FINRA SIE EXAM SUCCESS GUIDE |
UPDATED PRACTICE TESTS & STUDY
MATERIALS QUESTIONS, ANSWERS &
KEY CONCEPTS (2026/2027) EDITION
Q1
What traits do preferred stock and bonds have in common? How are they different?
Can be callable by issuer, both have periodic payments. Both are senior securities
to common stock.
Neither have voting rights
Preferred is paid dividends on a percentage of face value much like the yield of a
bond.
Preferred stock has no maturity date and can be held perpetually while bonds have
a set maturity date.
Payments to preferred stock are not mandatory unless a declared dividend has been
issued to common stock
Payments to bond holders are mandatory
Q2
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?
10,000 Shares with $560.,000
Explanation
,400 BP x $1.4 = 560
$560, BP/share = 10,000 Shares of XXYZ
Q3
What are some actions by a corporation will affect an individuals common
shareholder's equity
Conversion of convertible preferred stocks or bond
Repurchase of common shares
Issuance of additional common shares
(Stock splits do not effect shareholders equity but it must be voted on because it
effects Par Value)
Q4
If interest Rates fall the issuer will most likely call which bonds first?
High Dividend Rate preferred issues trading at a premium
Q5
Benefits to a Convertible stock compared to a regular debenture
, 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
Q6
When are common dividends declared and paid?
Quarterly for both
Q7
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.
How many shares may the customer buy with these right?
A share holder can buy a maximum of 18 shares with these rights paying $432 for
them.
The 17.06 shares may be rounded up to 18.
Q8
Preferred Stock market valuation is based primarily on what?
Performance of stock?
Inflation?
Interest rates?
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.
Long term market interest rate levels determine the valuation.
UPDATED PRACTICE TESTS & STUDY
MATERIALS QUESTIONS, ANSWERS &
KEY CONCEPTS (2026/2027) EDITION
Q1
What traits do preferred stock and bonds have in common? How are they different?
Can be callable by issuer, both have periodic payments. Both are senior securities
to common stock.
Neither have voting rights
Preferred is paid dividends on a percentage of face value much like the yield of a
bond.
Preferred stock has no maturity date and can be held perpetually while bonds have
a set maturity date.
Payments to preferred stock are not mandatory unless a declared dividend has been
issued to common stock
Payments to bond holders are mandatory
Q2
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?
10,000 Shares with $560.,000
Explanation
,400 BP x $1.4 = 560
$560, BP/share = 10,000 Shares of XXYZ
Q3
What are some actions by a corporation will affect an individuals common
shareholder's equity
Conversion of convertible preferred stocks or bond
Repurchase of common shares
Issuance of additional common shares
(Stock splits do not effect shareholders equity but it must be voted on because it
effects Par Value)
Q4
If interest Rates fall the issuer will most likely call which bonds first?
High Dividend Rate preferred issues trading at a premium
Q5
Benefits to a Convertible stock compared to a regular debenture
, 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
Q6
When are common dividends declared and paid?
Quarterly for both
Q7
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.
How many shares may the customer buy with these right?
A share holder can buy a maximum of 18 shares with these rights paying $432 for
them.
The 17.06 shares may be rounded up to 18.
Q8
Preferred Stock market valuation is based primarily on what?
Performance of stock?
Inflation?
Interest rates?
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.
Long term market interest rate levels determine the valuation.
