Unit 1

A customer owns cumulative preferred stock (par value of $100) that pays an 8% dividend. The dividend has not been paid this year and was missed in the two previous years. If the company wants to pay a dividend to common shareholders, how much must the company pay this customer per share first?

$24. Must pay preferred dividends first, there are $16 due in back dividends, and 2 years missed, with $8 this year ---> $24

MAS corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of...

2%

Which of these securities would likely provide the greatest potential for capital appreciation?

A common stock

Which of the following securities provides US investors with a way to gain exposure to the common stock of a foreign issuer?

ADR- American Depositary Receipts

Different categories of preferred shares offered by an issuer

All have preference over the issuers common shares

An affiliate has held restricted shares fully paid for 6 months. In anticipation of the desire to divest the shares, the affiliate should know that

Any shares sold will be subject to volume restrictions if still an affiliate

Transactions where the penny stock rules are applicable would be those that

Are solicited

A common stockholders voting rights apply to which of the following I. Election of Board of Directors (BOD) II. Declaration Dividends III. Authorization or issue or more common shares IV. Changing suppliers for raw materials or parts used in production

B. I and III

Mr. Smith purchases 2% of MES Corporation's common stock. Four years later Mrs. Smith purchases 9% for her own account. Which of the following is true?

Both Mr. and Mrs. Smith are considered control persons

Common shareholders wanting to vote on issues at a shareholder meeting can do so in all of the following ways except

By telephone or text message

Which of these would most likely require shareholder approval

Changing the corporations name

Which of the following preferred issues is most likely to fluctuate in line with the issuers common shares?

Convertible

Preferred shareholders who expect missed dividend payments to be eventually paid are most likely to own

Cumulative preferred stock

What is the primary benefit for an American Investor when purchasing an American Depositary Receipt (ADR)?

Diversification

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.

A common stock shareholders residual right to corporate assets refers to what?

During the dissolution of corporate assets, common shareholders will be paid after debtholders, and preferred shareholders.

Regarding investment products, which of the following is true?

Equity securities represent ownership in an issuing company

All of these dates are declared by the Board of Directors of a corporation except the...

Ex-dividend date

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

The primary purpose of the American Depositary Receipts (ADR's) is to facilitate the trading of...

Foreign stocks in US markets

Under Rule 144, which of these sales are subject to volume limitations on number of shares sold?

I. Control person selling registered stock held for 1 year II. Control person selling restricted stock held for 2 years

Jon owns 100 shares of the Bayside Fishing Co. 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 200 votes and he can cast them any way he likes

Someone who purchases shares of a corporations common stock has

Limited liability and voting rights

Characteristics common to penny stocks would include which of the following?

Market price less than $5 per share and unlisted

For registered shares held by an affiliate (known as common stock) which of the following applies?

No holding period, but volume limits ALWAYS apply

For this election cycle, Big Trucks Inc. has three open board seats. Big Trucks Inc. operates under a cumulative voting system. Your customer owns 300 participating preferred shares of Big Trucks. He has...

No voting rights

American Liquidators Corporation (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

All of the following statements regarding penny stocks are true except

Penny stock rules apply to both solicited an unsolicited transactions

Which of the following is an example of an equity security?

Preferred Shares

The potential that inflation will devalue the fixed dividend income payments received by preferred shareholders is known as

Purchasing power risk

The US Supreme Court decision that provided our current definition of a security is...

SEC vs Howey

Regarding the rights of a common stockholder, each of the following is true except...

Stockholders may never be part of the management of the company

Regarding the rights of a common stockholder, each of the following is true except?

Stockholders may never be part of the management of the company.

MMS Corporation has 7% callable preferred shares outstanding. Over the past few years, benchmark interest rates have declined and hovered close to 3%. Which of the following is true?

The 7% shares are likely to be called.

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

Your client holds ADR's 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 common stock

If a preferred shareholder received a $3.50 annual dividend each year, it could be assumed that

This is a 3.5% preferred class

The following are considered securities except

US gold minted coins

An investor interested in quarterly income should invest in

Utility company stock

SquidC. Inc is issuing 100 million dollars in 4.5% 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 a share, anytime in the next 10 years. SquidCo. common stock is currently trading at $29.95 a share, this is an example of..

Warrant

Preferred shares have

characteristics of both equity and debt securities

List the dates associated with dividend payment in their proper order

declaration date, ex-dividend date, record date, pay date

An American Depositary Receipt is a...

domestic security representing foreign security in US market.

Another term for stocks and bonds is

equity and debt

The growth potential in the price of preferred shares is generally considered to be...

less than that of the issuers common shares

Included under the term, equity security, would be

participating preferred

The holders of which of the following securities are considered owners of the issuing corporation?

preferred stock & common stock

Equity is to debt as

stock is to bond

If a preferred shareholder receives a $3.50 annual dividend each year, it could be assumed that

this is a 3.5% preferred class