market Pricing Structure 45

Agricultural Futures Pricing 48

Supply and Demand Elasticity 49

Government Agricultural Programs 49

Crop Year 50

Economic Policy 50

Tools of the Federal Reserve Board 51

Interest Rates 51

Reserve Requirement 52

Changing the Discount Rate 53

Federal Open Market Committee 53

Money Supply 53

Disintermediation 54

Moral Suasion 54

Fiscal Policy 55

International Monetary Considerations 56

London Interbank Offered Rate / LIBOR 57

Yield Curve Analysis 57

Technical Analysis 59

Pretest 65

Chapter 5 Speculation and Hedging 69

Speculation 69

Margin 72

Maintenance Margin 74

Changes to the Margin Requirement 78

Other Forms of Margin Deposits 79

Hedging 81

How to Manage an Imperfect Hedge 84

A Change in Basis Price 85

Hedging Financial Risks 88

Pretest 97

Chapter 6 Commodity Futures Options and Commodity Futures Spreads 101

Option Classification 101

Option Classes 102

Option Series 102

Bullish vs. Bearish 102

Possible Outcomes for an Option 103

Managing an Option Position 104

Buying Calls 104

Selling Calls 106

Buying Puts 108

Selling Puts 109

Option Premiums 111

Intrinsic Value and Time Value 113

Multiple Option Positions and Strategies 114

Long Straddles 114

Short Straddles 117

Spreads 120

Analyzing Spreads/Price Spreads 121

Bull Call Spreads/Debit Call Spreads 121

Spread Premiums Bull Call Spread 123

Bear Call Spreads/Credit Call Spreads 124

Spread Premiums Bear Call Spread 126

Bear Put Spreads/Debit Put Spreads 127

Spread Premiums Bear Put Spread 128

Bull Put Spreads/Credit Put Spreads 129

Spread Premiums Bull Put Spread 130

Synthetic Risk and Reward 131

Delta 133

Spreading Futures Contracts 133

Spreading Treasury Futures 136

Pretest 137

Chapter 7 CFTC & NFA and Regulations 141

The Commodity Exchange Act of 1936 141

Futures Commission Merchant 143

Introducing Broker 144

Commodity Pool Operator 144

Commodity Trading Adviser 146

Risk Disclosure Documents 146

Additional Disclosures by CTAs and CPOs 152

Customer Accounts 153

Arbitration 158

The CFTC Reparation Process 159

Written Communication with the Public 164

Pretest 169

Answer Keys 173

Glossary of Exam Terms 181

Index 195