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SIE Exam: 1001 Practice Questions For Dummies 1st Edition Steven M. Rice (Author) - Solutions

Which of the following is NOT TRUE regarding warrants?(A) They are marketable securities.(B) They offer investors a long-term right to buy stock at a fixed price.(C) They have voting rights.(D) Investors do not receive dividends.
All of the following securities may pay a dividend EXCEPT(A) warrants(B) common stock(C) American Depositary Receipts (ADRs)(D) participating preferred stock
Which of the following is true of rights offerings?(A) It gives existing shareholders the right to purchase more shares at a discount if the issuer is offering more shares.(B) It gives existing shareholders the right to purchase more shares at the current market price if the issuer is offering more
All of the following are true about warrants and rights EXCEPT(A) They are securities regulated by the SEC.(B) They allow investors to buy stock at a fixed price.(C) They allow investors to buy unissued stock at a discount from market price.(D) They are marketable securities.
Which of the following statements are true?I. Rights are short term.II. Rights are long term.III. Warrants are short term.IV. Warrants are long term.(A) I and IV(B) II and III(C) II and IV(D) I and III
A corporation needs to raise additional capital. Which of the following would help the corporation meet its goal?(A) Declaring a stock dividend to existing shareholders(B) A rights distribution to existing shareholders(C) Calling in their convertible bonds(D) Splitting their stock 2 for 1
All of the following are TRUE about rights offerings EXCEPT(A) they are short-term(B) each share of outstanding common stock receives one right(C) they typically have a standby underwriter(D) rights are automatically received by preferred stockholders
Which of the following best describes ADRs?I. They are receipts for foreign securities trading in U.S. markets II. They are receipts for U.S. securities trading in foreign markets III. They are used to help finance foreign corporations IV. They are used to help finance U.S.corporations(A) I and
Which TWO of the following are TRUE?I. ADRs are priced in U.S. currency.II. ADRs are priced in foreign currency.III. The price of ADRs fluctuates throughout the day like common stock.IV. ADRs trade like mutual funds, and the price of trades is not determined until the end of the day.(A) I and IV(B)
Why do U.S. investors typically purchase American depositary receipts (ADRs)?(A) As a hedge against currency risk(B) Because U.S. investors will receive tax credits for purchasing ADRs(C) Because typically foreign investments are more stable than U.S. investments(D) As a way to diversify a portfolio
Which of the following securities backs an American depositary receipt (ADR)?(A) U.S. corporate debt securities(B) Common stock(C) U.S. government bonds(D) Foreign debt securities
All of the following are characteristics of American depositary receipts EXCEPT(A) they help U.S. companies gain access to foreign dollars(B) investors do not receive the actual certificates(C) investors can’t vote(D) dividends are paid in U.S. dollars
All of the following are benefits of investing in ADRs EXCEPT(A) the dividends are received in U.S.currency(B) transactions are completed in U.S.currency(C) it has low currency risk(D) it allows U.S. investors to invest overseas
An ADR is(A) a receipt for a foreign security trading in the United States(B) a receipt for a foreign security trading in the United States and overseas(C) a receipt for a U.S. security trading overseas(D) a receipt for a U.S. security trading in the United States and overseas
When interest rates are steadily increasing, which of the following types of preferred stock would most likely pay a higher divided?(A) Adjustable rate(B) Convertible(C) Callable(D) Participating
This type of stock is most likely to have a more stable price.(A) Variable rate preferred(B) Convertible preferred(C) Participating preferred(D) Callable preferred
Which of the following is true regarding the dividend rate on variable preferred stock?(A) The interest rate is often tied to the returns on S&P 500 index funds.(B) The interest rate is based off of the Consumer Price Index.(C) The interest rate is often tied to a benchmark rate like the Treasury
TUV Corporation has continued their winning ways and have had another stellar year. As such, TUV’s board of directors has decided to pay their 5% participating preferred shareholders participating to 8% not only their 5% dividend but their full participating dividend this year. These preferred
