
Getting Started  Mathematics Required For The Examination
Mathematics Required For The Examination
Math on the Series 3 entails nothing more than addition, subtraction, multiplication and division. One does, however, need to read word problems carefully in order to understand which operations are required to arrive at a solution and why.
For example, say you had to compute an initial margin that is 25% higher than the maintenance margin. You are told that the maintenance margin is $500. You would need to multiply $500 times 1.25 (that means knowing that 25% is the same as 0.25, and that you have to add 1 to that to account for the $500 starting point) to arrive at $625.
To compute profits or losses from trades, you'll have to multiply the number of contracts by the number of units per contract by the price per unit. We will spend a great deal of time on this in Chapter 11: Test Taking.
You will also need to understand numerical concepts that may appear at first blush counterintuitive. For example, if the basis – an important concept from Chapter 6: Hedging – goes from 6 cents to 3 cents, you need to know that it is going up rather than down.
Lastly, you will need to understand ratios. They are nothing more than division. But you may well be asked to compute the return on equity if your trade earned $100 gross profit on an investment of $25. If you answered "$4," that's incorrect. First of all, the answer will be a percentage, not a dollar figure. Secondly, you have to subtract that $25 investment out of the $100 profit to make a fair comparison. The formula, then, is ($100$25)/$25. (This also presupposes that you know to perform the function in the parentheses before moving on.) So we come up with $75/$25, which can be expressed as 3, but is more correctly written as 300%, when asked for a return on equity figure.

Options & Futures
Margin Trading: The Dreaded Margin Call
In the previous section, we discussed the two restrictions imposed on the amount you can borrow. First, the initial margin, which is the initial amount you can borrow. Second, the maintenance ... 
Active Trading Fundamentals
Five Minute Investing: Getting Started
If you are a beginner in the world of investing, it is natural to be a bit apprehensive about getting started investing in stocks. Even though you now have a good strategy, you may want to see ... 
Entrepreneurship
What's a Good Profit Margin for a Mature Business?
How to determine if the amount you clear dovetails with the competition. 
Options & Futures
Tailoring Your Investment Plan
Start your own investing adventure with the help of some simple guidelines. 
Entrepreneurship
Run Your Finances Like A Business
Think of yourself as your own little company. To make it run smoothly, you need to take a look at your books. 
Forex Education
6 Steps To A RuleBased Forex Trading System
Learn to add structure to your trading methods with these six important steps. 
Active Trading Fundamentals
Five Minute Investing: Margin Power
As long as money has existed, risktakers have multiplied their efforts through the use of other people's money. There is probably no place where the use of other people's money can be used to ... 
Investing Basics
So You've Decided To Invest ...
Becoming an investor can be intimidating at first. Find out what happens after you take that first step. 
Consolidating Your Retirement Money – Plan For The Future
You've reached the last step of this tutorial. You know much more about who you are, what you have and how well your portfolio matches your goals. You've streamlined and consolidated ... 
Financial Advisors
How to Know When to Pass on an Investment
Knowing what to invest in is important, but knowing what not to invest in is equally important. Here's how to decide when to walk away.

Maintenance Margin
The minimum amount of equity that must be maintained in a margin ... 
House Maintenance Requirement
The minimum amount of equity that an account holder must maintain ... 
Mathematical Economics
Mathematical economics is a discipline of economics that utilizes ... 
Margin Call
A broker's demand on an investor using margin to deposit additional ... 
Equity Multiplier
The ratio of a company’s total assets to its stockholder’s equity. ... 
Marginal Profit
Marginal profit is the profit earned by a firm or individual ...

What does it mean when I get a maintenance margin call?
Understand how maintenance margin calls work, and learn about how margin requirements are different for trading stock versus ... Read Answer >> 
What is the difference between gross profit margin and operating profit margin?
Understand the difference between gross profit margin and operating profit margin, two measures of corporate profitability ... Read Answer >> 
It's my first time investing and I would like to know whether to choose margin or ...
... Read Answer >> 
What does a futures contract cost?
Learn about values of futures contracts and the initial margin a trader must place in an account to open a futures position, ... Read Answer >> 
How much should my profit margins be?
Understand some of the major factors you need to consider before you set a target profit margin on the merchandise for your ... Read Answer >> 
What are my options when I get a margin call?
Understand what a margin call means and the two primary options for meeting a margin call, such as depositing additional ... Read Answer >>