SIE Unit 2 Checkpoint Exam
Under Rule 144, which of these sales are subject to volume limitations on the number of shares sold?
-Control person selling registered stock held for 1 year -Control person selling restricted stock held for 2 years
An investor purchased 100 shares of MJS on June 19, 2015 at a price of $40 per share. On June 1, 2016, MJS declared a 25% stock dividend. On July 1, 2016, the investor sold 50 shares of the MJS at $50 per share. Which of these statements is correct?
-The adjusted cost basis of the shares is $32. -There is a long-term capital gain on all of the shares sold.
Your customer owns 2,200 shares of LMN common stock. LMN Corporation issues stock rights related to an additional offer of shares that will increase the company's common shares by 20%. How many rights will your customer receive?
2,200 rights
Which of these securities would likely provide the greatest potential for capital appreciation?
A common stock
Your customer, MJ, has a strong preference for investing in equity securities; however, she is hoping to increase the amount of current income her portfolio generates. Which of these is the least suitable for her?
Duratech common stock, an exciting new tech manufacturer
Jon owns 100 shares of the Bayside Fishing Company. Bayside has 1 million shares outstanding and operates under a statutory voting system. At the next election for the board, there are two open seats. All of these are true except
Jon has control of 200 votes, which he can cast any way he likes among the two open seats.
Big Company, Inc., an NYSE-listed manufacturer of large objects, has declared a 50-cent-per-share dividend payable next month. Big Company also has options available for trade. The actual ex-dividend date will be declared by
The NYSE
ABC Corporation cumulative preferred stock would pay dividends in what order?
The in arrears dividends, current preferred dividends, then common dividends
Jones bought an American depositary receipt (ADR) in a South Korean company at $22.00 and recently sold the shares for $36.88. What are the tax consequences of this transaction?
The profit is taxed as a capital gain of $14.88 in the United States.
BigCo separates a division (KNDA Big Company) and issues stock for the new division to holders of BigCo stock. What are the tax consequences of this corporate spinoff?
There is no taxable consequence.
On October 15 of last year, ABC Company declared a 3-for-1 reverse split. What are the tax consequences for this corporate action?
There is none.
An investor interested in quarterly income should invest in
a common stock paying a high dividend.
RJN common stock is currently listed on the New York Stock Exchange. Poor operating results over the past several years have led to a sharp decline in RJN's stock price, putting the company at risk for failing to meet the minimum price requirements to remain listed on the NYSE. The corporate action most likely to be taken to preserve the listing would be
a reverse split.
A company's board of directors has voted to divest itself of all shares of a subsidiary to create a new company. This is a type of corporate action best characterized as
a spinoff.
Snowflake Resorts, Inc., has announced their intention to repurchase 5 million of the company's outstanding shares from the secondary markets. This is called a
buy back
An American depositary receipt is a
domestic security representing a foreign security in U.S. markets.
Another term for stocks and bonds is
equity and debt.
Mary owns 8% of Doyle Inc., a publicly traded publishing company. She has recently married John, a doctor who owns 3% of Doyle. John wants to sell some of his shares to pay off the debt from the wedding and honeymoon. When he does so he will need to
file Form 144 because he is a control person.
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
no voting rights
Rule 144 covers all of the following transactions except
non-affiliate trades on an exchange.
American Liquidators Corporation (the ticker is LQDT) has 100 million outstanding common shares. The company would like to raise capital by selling 100 million new shares. In order to do this they must give their existing shareholders an opportunity to buy shares sufficient to maintain the shareholders percentage of ownership. In order to accomplish this they would
offer stock rights to existing shareholders.
Shareholders receive how many right per share owned.
one
Included under the term equity security would be
participating preferred
All of the following statements regarding penny stocks are true except
penny stock rules apply to both solicited and unsolicited transactions.
The special penny stock rules only apply to who?
solicited transactions
Equity is to debt as
stock is to bond.
All of these dates are declared by the board of directors of a corporation except
the ex-dividend date.
Your client holds ADRs of Daikon Motors, Inc., an automobile manufacturer based in Asia. All of these are true about the position except
they have the same voting rights as an owner of the common stock.
Squidco, Inc., is issuing $100 million in 4 ½% 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, any time in the next 10 years. Squidco common is currently trading at $29.95 per share. This is an example of a
warrant
