SIE Unit 1

All of the following are considered securities except A. U.S. minted gold coins B. Common stock of XYZ Corporation C. 15 British pound put contracts D. Treasury Bonds

A, stocks, bonds, and options are all examples of securities. Gold and gold coins are a commodity, not a security

Which of the following is not a security that an investor would purchase A. common shares of ABC petroleum, Inc B. Debt issue by ABC Petroleum C. Bitcoins D. Windmill Growth Fund

C, Bitcoin is considered a commodity, not a security

In 2011, RST corporation had both common stock and $100 par value 4% noncumulative preferred stock outstanding. The preferred, like the common stock, pay dividends on a quarterly basis. Because of the financial difficulties, the company stopped paying dividends after 2011. After resolving its problems in 2015, the company resumed dividend paymets in 2016. Before paying the first quarterly common stock dividend that year, the company would have to pay a quarterly dividend to the preferrred stockholders of A. $1 B. $4 C. $17 D. $20

A $1, in the case of a noncumulative preferred stock, skipped dividends are forever lost. So, when the company is able to pay a dividend, as is always the case, it must pay the current preferred dividend before paying to the common shares. The question states that dividends are paid quarterly. Therefore, the quarterly dividend on a stock paying $4 annually would be $1 - an amount that must be paid before the quarterly common dividend can be paid

Squidco, INC, is issuing 100 million dollars in 4 1/2% bonds maturing in 20 years. When purchased at issue, the buyers will receive an additional security that allows them to purchase 20 shares of Squidco common stock at $50 per share anytime in the next 10 years. Squidco common is currently trading at $29.95 a share. This is an example of A. a warrant B. a stock right C. a follow-on offering D. a call

A a warrant, a warrant is normally issued attached to a fixed income security to attract more interest in the debt issue. Warrants are generally longer term (five or more years) and have an exercise price that is higher than the current stock price

Another term for stocks and bonds is A. equity and debt B. shares and units C. voting and nonvoting D. taxable and tax free

A, equity is a common term for securities that represent ownership interest, such as stocks. Bonds are the most common type of debt security

Under rule 144, which of the following sales are subject to volume limitations on the number of shares sold? I. control person selling registered stock held for 1 year II. control person selling restricted stock held for 2 years III. non affiliate selling registered stock held for 1 month IV. Non affiliate selling restricted stock held for more than 6 months A. III and IV B. I and II C. I and III D. I and IV

B I and II, control persons (insiders) are always subject to volume limitations. Non affiliates have no volume (or any other restrictions) in the sale of registered stock. If the shares are restricted, the volume limits for non affiliates end after six months. Registered shares sold by non affiliates have no Form 144 filing requirement.

For this election cycle, Big Trucks Inc, has three open board seats. Big Trucks operates under a cumulative voting system. Your customer owns 300 participating preferred shares of Big Trucks. He has A. 900 votes he can divide anyway he wants among the three seats B. no voting rights C. 300 votes each for the open seats D. 300 votes total to spread among the three open seats

B no voting rights, your customer owns preferred stock. Preferred stock carries no voting rights

All big Company, Inc an NYSE listed manufacturer of large objects, has declared a 50-cents-a-share dividend payable next month, ALL Big also has options available for trade. The actual ex-dividend date will be declared by A. the OTC B. the NYSE C. FINRA D. the CBOE

B, ex dates are set by the market center where trades will likely take place. In the case of an NYSE - listed stock, the New York Stock Exchange will determine the ex-date. The fact that All Big has listed options is not relevant to the question

American liquidators corporation (Ticker LQDT) has 100 million outstanding common shares. The company would like to raise capital by selling 100 million new shares. In order to accomplish, this they would A. offer warrants to existing shareholders B. suggest that existing shareholders go to the market and double their existing position C. offer stock rights to existing shareholders D. perform a stock split

C, LQDT would give the right to purchase a portion of the newly issued shares to existing shareholders sufficient to maintain their current percentage of ownership via a stock rights offering. Warrants are long term and normally attached to a fixed income offer. Neither the stock split nor investors buying in the market generates capital for the company

Which of the following securities would likely provide the greatest potential for capital appreciation A. a preferred stock B. a U.S. treasury STRIP C. a common stock D. a convertible bond

C, common stocks would be the most suitable for investors seeking capital appreciation (growth). Bonds and preferred stocks are better suited for conservative investors because each is primarily an income investment and has limited growth prospects

Your client holds ADRs of Daikon Motors, Inc an automobile manufacturer based in Asia. All of the following are true about the position except A. they will receive dividends in the U.S. dollars B.The security may be traded in the U.S. markets C. they have the same voting rights as an owner of the common stock D. they have the right to request the underlying common shares be issued to them directly

C, it is important to remember that ADRs are issued by a depository bank and the bank is the registered owners of the shares. Depository banks are not required to pass voting proxies through to the ADR holders

Which of the following would most likely require shareholder approval? A. Declaring a dividend B. Firing the CEO C. Hiring a new CFO D. Changing the corporations name

D, changing the corporations name is a significant matter that will likely need shareholder approval. Declaring a dividend and the hiring and firing of senior executives is well within the boards power