This type of preferred stock may pay a dividend that is higher than the stated dividend.(A) Variable-rate(B) Participating(C) Senior(D) Convertible
With everything else being equal, a preferred stockholder would expect __________ preferred stock to pay the highest dividend.(A) convertible(B) straight(C) callable(D) cumulative
HIJ Corp. issued 6% callable preferred stock many years ago. Interest rates have been steadily declining over the past few years to where HIJ Corp. could issue 4% callable preferred stock now. What is HIJ Corp.likely to do?(A) HIJ will likely lower the dividend on their outstanding callable
With everything else being equal, which of the following preferred stock would pay the highest dividend?(A) Straight preferred(B) Cumulative preferred(C) Participating preferred(D) Callable preferred
Missy Love Corp. has called in its 7% callable preferred shares. Holders of these shares should expect that(A) the shares will likely be sold to other investors(B) the shares will continue trading in the market(C) dividend payments will continue to be paid until the shares are turned in(D) dividend
What is the advantage to a corporation issuing callable preferred stock as compared to non-callable preferred stock?(A) It allows the issuer to take advantage of high interest rates.(B) The dividend rate on callable preferred stock is lower than that of non-callable preferred stock.(C) It allows
If interest rates remained relatively stable over the last year, which of the following types of preferred stock was likely the most volatile during that period?(A) Adjustable rate(B) Callable(C) Participating(D) Convertible
Which of the following types of preferred stock will most likely increase in value or decrease in value in line with the issuer’s common shares?(A) Convertible preferred(B) Straight preferred(C) Participating preferred(D) Adjustable rate preferred
ABCD Corp. issued convertible bonds.Holders of those bonds can(A) convert their bonds for a set number of non-convertible bonds at any time(B) convert their bonds for a fixed number of shares of ABCD common stock(C) convert their bonds for 10 shares of ABCD straight preferred stock(D) convert their
One of your clients wants to purchase preferred stock but wants to reduce the risk of inflation. You should recommend(A) straight preferred stock(B) callable preferred stock(C) cumulative preferred stock(D) convertible preferred stock
A customer owns AylDec Corporation 6% cumulative preferred stock. AylDec has not paid a dividend yet this year, and they also missed the previous two years. If the AylDec wishes to pay a dividend to their common shareholders, how much must they pay this customer per share first?(A) $24(B) $18(C)
A corporation has issued 6% $100 par cumulative preferred stock. It paid $4 in dividends the first year and $3 in dividends the second year. If the corporation wants to declare a dividend for common shareholders the following year, how much must the company pay per share to its cumulative preferred
A company has previously issued 4% of$100 par cumulative preferred stock. Over the first three years, the company paid out$9 in dividends. If the company announces a common dividend in the following year, how much does it owe preferred stockholders?(A) $3(B) $4(C) $7(D) $16
Any corporation that has issued cumulative preferred stock(A) must pay the current preferred dividend before paying interest on their bonds or dividends on their common stock(B) must pay any past and current preferred dividends before paying any dividends on its common stock(C) must pay only the
LMNOP Corporation has past due dividends on their cumulative preferred stock. Which of the following is true?(A) LMNOP can choose to resume current dividends when they are able and write off the past due dividends.(B) Common stockholders must continue to receive dividends even though the dividends
Which two of the following are true of straight preferred shares?I. They are cumulative.II. They are non-cumulative.III. They have no provision for missed dividends to be paid at a later date.IV. They provide for any missed dividends to be paid at a later date.(A) I and III(B) I and IV(C) II and
A preferred stock dividend is based on a percentage of(A) its market price(B) its par value(C) the Consumer Price Index(D) the current T-bill rate
Preferred stockholders have(A) preemptive rights(B) voting rights(C) both (A) and (B)(D) neither (A) nor (B)
Which of the following is true of a preferred stock dividend?(A) It is variable and based on the consumer price index (CPI).(B) It is fixed and based on the par value.(C) It is variable based on the current market value.(D) It is fixed and based on the current market value.
