Unit 1 SIE

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

$5 per share.

What percentage of interest must be held by immediate family members for all of those family members to own voting stock and to be considered a control persons

10% or more

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 what?

2%

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

American Depository Receipts (ADR)

Which of the following preferred stocks allows the issuer to pay the shareholders par and cease dividend payments following a stated period?

Callable

What are the dates associated with dividend payment in their proper order?

Declaration date, ex-dividend date, record date, pay date

Who has claims on assets settled before preferred shareholders?

Employees of the corporation, debt (bond) holders and other creditors

An investor and his mother own 20% and 10%, respectively, of a corporation's outstanding shares, and the mother wants to sell all of her holdings. According to Rule 144, which of the following statements are true? She must file Form 144 to sell the shares. She does not have to file Form 144 to sell the shares. She is considered an affiliated person. She is not considered an affiliated person

She must file Form 144 to sell the shares. She is considered an affiliated person.

An investor looking to speculate in penny stocks would be exempt from the suitability statement requirement under which of the following circumstances?

The investor is an established customer.

Which of the following regarding established customers of a broker-dealer and the purchase of penny stocks are true? They are exempt from the suitability statement requirement. They are not exempt from suitability statement requirement. They are exempt from the disclosure rules. They are not exempt from the disclosure rules.

They are exempt from the suitability statement requirement and They are not exempt from the disclosure rules.

What does it mean to have priority at dissolution for preferred shareholders?

They are paid after all creditors but before common shareholders

Debt securities represent what?

a loan to the issuing company

What are penny stocks?

a market price below $5 per share that are not listed (traded) on any exchange or Nasdaq.

What is a reverse split?

a way of increasing a company's share price. The number of shares outstanding decreases, but the price per share increases

What is a vote by proxy?

an absentee ballot used if unable to attend a shareholder meeting

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

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

Once a dividend is initially declared by the board of directors (BODs), any future dividend payments what?

carry no guarantee of payment in any amount.

A preferred shareholder's priority claim on assets is the preferred shareholder's priority standing over who?

common shareholders

Rule 144 imposes volume limitations on the number of shares that can be sold by control persons selling registered stock held for one year. control persons selling restricted stock held for two years. nonaffiliates selling registered stock held for one month. nonaffiliates selling restricted stock held for more than six months.

control persons selling registered stock held for one year and control persons selling restricted stock held for two years.

A company has distributed profits to its shareholders. This type of distribution would most likely be in the form of what?

dividends

How are American depository receipts (ADRs) priced?

dollar-based and fluctuates throughout the day.

An investor has just received stock rights in the mail allowing the purchase of 250 shares of a stock offering at a discount. With these rights, the investor may do what?

exercise, sell, and/or allow to expire

What are the benefits to owning common stock?

limited liability, capital gains via increases in share price, income potential via the receipt of dividends.

What is adjustable rate?

one type of preferred share noted as being even more stable in price than the others

Equity securities represent what?

ownership in an issuing company

A shareholder owns preferred shares that allow for the possibility of receiving more than the stated dividend. This type of preferred share would be known as what?

participating

What is low dissolution priority?

refers to being paid last in the event of a corporate dissolution (bankruptcy)

Rule 144 defines an affiliate as what?

someone who is in a control relationship with an issuer

What is the declaration date?

the day the board of directors meets to declare the dividend

What is the pay date?

the day the checks are mailed

What is the record date?

the day the shareholder must be on the records of the company to receive the dividend

What is the ex-dividend date?

the first day that a purchaser of the stock is too late to get the dividend

What does it mean when a corporation calls in preferred shares?

the shares stop trading and dividend payments cease on the call date.

Securities and Exchange Commission (SEC) rules define penny stocks as what?

those that are unlisted on an exchange or Nasdaq trading at less than $5 per share.

Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares but is subject to what?

volume restrictions within any 90-day period.