Series 65 - Chapter 1 UPDATED ACTUAL
Exam Questions and CORRECT Answers
Security - CORRECT ANSWER - An investment that represents an ownership stake or
debt stake in a company
Debt Security - CORRECT ANSWER - Acquisition of a company's bonds
debt invesment - CORRECT ANSWER - Loan from a company in exchange for interest
and a promise to pay the loan back in full by the full maturation date. Does not confer to
ownership
OTC Market - CORRECT ANSWER - Where common stock can be purchased through
exchanges such as the NYSE or NASDAQ. Has no physical location
FINRA - CORRECT ANSWER - Financial Industry Regulatory Authority
Stock - CORRECT ANSWER - Represents equity or ownership in a company
bonds - CORRECT ANSWER - A loan to company (a debt)
Balance Sheet - CORRECT ANSWER - Part of a companies financial statement. It
represents a companies total assets (what it owns) and liabilities (what it owes).
Assets - CORRECT ANSWER - What a company owns. i.e. cash, accounts receivable
(money it is owed), investments, property, inventory, etc.
Liabilities - CORRECT ANSWER - What a company owes, i.e., Borrowed credit,
accounts payable (current bills it must pay), Short (less than 12 mos) and long term debt (longer
than 12mos) obligations.
, Equity - CORRECT ANSWER - Excess of the company's value of assets over liabilities
(company net worth)
Net Worth - CORRECT ANSWER - What a company is worth after liablities are
subtracted from all of its assets.
Assets - liabilities = net worth
BOD - CORRECT ANSWER - Board of Directors. An oversight of a company to
maintain the best interest of the shareholders, BOD can make changes throughout a company
such as hire/fire people but not involved in day-day operations.
Preferred Stock - CORRECT ANSWER - Represents equity ownership in a company but
does not receive the same voting rights as common stock. Usually pays a fixed, semiannual
dividend. It has priority claims over a common stock and if a company files for bankruptcy then
it is paid back before common stock.
Common Stock - CORRECT ANSWER - Classified into 4 categories.
1.Authorized,
2.issued,
3.outstanding,
4.treasury
Authorized Stock - CORRECT ANSWER - Specific # of shares a company is issued to
sell. Usually a company will only sell a portion of authorized stock at first and keep a portion as
reserve. If a company wants to have more authorized stock it must be amended through a
shareholder vote.
Issued stock - CORRECT ANSWER - Stock that has been authorized and sold to investors
(the portion of authorized stock that the company decides to sell at first).
Exam Questions and CORRECT Answers
Security - CORRECT ANSWER - An investment that represents an ownership stake or
debt stake in a company
Debt Security - CORRECT ANSWER - Acquisition of a company's bonds
debt invesment - CORRECT ANSWER - Loan from a company in exchange for interest
and a promise to pay the loan back in full by the full maturation date. Does not confer to
ownership
OTC Market - CORRECT ANSWER - Where common stock can be purchased through
exchanges such as the NYSE or NASDAQ. Has no physical location
FINRA - CORRECT ANSWER - Financial Industry Regulatory Authority
Stock - CORRECT ANSWER - Represents equity or ownership in a company
bonds - CORRECT ANSWER - A loan to company (a debt)
Balance Sheet - CORRECT ANSWER - Part of a companies financial statement. It
represents a companies total assets (what it owns) and liabilities (what it owes).
Assets - CORRECT ANSWER - What a company owns. i.e. cash, accounts receivable
(money it is owed), investments, property, inventory, etc.
Liabilities - CORRECT ANSWER - What a company owes, i.e., Borrowed credit,
accounts payable (current bills it must pay), Short (less than 12 mos) and long term debt (longer
than 12mos) obligations.
, Equity - CORRECT ANSWER - Excess of the company's value of assets over liabilities
(company net worth)
Net Worth - CORRECT ANSWER - What a company is worth after liablities are
subtracted from all of its assets.
Assets - liabilities = net worth
BOD - CORRECT ANSWER - Board of Directors. An oversight of a company to
maintain the best interest of the shareholders, BOD can make changes throughout a company
such as hire/fire people but not involved in day-day operations.
Preferred Stock - CORRECT ANSWER - Represents equity ownership in a company but
does not receive the same voting rights as common stock. Usually pays a fixed, semiannual
dividend. It has priority claims over a common stock and if a company files for bankruptcy then
it is paid back before common stock.
Common Stock - CORRECT ANSWER - Classified into 4 categories.
1.Authorized,
2.issued,
3.outstanding,
4.treasury
Authorized Stock - CORRECT ANSWER - Specific # of shares a company is issued to
sell. Usually a company will only sell a portion of authorized stock at first and keep a portion as
reserve. If a company wants to have more authorized stock it must be amended through a
shareholder vote.
Issued stock - CORRECT ANSWER - Stock that has been authorized and sold to investors
(the portion of authorized stock that the company decides to sell at first).
