SIE Equities: Special Securities

All of the following terms describe rights EXCEPT: A.) exercisable B.) negotiable C.) giftable D.) redeemable

D.) redeemable

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 1 share of preferred stock and a 1/4 warrant to buy one additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have: A.) 100,000 preferred shares and 25,000 common shares B.) 100,000 preferred shares and 50,000 common shares C.) 200,000 preferred shares and 100,000 common shares D.) 20,000 preferred shares and 200,000 common shares

A.) 100,000 preferred shares and 25,000 common shares

ABC Corporation has declared a rights offering to stockholders of record on Tuesday, June 22nd. Under the offer, shareholders need 20 rights to subscribe to 1 new share at a price of $60. Fractional shares can be rounded up to purchase 1 full share. A customer owning 240 shares wishes to subscribe. The market price of the stock is currently $73. The customer can buy: A.) 12 shares for $720 B.) 12 shares for $876 C.) 240 shares for $14,400 D.) 240 shares for $17,520

A.) 12 shares for $720

Which of the following pay quarterly dividends? A.) ADRs B.) Bonds C.) Preferred stock D.) Rights

A.) ADRs

Which statement is TRUE regarding American Depositary Receipts? A.) Exchange listed ADRs must be sponsored B.) Non-sponsored ADRs trade exclusively offshore C.) All ADRs must provide quarterly and annual reports to shareholders in English D.) Non-sponsored ADRs are not required to provide quarterly and annual reports to shareholders

A.) Exchange listed ADRs must be sponsored

American Depositary Receipts would trade on all of the following exchanges EXCEPT the: A.) London Stock Exchange B.) New York Stock Exchange C.) NASDAQ Stock Market D.) American Stock Exchange

A.) London Stock Exchange

Which statement is TRUE about non-sponsored ADRs? A.) These ADRs are created without the participation of the foreign corporation B.) These ADRs are sponsored by the country in which the foreign corporation resides C.) These ADRs must provide financial statements to the ADR holder in English D.) These ADRs are typically NASDAQ or NYSE listed

A.) These ADRs are created without the participation of the foreign corporation

All of the following statements are true regarding warrants EXCEPT: A.) Warrants generally have a maximum life of 2 months B.) At issuance, the exercise price of the warrant is set higher than the current market price of the underlying common stock C.) The price of the warrant will vary with the price movements of the underlying stock D.) The price of the warrant will vary depending upon the time to expiration of the warrant

A.) Warrants generally have a maximum life of 2 months

A foreign security held in foreign branches of U.S. bank is a(n): A.)ADR B.) LIBOR C.) Eurodollardeposit D.) Banker's Acceptance

A.)ADR

An ADR has been issued where each ADR equals 600 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 6,000 ordinary shares, how many ADRs must be purchased? A.) 1 B.) 10 C.) 100 D.) 1,000

B.) 10

When the market price of ACME Common stock is at $45, which of the following actions when completed by ACME Corporation, would raise additional capital? A.) Declaration of a 2 for 1stock split B.) Announcement of a rights distribution, allowing existing shareholders to buy the stock at $35 per share C.) Announcement of a call of ACME $100 par convertible preferred at par, convertible at a 2.5:1 ratio D.) Announcement of a 10% stock dividend

B.) Announcement of a rights distribution, allowing existing shareholders to buy the stock at $35 per share

Which of the following would be considered owners of a corporation? A.) OnlyCommon Shareholders B.) Both Common andPreferred Shareholders C.) Right Holders D.) Warrant Holders

B.) Both Common andPreferred Shareholders

A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights tendered, a shareholder may purchase one additional share at $20 per share. Any fractional rights-holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A.) The shareholder can buy a maximum of 10 shares by paying $20 B.) The shareholder can buy a maximum of 11 shares by paying $220 C.) The shareholder can buy a maximum of 11 shares by paying $420 D.) The shareholder can buy a maximum of 110 shares by paying $2,200 Explanation

B.) The shareholder can buy a maximum of 11 shares by paying $220

Which statement is TRUE regarding warrants? A.) Warrants are typically issued with an exercise price that is higher than the stock's current market price and would be exercised when the stock's market price is below the warrant strike price B.) Warrants are typically issued with an exercise price that is higher than the stock's current market price and would be exercised when the stock's market price is above the warrant strike price C.) Warrants are typically issued with an exercise price that is lower than the stock's current market price and would be exercised when the stock's market price is below the warrant strike price D.) Warrants are typically issued with an exercise price that is lower than the stock's current market price and would be exercised when the stock's market price is above the warrant strike price

