SIE Equities: Preferred Stock

A customer buys 100 shares preferred at $110 per share. The par value is $100. The dividend rate is 5%. Each dividend payment will be: A.) $250 B.) $275 C.) $500 D.) $550

A.) $250

ABC 8% $100 par preferred is trading at $120 in the market. The current yield is: A.) 6.7% B.) 8.6% C.) 10.6% D.) 60.6%

A.) 6.7%

ABC gold mining company has issued preferred stock. Dividends on the issue may be paid as: A.) Cash only B.) Cash or additional preferred shares of ABC C.) Cash or additional common shares of ABC D.) Cash or gold bullion

A.) Cash only

Which statement is TRUE when comparing preferred stock to common stock: A.) Preferred dividends are paid before common B.) Both preferred and common stock has voting rights C.) Preferred shareholders have a junior claim to assets upon liquidation after common shareholders D.) Preferred interest is paid semi-annually

A.) Preferred dividends are paid before common

Which statement is TRUE regarding preferred stock payments? A.) Preferred dividends are usually higher than those paid to common B.) Preferred dividends tend to grow over time C.) Preferred dividends are paid quarterly D.) Preferred interest is paid semi-annually

A.) Preferred dividends are usually higher than those paid to common

A customer holds 100 shares of ABC Corp $100 par convertible preferred stock convertible at a 10 to 1 ratio. If ABC declares and pays a 10% stock dividend, then as of the payable date, the customer will now have: A.) 90 shares of ABC preferred stock B.) 100 shares of ABC preferred stock C.) 100 shares of ABC preferred stock and 10 shares of ABC common stock D.) 110 shares of ABC preferred stock

B.) 100 shares of ABC preferred stock

A customer buys 100 shares of preferred at $101 per share. The par value is $100. The dividend rate is 8%. Each dividend payment will be: A.) $80 B.) $400 C.) $800 D.) $808

B.) $400

A customer holds 100 shares of ABC Corp $100 par non-convertible preferred stock. If ABC declares and pays a 10% common stock dividend, then as of the payable date, the customer will now have: A.) 90 shares of ABC preferred stock B.) 100 shares of ABC preferred stock C.) 100 shares of ABC preferred stock and 10 shares of ABC common stock D.) 110 shares of ABC preferred stock

B.) 100 shares of ABC preferred stock

Which statement is FALSE about preferred stock? A.) Dividends are paid before common B.) Dividends are paid quarterly C.) Dividends are based on corporate earnings D.)Preferred shareholders have a senior claim to common shareholders

B.) Dividends are paid quarterly

Callable preferred stock is likely to be redeemed by the issuer if: A.) interest rates rise B.) interest rates fall C.) the common stock price rises D.) the common stock price falls

B.) interest rates fall

All of the following are terms associated with preferred stock EXCEPT: A.) callable B.) cumulative C.) redeemable D.) convertible

C.) redeemable

XYZ Company has issued 10%, $100 par non-cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of: A.) 0 B.) $5 C.) $10 D.) $15

C.) $10

Common stockholders and preferred stockholders BOTH have: A.) voting rights B.) pre-emptive rights C.) dividend rights D.) subscription rights

C.) dividend rights

As interest rates rise, preferred stock prices will: A.) remain unaffected B.) rise C.) fall D.) fluctuate

C.) fall

Which statement is TRUE regarding participating preferred stock? Participating preferred: A.) participates in any bond interest payments B.) participates in a portion of the price appreciation of the issuer's common stock C.) has a dividend rate that is fixed as to a minimum but not as to a maximum D.) has a dividend rate that is fixed as to a maximum but not as to a minimum

C.) has a dividend rate that is fixed as to a minimum but not as to a maximum

Which security of the same issuer is likely to give the highest current yield? A.) warrant B.) common stock C.) convertible preferred stock D.) non-convertible preferred stock

D.) non-convertible preferred stock