SIE Exam-Questions with Correct Answers/ Verified/ 100% Pass
Which of the following is a true statement regarding warrants?
A)
Warrants are normally issued along with a bond offering as a unit.
B)
The warrant allows the holder to exercise and purchase the stock at a price lower than the market.
C)
Warrants are short-term instruments, typically 30 to 45 days.
D)
Warrants are issued to existing shareholders on a basis of one right for one existing share. -
✔️✔️Warrants are normally issued along with a bond offering as a unit
Which of the following preferred stocks allows the issuer to pay the shareholders par and cease
dividend payments following a stated period?
A)
Adjustable
B)
Callable
C)
Puttable
D)
Redeemable - ✔️✔️Callable
-Issuer can pay off callable preferred at any time after the call protection period, and dividends will
cease.
In order to receive a declared dividend a shareholder must be an owner of record at the close of
business on the
A)
declaration date.
B)
payable date.
,C)
ex-dividend date.
D)
record date. - ✔️✔️Record date
Which of the following is a true statement regarding warrants?
A)
The warrant allows the holder to exercise and purchase the stock at a price lower than the market.
B)
The warrant is a long-term instrument, typically with five years or more until expiration.
C)
Warrants are issued to existing shareholders on a basis of one right for one existing share.
D)
Warrants are short-term instruments, typically 30 to 45 days. - ✔️✔️The warrant is a long-term
instrument, typically with five years or more until expiration
BigTel Inc., has been the only provider of telephone service for over a century. The courts have
declared BigTel is an unlawful monopoly and orders the company to break into smaller, competing
companies. Owners of BigTel stock will retain their shares of BigTel (now smaller) and receive shares
of three new companies: East-Tel, Cent-Tel, and West-Tel. Which of these is a tax consequence that
could occur for this break up of BigTel and the receipt of the new shares?
A)
Partial-long-term capital gain
B)
Capital gain dependent on how long the shares were held
C)
Income based on the value of the new shares received
D)
There is no taxable consequence - ✔️✔️There is no taxable consequence
-This spinoff is not a taxable event. Each new share will have a new cost basis based on a percentage
of the original cost basis. There is no taxable event until shares are sold.
,When the board of directors (BOD) declares a dividend,
A)
owners of preferred shares must be paid at least the same amount as any payment made to
common shareholders.
B)
owners of preferred shares are paid only after any payment is made to common shareholders.
C)
owners of common shares must be paid at least the same amount as any payment made to
preferred shareholders.
D)
owners of preferred shares must be paid before any payment is made to common shareholders. -
✔️✔️owners of preferred shares must be paid before any payment is made to common
shareholders
-this is known as the dividend preference allotted to preferred shareholders. There is no relationship
between the amounts paid to preferred shareholders and common shareholders.
To receive a dividend, the owner's name must appear in the transfer agent's books by
A)
the next business day.
B)
the payable date.
C)
the ex-date.
D)
the record date. - ✔️✔️the record date
What is the primary benefit for an American investor when purchasing an American depositary
receipt (ADR)?
A)
Exemption from U.S. taxation
B)
Tax-deferred dividends
, C)
Diversification
D)
Hedging currency risk - ✔️✔️Diversification
-ADRs are a type of equity security designed to simplify foreign investing for Americans. ADRs
provide Americans with an easy way to invest in foreign companies that might otherwise be difficult
or impossible to own. This overseas exposure provides investors with additional diversification
within their portfolio
A customer purchases 100 American depositary receipts (ADRs) of a London-based company. When
does the trade settle?
A)
Two business days following the trade date
B)
One business day following the trade date
C)
Seven business days following the trade date (due to the international currency transaction)
D)
On the trade date - ✔️✔️One business day following the trade date
-ADRs trade in U.S. markets in U.S. dollars and settle T + 1
If a corporation is liquidated in a bankruptcy,
A)
a shareholder may be obligated to liquidate personal assets to meet the liabilities of the corporation.
B)
a shareholder has unlimited liability as an owner of the corporation.
C)
a shareholder's liability is limited to the amount invested.
D)
a shareholder will be required to rebate all dividends received during the previous two years. -
✔️✔️a shareholder's liability is limited to the amount invested
Which of the following is a true statement regarding warrants?
