EQUITY SECURITIES EXAMINATION SET ACTUAL TEST PAPER QUESTIONS CORRECT ANSWERS

EQUITY SECURITIES EXAMINATION SET ACTUAL TEST PAPER QUESTIONS CORRECT
ANSWERS GRADED A PLUS




Question:
How does an investor become a part owner of a corporation?

Answer:
By buying shares of the company's stock.



Question:
What is a debt security?

Answer:
An investment acquired by buying bonds, representing a loan to the issuer.



Question:
What benefits do investors receive from owning common stock?

Answer:
They can share in earnings through dividends and benefit from an increase in share price.



Question:
What is common stock?

Answer:
Equity in a corporation that entitles the owner to a portion of earnings and voting rights.



Question:
What rights do common stockholders have?

, Answer:
They have a vote in major management decisions and a share in the company's earnings.



Question:
How is ownership represented in a corporation?

Answer:
Each share of stock represents a proportional ownership stake in the company.



Question:
What are the two types of stock that corporations may issue?

Answer:
Common stock and preferred stock.



Question:
What distinguishes preferred stock from common stock?

Answer:
Preferred stock usually has fixed dividends and priority claims over common stock but typically
lacks voting rights.



Question:
What is a key characteristic of preferred stock?

Answer:
It pays a fixed dividend and has priority over common stock in dividend payments.



Question:
What happens to common stock dividends if a company goes bankrupt?

Answer: