SIE Prep
Regarding investment products, which of the following is true? A) Equity securities represent ownership in an issuing company. B) Debt securities represent ownership in an issuing company. C) Derivative securities represent ownership in an issuing company. D) Both derivatives and debt represent ownership in an issuing company.
Equity securities represent ownership in an issuing company.
Common stockholders of a publicly traded corporation have which of the following rights and privileges? I. Residual claim to assets at dissolution II. Right to a vote for stock dividends to be paid III. Right to receive an audited financial report on an annual basis IIII. Claim against dividends in default
I and III
A corporation is issuing a bond with an interest rate below that which is commonly being offered for this type of bond. To improve the bond's marketability without reducing the capital to be obtained, which of the following actions might the corporation take? A) Offer a stock dividend to the current shareholders B) Offer a warrant on the stock with each bond C) Offer the bond at a discount D) Conduct a rights offering for potential bond buyers
Offer a warrant on the stock with each bond
Which of the following statements about rights and warrants is true? A) Rights and warrants are both long term. B) Rights are long term; warrants are short term. C) Rights are short term; warrants are long term. D) Rights and warrants are both short term.
Rights are short term; warrants are long term.
Which of the following sell transactions is not subject to the holding period restriction specified in SEC Rule 144? A) Unregistered stock acquired by a nonaffiliate under an investment letter B) Stock acquired by a corporate affiliate in a private placement C) Unregistered stock acquired by a corporate affiliate in a stock option program D) Stock acquired on the NYSE by a corporate affiliate
Stock acquired on the NYSE by a corporate affiliate
A penny stock is best described as A) an unlisted stock valued at less than $5 per share. B) an exchange-listed stock valued at less than $5 per share. C) an unlisted stock valued at less than $2 per share. D) an unlisted stock valued at less than $1 per share.
an unlisted stock valued at less than $5 per share.
Restricted shares, those that are unregistered, meaning that they were not attained in a public offering, may be sold by a nonaffiliate A) freely, with no holding period or volume restrictions. B) after holding them for six months and freely thereafter. C) at any time but with volume restrictions. D) after holding them for six months but then subject to volume restrictions.
after holding them for six months and freely thereafter.
An investor having no affiliation with CDS Company has just purchased shares that were sold subject to Rule 144. This investor A) must wait six months before selling shares subject to volume limits. B) can only sell subject to volume limits. C) can sell the shares unrestricted at any time. D) must wait six months before any sales can be made.
can sell the shares unrestricted at any time.
An investor owns 4% preferred stock participating to 6%. This means the investor A) must receive an additional 4% in any year the board declares the 6% participating be paid. B) could receive an additional 6% over the stated 4% dividend if the board declares it. C) could receive an additional 2% over the stated 4% dividend if the board declares it. D) must receive at least 6% each year.
could receive an additional 2% over the stated 4% dividend if the board declares it.
