Orion Series 65 Quick Quiz 3 & 4

A corporation with a 7% $100 par cumulative preferred paid $5 to preferred stockholders last year. Before the company can pay common dividends, how much must it pay each preferred share outstanding?

$9.00.

When using the Dividend Discount Model:

future expected dividends are discounted to compute the present value of the stock.

Which of the following statements accurately describes the doctrine of limited liability?

A shareholder of a corporation is not personally liable for the corporation's debt.

A customer owns cumulative preferred stock (par value of $100) that pays an 8% divided.The dividend has not been paid this year or for the 2 previous years. How much must the company pay the customer per share before it may pay dividends to the common stockholders?

$24.00.

A common stockholder's rights include all of the following EXCEPT:

the right to determine the par value of the stock.

An investment in which of the following would expose the investor to the greatest capital risk?

Common Stock.

Under the USA, all of the following persons may provide investment advice incidental to their normal business without requiring registration as an investment adviser EXCEPT:

Economist

Bail Bonds, Inc., might issue warrants in connection with a bond issue for which of the following reasons? I. As an inducement to make the bonds more marketable. II. To lower their interest cost on the issue..

I and II.

Investing in emerging market stocks primarily exposes your client to which of the following risks? I. Currency II. Inflation III. Liquidity IV. Political

I, II, III, and IV.

An investor who chooses to use preferred stock as an income source instead of bonds would potentially incur which of the following risks? I. Loss of principal II. Price volatility of preferred stock is closely related to interest rates IV. If the stock is callable, the client's income can be suddenly lowered

I, II, and IV.

An investment Adviser is preparing an advertisement. Which of the following would be acceptable? III. Offering to provide his investment recommendations for the past 12 months. IV. Promoting his system of charts and formulas while mentoring their limitations and difficulties.

III and IV.

As interest rates fall, prices of straight preferred stock will:

Rise.

Which of the following statements best describes cumulative preferred stock?

Owners have a continuing claim to their dividends, and all arrears must be paid before any dividends can be paid to common stock.

Which of the following statements regarding rights is TRUE:

Preferred stockholders do not have the right to subscribe to a rights offering.

An investment adviser with custody of customer funds and securities must send the customer a statement of account activity no less frequently than:

Quarterly.

A company's dividend on its common stock is:

determined by its board of directors.

Wrap fee accounts would tend to be most suitable for investors who follow a:

tactical approach to investing.

Kapco Investment Advisers currently has $138 million in assets under management and has offices in Colorado and Utah. Kapco's only clients in Utah are 2 insurance companies domiciled in that state. Kapco has no office in New Mexico but does service the accounts of 3 middle-class individuals. Kapco recently has opened an advisory account for a pension plan for a corporation located in Montana. Under USA, Kapco would have to register with:

the SEC.

When analyzing a preferred stock, an investment adviser would give the most credence to:

the ability of the company to pay the stated dividend.

An analyst using the dividend growth model would take into account all of the following factors EXCEPT:

the current earnings per share.