Which TWO of the following are TRUE of preferred stock?I. Holders have voting rights.II. Holders do not have voting rights.III. In the event of corporate bankruptcy, preferred stock is senior to common stock.IV. In the event of corporate bankruptcy, preferred stock is junior to common stock.(A) I
As interest rates rise, prices of outstanding preferred stock will likely(A) fall(B) rise(C) fluctuate(D) remain stable
Preferred dividends may be paid in the form of I. cash II. stock III. product(A) I only(B) I and II(C) I and III(D) I, II, and III
Preferred stock has I. characteristics of debt securities II. no characteristics of debt securities III. characteristics of common stock IV. no characteristics of common stock(A) I and III(B) I and IV(C) II and III(D) II and IV
Which of the following are advantages of holding straight preferred stock over common stock?I. A fixed dividend II. More voting power III. Preference in the event of issuer bankruptcy IV. The ability to receive par value at maturity(A) I and II(B) II and IV(C) I and III(D) I, III, and IV
EYEBM Corp. shares are trading at $55 per share when it declares a 5% stock dividend.After EYEBM pays the dividend, one of your clients who owned 500 shares now owns(A) 500 shares valued at $57.73 per share(B) 525 shares valued at $55.00 per share(C) 550 shares valued at $55.00 per share(D) 525
One of your customers owns 1,000 shares of DIM common stock at $24. DIM declares a 20% stock dividend. On the ex-dividend date, your customer will own I. 1,000 shares II. 1,200 shares III. stock at $20 per share IV. stock at $24 per share(A) I and III(B) I and IV(C) II and III(D) II and IV
What is the main reason a corporation would split its stock?(A) To bring in additional funds(B) To increase the overall market value of its stock(C) To decrease the amount of dividend paid per share(D) To increase the demand for its stock
The ex-dividend date as related to cash dividends is I. the date that the stock price is reduced by the dividend amount II. the date that the stock price is increased by the dividend amount III. one business day before the record date IV. one business day after the trade date(A) I and III(B) I and
ABCDEF Corporation will be paying a cash dividend to its common stockholders. On what date will the market price of ABCDEF be reduced to reflect the dividend?(A) The declaration date(B) The ex-date(C) The record date(D) The payment date
A listed stock closed at $24.95 on the business day prior to the ex-dividend date.If the company previously announced a$0.30 dividend, what will be the opening price on the next business day?(A) $24.35(B) $24.65(C) $24.95(D) $25.25
TUVW Corp. declared a $0.40 dividend to their shareholders of record. Future dividend payments(A) are not guaranteed(B) are guaranteed to be paid although the amount needs to be decided(C) will be $0.40 per share(D) are guaranteed to be at least$0.40 per share
Which of the following is true regarding cash dividends?I. They are decided by a shareholder vote.II. They are decided by the board of directors.III. They are guaranteed.IV. They are not guaranteed.(A) I and III(B) I and IV(C) II and III(D) II and IV
Declan K. owns 2,500 shares of common stock of AylDec Corporation. Which of the following actions would dilute Declan’s equity?I. A primary share offering (registered)II. A stock split III. Payment of a stock dividend IV. A secondary share offering (registered)(A) I only(B) II only(C) I, II, and
An investor owns 100 shares of DEF common stock at the current market price of $40 per share. If DEF conducts a 1-for-2 reverse split, what would be the investor’s position after the split?(A) 50 shares at $20 per share(B) 50 shares at $80 per share(C) 200 shares at $20 per share(D) 200 shares at
Dana Black, an investor, purchased 1,000 shares of ABC at $40. If ABC announces a 5-for-4 split, what is Dana’s position after the split?(A) 800 ABC at $50(B) 1,250 ABC at $32(C) 1,250 ABC at $50(D) 800 ABC at $32
TUV Corporation declares a 4-for-3 stock split; an investor who owns 600 shares would receive __________ additional shares.(A) 100(B) 200(C) 400(D) 600
Which of the following changes the par value of a stock?(A) A rights offering(B) The issuer repurchasing some of its outstanding stock(C) A stock split(D) A cash dividend
Tender offers typically __________ the price of the outstanding shares of a corporation.(A) increase(B) decrease(C) do not affect(D) cannot be determined
The amount over par value that an issuer receives when selling stock is called(A) a bonus(B) equity surplus(C) surplus over par(D) additional paid in capital
The par value of a common stock is I. used for bookkeeping purposes II. one dollar III. adjusted for stock splits IV. the amount investors receive at maturity(A) I and III(B) I, II, and III(C) II, III, and IV(D) I, II, III, and IV
Which of the following changes the par value of a common stock?(A) A cash dividend(B) A stock dividend(C) A stock split(D) All of the above
Macrohard Corp. was authorized to issue 2 million shares of common stock. Macrohard issued 1.1 million shares and subsequently repurchased 150,000 shares. How many of Macrohard’s shares remain outstanding?(A) 150,000(B) 900,000(C) 950,000(D) 1.85 million
Treasury stock is(A) U.S. government stock(B) local government stock(C) authorized but unissued stock(D) repurchased stock
Which of the following does NOT describe treasury stock?(A) Treasury stockholders have no voting rights.(B) It is stock that was previously authorized but still unissued.(C) It is issued stock that has been repurchased by the company.(D) It has no dividends.
