Series 65
An investor wishing to add some diversification to his portfolio wants to purchase 200 shares of an ADR for a Japanese electronics manufacturer. The ADR is listed on the NYSE. Which of the following risks should be of most concern to this investor? Business Currency Inflation Liquidity
I and II
Which of the following have equity positions in a corporation? Common stockholders Preferred stockholders Convertible bondholders Mortgage bondholders
I and II
If a woman owns 9% of the common shares of XYZ and her spouse owns 2% and wishes to sell his shares, which of these is true? He is considered an affiliate. He is not considered an affiliate. He must file a Form 144 to sell. He does not have to file a Form 144 to sell.
I and III
Julie owns 100 shares of CCC at $25. CCC declares a 25% stock dividend. After the ex-date, what will she own? 125 shares 100 shares Cost basis of $25 Cost basis of $20
I and IV
Which of the following statements regarding a 100% stock dividend are true? The share price is reduced by half. The total market value of the outstanding stock decreases. The total market value of the outstanding stock may increase or decrease as a result of the split. The number of shares doubles.
I and IV
Which of the following are subject to the holding period requirements of Rule 144 of the Securities Exchange Act of 1934? Registered securities held by a control person Unregistered securities held by a noncontrol person Registered securities held by a noncontrol person Unregistered securities held by a control person
II and IV
Investing in emerging market stocks is least likely to expose your client to which of the following risks?
Interest rate
Which of the following statements regarding preemptive rights is true?
Preferred stockholders do not have the right to subscribe to a rights offering.
A customer owns cumulative preferred stock (par value of $100) that pays an 8% dividend. The dividend has not been paid this year or for the two previous years. How much must the company pay the customer per share before it may pay dividends to the common stockholders?
$24 *need to pay 8$ for each of the last 3 years
The board of directors of DDC omitted dividends in 2020 on their $100 par 6% noncumulative preferred stock. In 2021, a $2 preferred dividend was paid. For DDC, 2022 has been a good year, and the board wishes to pay a common dividend. How much must be paid per share on the preferred for 2022 in order to pay a common dividend?
$6 *A 6% dividend on a $100 par means a $6 dividend each year per share.
If a customer owns 7% of a publicly traded company's stock and his spouse owns 6% and wants to sell her shares, which of the following statements is true?
The spouse is an affiliate and Rule 144 applies.
A client is considering the purchase of American depositary receipts (ADRs). She is looking to further diversify her portfolio. Which of the following is not a feature of this type of investment vehicle?
They are not subject to exchange rate, or currency, risk.
One of your customers owns 300 shares of the 5% $100 par cumulative preferred stock issued by the Northern Atlantic Railroad (NAR). The cumulative feature provides that
all unpaid dividend arrearage must be brought current before a dividend may be paid on NAR's common stock.
An employee is offered a nonqualified stock option with an exercise price of $20 per share. If the option is exercised when the current market value of the stock is $30, the employee
is taxed on $10 per share as if it were salary. *calc price difference
The primary defining characteristic of an equity security is
it represents ownership in a corporation.
A company that has issued cumulative preferred stock
pays past and current preferred dividends before paying dividends on common stock.
Rule 144 applies to the sale of all of the following except
registered securities by a nonaffiliated shareholder of the issuer.
One way in which incentive stock options (ISOs) differ from nonqualified stock options (NQSOs) is that
the bargain element of the ISO is an AMT preference item.
