SIE EXAM STUDY QUESTIONS: CHAPTER
1-6 EXAMS WITH CORRECT ANSWERS
GRADED A+ /PRACTICE TEST
A company you own common stock in has just filed for bankruptcy.
As a shareholder, you will have the right to receive:
A. the par value of the common shares
B. new common shares in the reorganized company
C. A percentage of your original investment
D. Your proportional percentage of residual assets - ANSWER-D.
Your proportional percentage of residual assets
A corporation may pay a dividend in which of the following ways?
A. stock
B. cash
C. stock of another company
D. all of the above - ANSWER-D. all of the above
ABC Common Stock has declined dramatically in value over the last
quarter but the dividend it has declared for payment this quarter
has remained the same. The dividend yield on the stock has:
A. Not changed bc the board has to declare the dividend amount
B. Gone down because the yield is a stated rate
C. Gone up as the price has fallen
D. been fixed at the time of issuance - ANSWER-C. Gone up as the
price has fallen
,All qualified dividends for ordinary income earners are:
A. Taxed as ordinary income each year
B. Tax free income
C. Taxed as special interest - free income
D. Taxed as a set rate of 15% - ANSWER-D. Taxed as a set rate of
15%
All of the following are rights of common stockholders except:
A. right to elect board of directors
B. right to vote for executive compensation
C. right to vote for a stock split
D. right to maintain their percentage of ownership in the company -
ANSWER-B. right to vote for executive compensation
Which of the following is not true regarding American Depositary
Receipts (ADRs)?
A. they are receipts of ownership of foreign shares being held
abroad in a US bank
B. Each ADR represents 100 shares of foreign stock, and the ADR
holder may request delivery of the foreign shares
C. ADR holders have the right to vote and to receive dividends that
the foreign corporation declares for shareholders.
D. The foreign country may issue restrictions on the foreign
ownership of stock - ANSWER-B. Each ADR represents 100 shares of
foreign stock, and the ADR holder may request delivery of the
foreign shares
An investor buys 10% preferred stock at 110. What is their current
yield?
A. 10.4%
, B. 9.1%
c. 10%
d. 9.5% - ANSWER-B. 9.1% (10%/110)
An investor buys 100 shares of XYZ 7% convertible preferred stock
which is convertible into XYZ common stock at $20 per share. How
many shares of common stock upon conversion:
A. 5
b. 400
c. 500
d. 5000 - ANSWER-c. 500 (100/20) = 5 x 100 = 500
An investor has purchased shares of a foreign company through an
ADR. Which is not true?
a. the ADR may represent one or more shares of the company's
common stock
b. the dividend will be paid in USD
c. the investor may elect to exchange ADR for the underlying
common shares
d. investor is subject to currency risk - ANSWER-b. the dividend will
be paid in USD
An investor owns 100 shares of XYZ 8% participating preferred
stock. XYZ's common stock pays a quarterly dividend of $0.25. How
much will the investor earn each year in dividends?
a. $825
b.$90
c$180
d. $900 - ANSWER-d. $900 (8%*100 = 8*100 = 800 + $1 *100 =900)
1-6 EXAMS WITH CORRECT ANSWERS
GRADED A+ /PRACTICE TEST
A company you own common stock in has just filed for bankruptcy.
As a shareholder, you will have the right to receive:
A. the par value of the common shares
B. new common shares in the reorganized company
C. A percentage of your original investment
D. Your proportional percentage of residual assets - ANSWER-D.
Your proportional percentage of residual assets
A corporation may pay a dividend in which of the following ways?
A. stock
B. cash
C. stock of another company
D. all of the above - ANSWER-D. all of the above
ABC Common Stock has declined dramatically in value over the last
quarter but the dividend it has declared for payment this quarter
has remained the same. The dividend yield on the stock has:
A. Not changed bc the board has to declare the dividend amount
B. Gone down because the yield is a stated rate
C. Gone up as the price has fallen
D. been fixed at the time of issuance - ANSWER-C. Gone up as the
price has fallen
,All qualified dividends for ordinary income earners are:
A. Taxed as ordinary income each year
B. Tax free income
C. Taxed as special interest - free income
D. Taxed as a set rate of 15% - ANSWER-D. Taxed as a set rate of
15%
All of the following are rights of common stockholders except:
A. right to elect board of directors
B. right to vote for executive compensation
C. right to vote for a stock split
D. right to maintain their percentage of ownership in the company -
ANSWER-B. right to vote for executive compensation
Which of the following is not true regarding American Depositary
Receipts (ADRs)?
A. they are receipts of ownership of foreign shares being held
abroad in a US bank
B. Each ADR represents 100 shares of foreign stock, and the ADR
holder may request delivery of the foreign shares
C. ADR holders have the right to vote and to receive dividends that
the foreign corporation declares for shareholders.
D. The foreign country may issue restrictions on the foreign
ownership of stock - ANSWER-B. Each ADR represents 100 shares of
foreign stock, and the ADR holder may request delivery of the
foreign shares
An investor buys 10% preferred stock at 110. What is their current
yield?
A. 10.4%
, B. 9.1%
c. 10%
d. 9.5% - ANSWER-B. 9.1% (10%/110)
An investor buys 100 shares of XYZ 7% convertible preferred stock
which is convertible into XYZ common stock at $20 per share. How
many shares of common stock upon conversion:
A. 5
b. 400
c. 500
d. 5000 - ANSWER-c. 500 (100/20) = 5 x 100 = 500
An investor has purchased shares of a foreign company through an
ADR. Which is not true?
a. the ADR may represent one or more shares of the company's
common stock
b. the dividend will be paid in USD
c. the investor may elect to exchange ADR for the underlying
common shares
d. investor is subject to currency risk - ANSWER-b. the dividend will
be paid in USD
An investor owns 100 shares of XYZ 8% participating preferred
stock. XYZ's common stock pays a quarterly dividend of $0.25. How
much will the investor earn each year in dividends?
a. $825
b.$90
c$180
d. $900 - ANSWER-d. $900 (8%*100 = 8*100 = 800 + $1 *100 =900)