All of the following are possible ways to vote for the board of directors of a corporation EXCEPT(A) in person(B) by telephone(C) by mailed proxy(D) by online proxy
As a stockholder, Ayla Rice would really like to attend the vote for board of director members.Unfortunately, her schedule will not allow her to attend in person. Which of the following is true?(A) Ayla can vote by proxy.(B) Ayla will have to wait until the next vote.(C) Ayla can show up to the
This type of voting gives smaller shareholders(in terms of shares) a better chance to gain representation on the board of directors(BOD).(A) Statutory(B) Cumulative(C) Regular(D) Break-up
An individual owns 2,000 shares of TUV common stock. TUV has four vacancies on the board of directors. If the voting is cumulative, the investor may vote in any of the following ways EXCEPT(A) 4,000 votes for two candidates each(B) 5,000 votes for one candidate and 3,000 votes for another
Cain Weidman owns 1,000 shares of HIT Corp. HIT issues stock with cumulative voting. What is the maximum number of votes that Cain can cast for one candidate if the board of directors of HIT has four vacancies?(A) 100(B) 250(C) 1,000(D) 4,000
An investor who holds common stock has I. limited liability II. unlimited liability III. voting rights IV. no voting rights(A) I and III(B) I and IV(C) II and IV(D) II and III
ABCD Corporation’s common shareholders would have the right to vote for I. members of the board of directors (BOD)II. cash dividends III. stock dividends IV. stock splits(A) II and III(B) I and III(C) I and IV(D) II and IV
Which of the following investors would have the right to vote for corporation board of director positions?(A) Preferred stockholders(B) Commons stockholders(C) Bondholders(D) Both (A) and (B)
Common stockholders have the right to vote for all of the following EXCEPT I. cash dividends II. stock dividends III. stock splits IV. members of the board of directors(A) I, II, and III(B) III and IV(C) I and II(D) IV only
Common stockholders have which of the following rights and privileges?I. The right to receive monthly audited financial reports II. The right to vote for cash dividends III. The right to vote for stock splits IV. A residual claim to assets at dissolution(A) I and II(B) III and IV(C) I, III, and
In the event of corporate bankruptcy, preferred stockholders have priority claim of assets over(A) unpaid workers(B) debenture holders(C) the IRS(D) common shareholders
Poor Outlook Corporation has just declared bankruptcy. Remaining assets would be distributed in which way (from first to last)?(A) IRS, unpaid workers, general creditors, preferred stockholders, secured creditors, subordinated debenture holders, common stockholders(B) Common stockholders, general
AylDec Corporation has just decided to go public. AylDec will issue(A) preferred stock(B) common stock(C) term bonds(D) warrants
Regarding investments, which of the following is true?(A) Bonds represent ownership in an issuing corporation.(B) Warrants and bonds represent ownership in an issuing corporation.(C) Stocks represent ownership in an issuing corporation.(D) Warrants represent ownership in an issuing corporation.
