Unit 1 - Individual Securities - Equities

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 financial difficulties, the company stopped paying dividends after 2011. After resolving its problems in 2015, the company resumed dividend payments in 2016. Before paying the first quarterly common stock dividend that year, the company would have to pay a quarterly dividend to the preferred stockholders of

$1.00

Under the rules, a penny stock is defined as an unlisted, security trading at less than

$5 per share

Under the provisions of Rule 144, what percentage of outstanding stock may a control person sell every 90 days?

1%

A Japanese computer ship manufacturer wants to attract U.S equity investors. Which of the following securities would help the issuer to accomplish this goal?

American depositary receipts (ADRs)

Which of the following is NOT a security that an investor would purchase?

Bitcoins

All else being equal, which of the following preferred would pay the highest dividend?

Callable preferred

Regarding investment products, which of the following is TRUE?

Equity securities represent ownership in an issuing company

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

I and II I. control person selling registered stock held for 1 year II. control person selling registered stock held for 2 year

Straight preferred shares I. are noncumulative II. are cumulative III. allow for missed dividends to be paid later IV. have no provision for paying missed dividends later

I and IV

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

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..

Offer stock rights to existing shareholders

What is the primary purpose of an issuer sponsoring an American depositary receipt (ADR)?

These securities are created to attract a U.S investor base

All of the following are considered securities EXCEPT

U.S minted gold coins

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

a common stock

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 warrant

During times when interest rates are rising, which of the following preferred are likely to pay a higher annual dividend?

adjustable rate

All of the following are considered control persons (owning control stock) EXCEPT

an unaffiliated shareholder owning 8% of the outstanding shares

Which of the following would MOST likely require shareholder approval?

changing the corporation's name

Another term for stocks and bonds is

equity and debt

An affiliate holding unregistered shares can sell under Rule 144

four times a year

Each of the following are likely benefits of owning share of common stock EXCEPT

interest payments

When a company wants to issue additional shares of stock, the preemptive right given to existing shareholders allows those shareholders to..

maintain their proportionate ownership in the corporation

For restricted stock (unregistered) held by a nonaffiliated, which of the following applies?

six-month holding period, with sales allowed freely thereafter

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

the NYSE

Your client holds ADRs of Daikon Motors, Inc., an automobile manufacturer based in Asia. All of the following are true about the position EXCEPT

they have the same voting rights as an owner of the 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

Exempt from the penny stock rules are

unsolicited transactions