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?
1) US Treasury Bonds
2) Treasury Bills
3) Prime Commercial Paper
4) Prime Banker's Acceptances - ANSWER-3) Prime commercial paper is
not traded by the Federal Reserve therefore does not settle in Fed Funds
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?
1) US Treasury Bonds
2) Treasury Bills
3) Prime Commercial Paper
4) Prime Banker's Acceptances - ANSWER-3) Prime commercial paper is
not traded by the Federal Reserve therefore does not settle in Fed Funds