B.) Warrants are typically issued with an exercise price that is higher than the stock's current market price and would be exercised when the stock's market price is above the warrant strike price

Which statement is TRUE about the time value and intrinsic value of rights and warrants when issued? A.) Both have time value and intrinsic value at issuance B.) Warrants have time value and rights have intrinsic value at issuance C.) Warrants have intrinsic value and rights have time value at issuance D.) Neither has time value or intrinsic value at issuance

B.) Warrants have time value and rights have intrinsic value at issuance

The exercise price of a warrant is set at issuance at: A.) a discount to the market price of the common stock B.) a premium to the market price of the common stock C.) the market price of the common stock D.) any price designated by the issuer

B.) a premium to the market price of the common stock

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 2 shares of preferred stock and a warrant to buy one half additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have outstanding: A.) 100,000 preferred shares and 100,000 common shares B.) 200,000 preferred shares and 100,000 common shares C.) 200,000 preferred shares and 50,000 common shares D.) 50,000 preferred shares and 100,000 common shares

C.) 200,000 preferred shares and 50,000 common shares

Which statement is TRUE about American Depositary Receipts? A.) ADR dividends are paid in foreign currency B.) Each ADR represents one underlying foreign share C.) ADR market prices are subject to foreign currency exchange fluctuations D.) ADRs are issued by U.S. companies and trade overseas

C.) ADR market prices are subject to foreign currency exchange fluctuations

Dividends are paid to holders of: A.) Warrants B.) Treasury Stock C.) ADRs D.) Rights

C.) ADRs

A corporation wishes to raise funds to build a new manufacturing facility. Which method is suitable for the issuer to obtain financing? A.) Force conversion of outstanding convertible preferred B.) Split the outstanding shares of common stock 2 for 1 C.) Issue rights to outstanding shares of common stock D.) Call outstanding convertible preferred

C.) Issue rights to outstanding shares of common stock

All of the following terms describe rights EXCEPT? A.) Exercisable B.) Negotiable C.) Redeemable D.) Giftable

C.) Redeemable

Which of the following actions taken by a corporation will raise additional capital? A.) Declaration of a stock split B.) Announcement of a call of all convertible preferred shares at par C.) Declaration of a stock dividend D.) Announcement of a rights distribution allowing existing shareholders to buy the additional stock

D.) Announcement of a rights distribution allowing existing shareholders to buy the additional stock

Which statement is TRUE regarding sponsored American Depositary Receipts? A.) Sponsored ADRs trade exclusively over-the-counter B.)Sponsored ADRs are created to facilitate the trading of U.S stocks overseas C.) Sponsored ADRs are not required to provide quarterly reports to shareholders D.) Sponsored ADRs provide annual reports to shareholders

D.) Sponsored ADRs provide annual reports to shareholders

A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 15 rights tendered, a shareholder may purchase one additional share at $24 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A.) The shareholder can buy a maximum of 15 shares by paying $360 B.) The shareholder can buy a maximum of 16 shares by paying $384 C.) The shareholder can buy a maximum of 17 shares by paying $408 D.) The shareholder can buy a maximum of 18 shares by paying $432

D.) The shareholder can buy a maximum of 18 shares by paying $432

All of the following statements are true regarding warrants EXCEPT: A.) warrants allow the holder to buy the stock of that issuer at a fixed price B.) warrants give the holder a long term option to buy the stock C.) warrants are attractive to speculators because of the leverage that they offer D.) warrant holders have pre-emptive rights

D.) warrant holders have pre-emptive rights

All of the following securities represent ownership of a corporation EXCEPT: A.) common stock B.) preferred stock C.) convertible preferred stock D.) warrants

D.) warrants

Which statement is TRUE regarding ADRs? A.)Dividends are declared by the issuer of the underlying stock in U.S. dollars while investors receive dividend payments in U.S. dollars B.)Dividends are declared by the issuer of the underlying stock in the foreign currency while investors receive dividend payments in the foreign currency C.)Dividends are declared by the issuer of the underlying stock in U.S. dollars while investors receive dividend payments in the foreign currency D.)Dividends are declared by the issuer of the underlying stock in the foreign currency while investors receive dividend payments in U.S. dollars

D.)Dividends are declared by the issuer of the underlying stock in the foreign currency while investors receive dividend payments in U.S. dollars