SIE UNIT 1

a shareholder feels strongly about some of the issues to be voted on at the next shareholder meeting but is unable to attend. Which of the following is true?

the shareholder can vote by proxy

What is the tax status of dividend paid to a U.S.-based American depository receipts(ADR) investor

these dividends may be taxed by both the foreign country and the United States

what is the primary purpose of an issuer sponsoring an American depository receipt(ADR)?

these securities are created to attract a US investor base

each of the following is considered a control person under Securities and Exchange Commission(SEC) Rule 144 except

those persons who own 5% or more of the total beneficial interest of a company's common stock

which of the following best describes the trade execution ofAmerican depository receipts(ADRs)?

trades are executed domestically in US dollars

DEF Corporation has 4% noncumulative preferred stock outstanding. The company eliminated its dividend payments for the past three years but now is in a position to resume paying them again. Before paying common shareholders a dividend, the company would be required to pay the preferred shareholders

$4.00

a customer has held an account with a broker-dealer for over on year. A registered representative associated with the firm recommends the purchase of an unlisted security trading at $3.50. What documentation, if any, is required prior to the trade?

A disclosure statement is required, but not a suitability statement.

list the dates associated with dividend payment in their proper oder.

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

an investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place?

Rights will be distributed to existing stockholders with an exercise price lower than the current market value

by electing a board of directors(BOD), stockholders have

a say in the company's management but are not involved in the day-to-day details of its operations.

a certificate issued by a company granting its owner the right to purchase securities from the issuer at come specified price years into the future would best be described as

a warrant

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

are solicited

past-due dividends on a cumulative preferred shares

accumulate on the company's books until paid

while preferred shares tend to be less volatile than common shares, one type of preferred is noted as being even more stable in price than the others. This would be

adjustable rate

different categories of preferred shares offered by an issuer

all have preference over the issuer's common shares.

Under penny stock rules, what is required for a broker-dealer to consider an investor an established customer?

at least three separate penny stock purchases

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

callable

an investor having no affiliation with CDS company has just purchased shares that were sold subject to rule 144. this investor

can sell the shares unrestricted at any time

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

carry no guarantee of payment in any amount

voting rights are a privilege generally afforded to

common shareholders only

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

common stock preferred stock

before effecting an initial penny stock transaction for a new customer, the registered representative must do all of the following except

confirm that. margin account has been established

an investor owns 4% preferred stock participating to 6%. This means the investor

could receive an additional 2% over the stated 4% dividend if the board declares it

the primary purpose of American depositary receipts(ADRs) is to facilitate the trading of

foreign stocks in U.S. markets

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

less than that of the issuer's common shares

someone who purchases shares of a corporation's common stock has

limited liability and voting rights

rules to protect the investing public during the public offering process include all of the following except

limiting the number of shares of an initial public offering (IPO) that may be purchased by the issuing company's employees.

a corporation is issuing a bond with an interest rate below that which is commonly being offered for this type of bond. To improve the bond's marketability without reducing the capital to be obtained, which of the following actions might the corporation take?

offer a warrant on the stock with each bond

when the board of directors(BOD) declares a dividend

owners of preferred shares must be paid before any payment is made to common shareholders.

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

preferred stock

callable preferred stock is advantageous to the issuing company because it allows the company to

replace a higher, fixed-rate issue with a lower issue after the call date

which of the following statements about rights and warrants is true?

rights are short term; warrants are long term

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

six-month holding period, with sales allowed freely thereafter

which of the following sell transactions is not subject to the holding period restriction specified in SEC Rule 144?

stock acquired on the NYSE by a corporate affiliate

Rule 144 stipulates that after holding stock fully paid for six months, an affiliate may begin selling shares

subject to volume restrictions within any 90-day period

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

the decision to pay a dividend rests with

the board of directors(BOD) but is not guaranteed

a preemptive right doe existing shareholders is best described as

the right to purchase shares in an amount that would keep a shareholder's proportionate ownership in the corporation unchanged when a company issues additional shares.

interest-rate sensitivity for preferred shareholders should be understood to mean that

when interest rates rise, the prices for preferred shares can fall