A)
Warrants are normally issued along with a bond offering as a unit.
B)
The warrant allows the holder to exercise and purchase the stock at a price lower than the market.
C)
Warrants are short-term instruments, typically 30 to 45 days.
D)
Warrants are issued to existing shareholders on a basis of one right for one existing share. -
✔️✔️Warrants are normally issued along with a bond offering as a unit
Which of the following preferred stocks allows the issuer to pay the shareholders par and cease
dividend payments following a stated period?
A)
Adjustable
B)
Callable
C)
Puttable
D)
Redeemable - ✔️✔️Callable
-Issuer can pay off callable preferred at any time after the call protection period, and dividends will
cease.
In order to receive a declared dividend a shareholder must be an owner of record at the close of
business on the
A)
declaration date.
B)
payable date.
,C)
ex-dividend date.
D)
record date. - ✔️✔️Record date
Which of the following is a true statement regarding warrants?
A)
The warrant allows the holder to exercise and purchase the stock at a price lower than the market.
B)
The warrant is a long-term instrument, typically with five years or more until expiration.
C)
Warrants are issued to existing shareholders on a basis of one right for one existing share.
D)
Warrants are short-term instruments, typically 30 to 45 days. - ✔️✔️The warrant is a long-term
instrument, typically with five years or more until expiration
BigTel Inc., has been the only provider of telephone service for over a century. The courts have
declared BigTel is an unlawful monopoly and orders the company to break into smaller, competing
companies. Owners of BigTel stock will retain their shares of BigTel (now smaller) and receive shares
of three new companies: East-Tel, Cent-Tel, and West-Tel. Which of these is a tax consequence that
could occur for this break up of BigTel and the receipt of the new shares?
A)
Partial-long-term capital gain
B)
Capital gain dependent on how long the shares were held
C)
Income based on the value of the new shares received
D)
There is no taxable consequence - ✔️✔️There is no taxable consequence
-This spinoff is not a taxable event. Each new share will have a new cost basis based on a percentage
of the original cost basis. There is no taxable event until shares are sold.
,When the board of directors (BOD) declares a dividend,
A)
owners of preferred shares must be paid at least the same amount as any payment made to
common shareholders.
B)
owners of preferred shares are paid only after any payment is made to common shareholders.
C)
owners of common shares must be paid at least the same amount as any payment made to
preferred shareholders.
D)
owners of preferred shares must be paid before any payment is made to common shareholders. -
✔️✔️owners of preferred shares must be paid before any payment is made to common
shareholders
-this is known as the dividend preference allotted to preferred shareholders. There is no relationship
between the amounts paid to preferred shareholders and common shareholders.
To receive a dividend, the owner's name must appear in the transfer agent's books by
A)
the next business day.
B)
the payable date.
C)
the ex-date.
D)
the record date. - ✔️✔️the record date
What is the primary benefit for an American investor when purchasing an American depositary
receipt (ADR)?
A)
Exemption from U.S. taxation
B)
Tax-deferred dividends
, C)
Diversification
D)
Hedging currency risk - ✔️✔️Diversification
-ADRs are a type of equity security designed to simplify foreign investing for Americans. ADRs
provide Americans with an easy way to invest in foreign companies that might otherwise be difficult
or impossible to own. This overseas exposure provides investors with additional diversification
within their portfolio
A customer purchases 100 American depositary receipts (ADRs) of a London-based company. When
does the trade settle?
A)
Two business days following the trade date
B)
One business day following the trade date
C)
Seven business days following the trade date (due to the international currency transaction)
D)
On the trade date - ✔️✔️One business day following the trade date
-ADRs trade in U.S. markets in U.S. dollars and settle T + 1
If a corporation is liquidated in a bankruptcy,
A)
a shareholder may be obligated to liquidate personal assets to meet the liabilities of the corporation.
B)
a shareholder has unlimited liability as an owner of the corporation.
C)
a shareholder's liability is limited to the amount invested.
D)
a shareholder will be required to rebate all dividends received during the previous two years. -
✔️✔️a shareholder's liability is limited to the amount invested