Equity securities include(A) TIPS(B) debentures(C) preferred shares(D) GO bonds
Which of the following would be owners of a corporation?I. Common stockholders II. Debenture holders III. Participation preferred stockholders IV. Equipment trust bondholders(A) I and III(B) II and IV(C) I, III, and IV(D) II, III, and IV
Which of the following securities is subject to the anti-fraud provision of the Securities Act of 1933?(A) U.S. government securities(B) Common stock issued by any corporation(C) Private placements under Regulation D(D) All of the above
Sig Hillstrand has held shares of Greenhorn restricted stock for more than one year.Greenhorn has 4 million shares outstanding.The most recently reported weekly trading volumes for Greenhorn are as follows:What is the maximum number of shares that Sig can sell under Rule 144?(A) 35,000(B) 46,250(C)
SEC Rule 144 regulates(A) the sale of control stock(B) the sale of new securities(C) the sale of equity securities worth$75 million or less in a one-year period(D) the conversion of convertible preferred stock into common stock
Under Rule 144, what percentage of outstanding shares may a control person sell every 90 days?(A) 1%(B) The average weekly trading volume for the previous 4 weeks(C) Either (A) or (B)(D) Neither (A) nor (B)
Which of the following are considered accredited investors?(A) Financial institutions(B) Investors with a net worth of $1 million or more excluding primary residence(C) Rural business investment companies(D) All of the above
Which of the following is true?(A) Public securities offerings are typically exempt from SEC registration.(B) All securities offerings are exempt from SEC registration.(C) No securities offerings are exempt from SEC registration.(D) Private securities offerings are typically exempt from SEC
Which of the following is TRUE of Regulation A+ Tier 2 offerings?(A) They are limited to 35 unaccredited investors each year.(B) They are issued without using a prospectus.(C) They are limited to raising up to$20 million per year.(D) They are also known as private placements.
All of the following would be considered accredited investors EXCEPT(A) financial institutions(B) joint investors with a combined income of at least $200,000 for the current year and previous two years(C) corporations with a net worth of at least$5 million(D) investors with a net worth of at
Which of the following is not an offering that is exempt from the full registration requirements of the Securities Act of 1933?(A) Regulation D(B) Regulation A+(C) Regulation T(D) Rule 147
A Regulation D offering is(A) an offering of securities only within the issuer’s home state(B) an offering of securities worth no more than $75 million within a one-year period(C) an offering of securities to no more than 35 unaccredited investors within a one-year period(D) also known as an
A Rule 147 offering is(A) an offering of securities only within the issuer’s home state(B) an offering of securities worth no more than $75 million within a one-year period(C) an offering of securities to no more than 35 unaccredited investors within a one-year period(D) also known as an
Which of the following are exempt transactions?I. Private placements II. Securities issued by the U.S. government III. Municipal bonds IV. Intrastate offerings(A) II and III(B) II, III, and IV(C) I and IV(D) I, II, III, and IV
Which of the following securities are exempt from the full registration requirements of the Securities Act of 1933?(A) Corporate convertible bonds(B) Closed-end funds(C) Real estate limited partnerships(D) Commercial paper
Under the Securities Act of 1933, all of the following securities must be offered by a prospectus EXCEPT(A) variable annuities(B) mutual funds(C) UITs(D) TIPS
Which of the following securities are exempt from SEC registration?I. Revenue bonds II. Treasury bonds III. Variable annuities IV. Securities issued by not-for-profit organizations(A) I, II, and IV(B) II, III, and IV(C) II and IV(D) I, II, III, and IV
Which TWO of the following are nonexempt securities under the Securities Act of 1933?I. Variable annuities II. Fixed annuities III. Non-negotiable CDs IV. Oil and gas limited partnerships(A) I and III(B) I and IV(C) II and III(D) II and IV
Which of the following securities is exempt from SEC registration?(A) Corporate term bonds(B) Warrants(C) General obligation bonds(D) None of the above
All of the following are exempt securities under the Securities Act of 1933 EXCEPT(A) Treasury bonds(B) municipal general obligation bonds(C) REITs(D) public utility stocks
A primary offering would do which of the following?I. Increase the number of shares outstanding.II. Decrease the number of shares outstanding.III. Raise additional capital for the issuer.IV. Include selling treasury stock.(A) I, III, and IV(B) II, III, and IV(C) I and IV(D) I and III
Another name for a combined offering is a __________ offering.(A) split(B) dual(C) secondary(D) coupled
The first time a corporation issues stock is called a(n)(A) primary offering(B) secondary offering(C) split offering(D) initial public offering
WXY Corporation is offering a large block of treasury stock. What type of offering is this?(A) IPO(B) Primary(C) Secondary(D) Split

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