SIE EXAM

A stock dividend would be paid on which of the following securities a. common stock b. preferred stock c. treasury notes d. treasury bills

Common stock

Which of the following is NOT a characteristic of common stock?

Dividends paid on common stock are typically a fixed percentage of the value at the time of issuance

Regarding dividends paid to stockholders of a public company, the board of directors of the company is not responsible for setting which dates

ex-dividend date

Public utility common stocks generally experience greater rice volatility than the common stocks of industrial companies due to which of the following

fluctuations in interest rates

An emerging growth company is generally defined as a company with total annual

gross revenues of less than $1.07 for its more recent fiscal year

Equity Real Estate Investment Trusts will usually invest in which of the following

income producing properties

which of the following factors tends to affect the price of utility common stocks more than industrial common stocks?

interest rates

outstanding stock

issued stock - treasury stock the only shares which: vote, receive dividends, calculate EPS

Each of the following can be passed through to an investor who has purchased REIT shares except

losses incurred on a sale

if a preferred stock is cumulative, it means that the stock

must pay all dividends in arrears prior to the payment of dividends on common stock

When a company does a Rights Offering, the rights are

only given to existing shareholders, proportionately to shares held

which would not be considered a characteristic of a growth stock

stock price fluctuates within a narrow range

which of the following have unlimited liability I. a general partner II. a limited partner III. a stockholder IV. a sole proprietor

I and IV

Order of asset distribution

1. Taxes 2. Secured Debt (generally bond backed by assets) 3. Unsecured Debt (debenture, general creditor) 4. Preferred Stockholders 5. Common Stockholders (most risky and always the last to be paid)

a round lot unit of trading in common stock is

100 shares

which of the following companies is most likely to pay a stock dividend

a company with a small cash balance and earning growing at 20% per year

Compared with owning corporate stock, a person investing in a limited partnership would normally receive which one of the following

a more direct share in profits and losses

which fo the following are reasons for a corporation to repurchase its own stock a. to increase earnings per share b. to fund stock option plans c. to finance future acquisitions d. all of the above

all of the above

On the ex-date for a 20% stock dividend, a customer with a short position of 300 shares of common stock would

owe an additional 60 shares of common stock

All of the following comments would NOT apply to holders of preferred stock except

preferred shareholders typically see lower levels of price volatility than common shareholders

Of the securities listed below which would be classified as a fixed income security

preferred stock

when interest rates change which of the following securitie would have the greatest reaction a. rights b. warrants c. preferred stock d. common stock

preferred stock

Fixed income securities

preferred stock and bonds

A preemptive Rights clause in a corporate charter includes all of the following characteristics except

requires the corporation to repurchase shares from existing shareholders at predetermined intervals

All of the following are defensive stocks except a. stocks of public utilities b. stocks in tobacco companies c. stocks in cyclical industries d. stocks in food companies

stocks in cyclical industries

Under Federal Tax laws, a corporation can pay dividends in all of the following except a. cash b. tax credits c. products d. stock

tax credits

which of the following is true of warrants

the market price of the stock is below the exercise price when they are issued

Bobbie purchased 100 shares of ABC common stock several years ago Which of the following rights does Bobbie have by owning common stock that preferred stockholders do not have?

the right to vote on important matters such as stock splits

Which of the following is true regarding a stock split?

the stockholder's percentage ownership remains unchanged

all of the following are examples of REITs except a. they are publicly traded securities and can be traded on an exchange or OTC b. they generally own income-producing properties like apartment buildings c. they distribute 90% of their income to shareholders d. they must be registered under the investment company act of 1940

they must be registered under the investment company act of 1940

all of the following pay dividends except a. preferred stock b. warrants c. mutual fund shares d. american depository receipts (ADR's)

warrants

A corporation is planning to distribute new shares of common stock to its existing shareholders. This would be described as a

Rights Offering

The Eskimo CUp Company announces a 20 cent dividend payable March 15th to owners of record Thursday, February 19th and declares a 5% stock dividend payable March 15th to owners of record Friday, February 13th. An investor buys 2,000 shares regular way on Monday, February 16th. He would expect a cash dividend of

20 cents per share on 2,000 shares

A corporation has authorized common stock of 10,000,000 shares. 8,000,000 shares have been issued and 4,000,000 shares are treasury stock. Which of the following is true?

4,000,000 shares are outstanding

The stock of a corporation is selling at $55 per share and the corporation pays a quarterly dividend of $1.30. The yield is?

9.5% ($1.30 x 4) / $55

Which of the following are reasons why Direct Participation Programs are formed as Limited Partnerships? I. The partnership is taxed at a lower rate than the rate of the partners II. The advantages of limited liability for the limited partners III. The tax advantages of the pass-through of profits and losses to the limited partners

II and III

Place the following in order, highest to lowest, in terms of asset distribution if a corporation is liquidated I. preferred stockholders II. owners of secured debt instruments III. common stockholders IV. owners of unsecured debt instruments

II, IV, I, III

Which two of the following are characteristics of common stock? I. it has less upside potential than preferred stock II. it has priority claims over preferred stock on liquidation III. it represents equity ownership of a corporation IV. It has more upside potential than preferred stock

III and IV

ABC corp plans to issue subordinated notes that include warrants The warrants allow investors to purchase ABC common stock. Based on this information, which is most likely true of the notes?

It can pay lower interest (coupon) rate

You are evaluating a number of preferred stocks with varying features. One of the preferred stocks that you are evaluating shows a pattern fo increased market value in relation to increases in the market value of the common stock of the company. Of the following preferred stock features, which is the most likely cause of this pattern

The preferred stock likely carries a conversion feature

A customer wishes to sell stock just after the stock pays a dividend with a record date of Friday, October 20th. Assuming a regular-way settlement, the earliest that the customer could sell the stock and still receive the dividend is

Thursday, October 19th

If Ida has a significant portion of her portfolio invested in equity REITs, her portfolio would be most detrimentally affected by

an increase in interest rates as well as a significant increase in the number of available buildings in the are in which her REIT houls properties

cash dividends paid to investors

are subject to federal, state, and local tax

Normally a stock will begin trading ex-dividend on the

business day prior to the record date

which of the following securities represent ownership in a corporation

callable preferred stocks

an investor is interested in owning REIT securities. He is aware of an upcoming offering of a new hybrid REIT. The investor is not an accredited investor and is able to invest a maximum of $2,000 only. The investor

can purchase the REIT

REITs can pass through all of the following to investors except

capital losses

All of the following are correct regarding common stock except

common shares may be called by the issuing corporation after a specified date

A corporation that issued several types of securities is being liquidated. investors who own which of the following securities will have the most junior claim to company assets

common stock

If an investors investment objective is capital appreciation what would you recommend as an investment opportunity?

common stock

Which of the following securities have over time best kept up with inflation

common stock

Which of the following would provide a corporate issuer the most inexpensive source of capital?

common stock

as inflation increases over time, the best hedge against it has historically been provided by which of the following types of securities

common stocks

Which of the following is most likely to fluctuate in value during a period of stable interest rates?

convertible preferred

corporations usually issue warrants in connection with which of the following types of new issues

debentures, to secure a lower interest rate

Which of the following would be paid last in terms of priority by a corporation

dividend payments on a common stock