FINRA SIE EXAM QUESTIONS AND ACCURATE
ANSWERS (A+) LATEST UPDATE
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
What characteristics do preferred stock and bonds share? How do they differ? -
SOLUTION Both can be callable by the issuer, both have periodic payments. Both are
senior securities to common stock. Neither has voting rights Preferred is paid dividends
on a percentage of face value much like the yield of a bond.
There is no maturity date for preferred stock. Preferred stock can be held perpetually
while bonds have set maturity date.
Dividend Payments to preferred stock are not mandatory unless a declared dividend
has been issued to common stock
Dividend Payments to bond holders are mandatory
When are common dividends declared and paid? - ANSWER Quarterly for both
zero coupon bond - ANS a bond that makes no coupon payments and is thus priced
initially at a deep discount
call premium - ANSWER The call premium is an amount over the face value of the
security and is paid in the event that the security is redeemed before the scheduled
maturity date. Alternatively stated, the call premium is the excess of the bond's call
price over its stated par value.
Who rates commercial paper? - ANSWER Moody's, Standard and Poor's, Fitch
NOT BEST's
,BEST's DOESNT DO A THING
Treasury notes and Bonds are registered in?
A) Bearer securities
B) Registered to interest only
C) Registered to principal only
D) Fully registered in book entry form - ANSWER D
Government and Corporate are registered in book entry form
Which statements are true regarding the relationship interest rates and preferred
stock? - ANSWER When interest rates rise preferred stock prices will fall
When interest rates fall the preferred stock prices will rise.
They are inverse! Similar to Bonds
At the time of "when and as if issued" trade the:
I Amount of accrued interest due to the under writer is known
II Amount of accrued interest due to the underwriters is not known
III Settlement date is known
, IV Settlement date is not known - ANSWER II and IV
Interest due is now known
Settlement date is not known
Which of the following are defined as investment companies under the Investment
Company Act of 1940 - ANSWER 1) Management Company
2) Unit Investment Trust
3) Face Amount Certificate Company
( Real Estate Investment Trust are not considered under this act)
Constitutional Debt Limits are imposed on the issuance of? - ANSWER General
Obligation bonds
(Moral obligation bonds do not have debt limits; they are issued in desperation)
Which of the following pays dividends?
I Warrants
II ADR's
III Preferred Stocks
IV Real Estate Investment Trust Shares - ANSWER II, III, IV
Warrants are the only ones that do not pay dividends
Which of the following rights do shareholders in a management company have?
ANSWERS (A+) LATEST UPDATE
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
What characteristics do preferred stock and bonds share? How do they differ? -
SOLUTION Both can be callable by the issuer, both have periodic payments. Both are
senior securities to common stock. Neither has voting rights Preferred is paid dividends
on a percentage of face value much like the yield of a bond.
There is no maturity date for preferred stock. Preferred stock can be held perpetually
while bonds have set maturity date.
Dividend Payments to preferred stock are not mandatory unless a declared dividend
has been issued to common stock
Dividend Payments to bond holders are mandatory
When are common dividends declared and paid? - ANSWER Quarterly for both
zero coupon bond - ANS a bond that makes no coupon payments and is thus priced
initially at a deep discount
call premium - ANSWER The call premium is an amount over the face value of the
security and is paid in the event that the security is redeemed before the scheduled
maturity date. Alternatively stated, the call premium is the excess of the bond's call
price over its stated par value.
Who rates commercial paper? - ANSWER Moody's, Standard and Poor's, Fitch
NOT BEST's
,BEST's DOESNT DO A THING
Treasury notes and Bonds are registered in?
A) Bearer securities
B) Registered to interest only
C) Registered to principal only
D) Fully registered in book entry form - ANSWER D
Government and Corporate are registered in book entry form
Which statements are true regarding the relationship interest rates and preferred
stock? - ANSWER When interest rates rise preferred stock prices will fall
When interest rates fall the preferred stock prices will rise.
They are inverse! Similar to Bonds
At the time of "when and as if issued" trade the:
I Amount of accrued interest due to the under writer is known
II Amount of accrued interest due to the underwriters is not known
III Settlement date is known
, IV Settlement date is not known - ANSWER II and IV
Interest due is now known
Settlement date is not known
Which of the following are defined as investment companies under the Investment
Company Act of 1940 - ANSWER 1) Management Company
2) Unit Investment Trust
3) Face Amount Certificate Company
( Real Estate Investment Trust are not considered under this act)
Constitutional Debt Limits are imposed on the issuance of? - ANSWER General
Obligation bonds
(Moral obligation bonds do not have debt limits; they are issued in desperation)
Which of the following pays dividends?
I Warrants
II ADR's
III Preferred Stocks
IV Real Estate Investment Trust Shares - ANSWER II, III, IV
Warrants are the only ones that do not pay dividends
Which of the following rights do shareholders in a management company have?
