FINRA SIE EXAMS WITH CORRECT
ANSWERS GRADED A+ /PRACTICE
TEST/2026 UPDATED
1. If interest Rates fall the issuer will most likely call which
bonds first? - ANSWER-High Dividend Rate preferred issues
trading at a premium
2. What are some actions by a corporation will affect an
individuals common shareholder's equity - ANSWER-
Conversion of convertible preferred stocks or bond
3. Repurchase of common shares
4. Issuance of additional common shares
5. (Stock splits do not effect shareholders equity but it must be
voted on because it effects Par Value)
6. Benefits to a Convertible stock compared to a regular
debenture - ANSWER-Convertible stock will have a slightly
lower yield than non-convertible however it will raise in value
as the market price of common stock rises
7. What traits do preferred stock and bonds have in common?
How are they different? - ANSWER-Can be callable by issuer,
both have periodic payments. Both are senior securities to
common stock.
8. Neither have voting rights
9. Preferred is paid dividends on a percentage of face value
much like the yield of a bond.
10. Preferred stock has no maturity date and can be held
perpetually while bonds have a set maturity date.
11. Payments to preferred stock are not mandatory unless a
declared dividend has been issued to common stock
,12. Payments to bond holders are mandatory
13. When are common dividends declared and paid? -
ANSWER-Quarterly for both
14. A customer owns 256 shares of ABC common stock. ABC
declares a rights offering, with the terms being that for every
15 rights a shareholder may purchase one additional share.at
$24 a share. Any fractional rights may be rounded up to buy
an additional share.
15. How many shares may the customer buy with these
right? - ANSWER-A share holder can buy a maximum of 18
shares with these rights paying $432 for them.
16. The 17.06 shares may be rounded up to 18.
17. XXYZ ADR (American Depository Receipt) represents 10%
of the value of an XXYZ ordinary share. The ordinary shares
trade on the London Stock Exchange, where the current price
is 400 British Pounds (BP). The current exchange rate for the
British Pound against the US Dollar is $1.40. The ordinary
share pays an annualized dividend of 12 BP. The XXYZ ADR is
listed on the NYSE. If a customer places an order to buy
$560,000 of the ADR on the customer will buy how many
shares of the ADR? - ANSWER-10,000 Shares with $560.,000
18. Explanation
19. 400 BP x $1.4 = 560
20. $560, BP/share = 10,000 Shares of XXYZ
21. Preferred Stock market valuation is based primarily on
what?
, 22. Performance of stock?
23. Inflation?
24. Interest rates? - ANSWER-Interest Rates is the correct
answer, remember that preferred stock is much like a bond in
that it has fixed payments and is considered fixed income.
25. Long term market interest rate levels determine the
valuation.
26. Rights are? - ANSWER-Exerciserable, Negotiable (can be
traded), Giftable
27. Dividends can be paid in the form of? - ANSWER-Cash or
products
28. Additional shares of ANOTHER company (yes another
company)
29. Additional shares of that company
30. NOT Options and Not Tax deferments
31. Preferred Stock is? - ANSWER-Performance based,
participating, cumulative (dividends)
32. It is not refundable or redeemable
33. A corporate bond which is backed solely by full faith and
credit of the issuer.. - ANSWER-Debenture
34. Trades of all of the following will settle in Fed Funds
Except?
ANSWERS GRADED A+ /PRACTICE
TEST/2026 UPDATED
1. If interest Rates fall the issuer will most likely call which
bonds first? - ANSWER-High Dividend Rate preferred issues
trading at a premium
2. What are some actions by a corporation will affect an
individuals common shareholder's equity - ANSWER-
Conversion of convertible preferred stocks or bond
3. Repurchase of common shares
4. Issuance of additional common shares
5. (Stock splits do not effect shareholders equity but it must be
voted on because it effects Par Value)
6. Benefits to a Convertible stock compared to a regular
debenture - ANSWER-Convertible stock will have a slightly
lower yield than non-convertible however it will raise in value
as the market price of common stock rises
7. What traits do preferred stock and bonds have in common?
How are they different? - ANSWER-Can be callable by issuer,
both have periodic payments. Both are senior securities to
common stock.
8. Neither have voting rights
9. Preferred is paid dividends on a percentage of face value
much like the yield of a bond.
10. Preferred stock has no maturity date and can be held
perpetually while bonds have a set maturity date.
11. Payments to preferred stock are not mandatory unless a
declared dividend has been issued to common stock
,12. Payments to bond holders are mandatory
13. When are common dividends declared and paid? -
ANSWER-Quarterly for both
14. A customer owns 256 shares of ABC common stock. ABC
declares a rights offering, with the terms being that for every
15 rights a shareholder may purchase one additional share.at
$24 a share. Any fractional rights may be rounded up to buy
an additional share.
15. How many shares may the customer buy with these
right? - ANSWER-A share holder can buy a maximum of 18
shares with these rights paying $432 for them.
16. The 17.06 shares may be rounded up to 18.
17. XXYZ ADR (American Depository Receipt) represents 10%
of the value of an XXYZ ordinary share. The ordinary shares
trade on the London Stock Exchange, where the current price
is 400 British Pounds (BP). The current exchange rate for the
British Pound against the US Dollar is $1.40. The ordinary
share pays an annualized dividend of 12 BP. The XXYZ ADR is
listed on the NYSE. If a customer places an order to buy
$560,000 of the ADR on the customer will buy how many
shares of the ADR? - ANSWER-10,000 Shares with $560.,000
18. Explanation
19. 400 BP x $1.4 = 560
20. $560, BP/share = 10,000 Shares of XXYZ
21. Preferred Stock market valuation is based primarily on
what?
, 22. Performance of stock?
23. Inflation?
24. Interest rates? - ANSWER-Interest Rates is the correct
answer, remember that preferred stock is much like a bond in
that it has fixed payments and is considered fixed income.
25. Long term market interest rate levels determine the
valuation.
26. Rights are? - ANSWER-Exerciserable, Negotiable (can be
traded), Giftable
27. Dividends can be paid in the form of? - ANSWER-Cash or
products
28. Additional shares of ANOTHER company (yes another
company)
29. Additional shares of that company
30. NOT Options and Not Tax deferments
31. Preferred Stock is? - ANSWER-Performance based,
participating, cumulative (dividends)
32. It is not refundable or redeemable
33. A corporate bond which is backed solely by full faith and
credit of the issuer.. - ANSWER-Debenture
34. Trades of all of the following will settle in Fed Funds
Except?
