SIE Mastery Exam 1 UPDATED ACTUAL
Questions and CORRECT Answers
If a corporation's stock price rises to an extremely high level:
A
trading volume tends to decline and the corporation is likely to split its stock to reduce the
market price
B
trading volume tends to rise and the corporation is likely to split its stock to reduce the market
price
C
trading volume tends to decline and the corporation is likely to buy back shares for its Treasury
to increase the market price
D
trading volume tends to rise and the corporation is likely to buy back shares for its Treasury to
increase the market price - CORRECT ANSWER - A++
trading volume tends to decline and the corporation is likely to split its stock to reduce the
market price
Treasury Bills are issued by the U.S. Government in which form? - CORRECT
ANSWER -A
Book Entry
B
Bearer
C
Registered to Principal Only
D
Registered to Principal and Interest
,A customer owns 1,000 common shares of ABC Corporation. Which of the following actions
will dilute the shareholders' equity? - CORRECT ANSWER -A
ABC declares a 5% stock dividend
B++
ABC declares that it will call its convertible preferred stock, which is currently trading at a
premium
C
ABC declares that it will issue an additional $100,000,000 in bonds
D
ABC declares a 4:1 stock split
The market price of common stock will be influenced by which of the following? - CORRECT
ANSWER -A
The par value of the shares
B
++Expectations for future earnings growth
C
Date of incorporation for the issuer
D
Book value of the company
A customer buys 100 shares of XYZ stock at $40. The stock pays a quarterly dividend of $.50.
What is the dividend yield?
A
1%
B
1.25%
C
4%
, D
5% - CORRECT ANSWER - D++
5%
ABC Company has issued 8%, $100 par, cumulative preferred stock. Two years ago, ABC paid a
4% preferred dividend. Last year, ABC paid a 5% preferred stock dividend. This year, ABC
wishes to pay a common dividend. If the preferred stock is now trading at $94, a customer who
owns 100 shares of the company's preferred stock will receive:
A
$700
B
$800
C
$1,000
D
$1,500 - CORRECT ANSWER -D
$1,500
Which statement is BEST regarding participating preferred stock?
A
The dividend rate is fixed
B
The dividend rate varies depending on the decision of the Board of Directors
C
The dividend rate is fixed as to maximum but not as to minimum
D
The dividend rate is fixed as to minimum but not as to maximum - CORRECT ANSWER -
D++
The dividend rate is fixed as to minimum but not as to maximum
Questions and CORRECT Answers
If a corporation's stock price rises to an extremely high level:
A
trading volume tends to decline and the corporation is likely to split its stock to reduce the
market price
B
trading volume tends to rise and the corporation is likely to split its stock to reduce the market
price
C
trading volume tends to decline and the corporation is likely to buy back shares for its Treasury
to increase the market price
D
trading volume tends to rise and the corporation is likely to buy back shares for its Treasury to
increase the market price - CORRECT ANSWER - A++
trading volume tends to decline and the corporation is likely to split its stock to reduce the
market price
Treasury Bills are issued by the U.S. Government in which form? - CORRECT
ANSWER -A
Book Entry
B
Bearer
C
Registered to Principal Only
D
Registered to Principal and Interest
,A customer owns 1,000 common shares of ABC Corporation. Which of the following actions
will dilute the shareholders' equity? - CORRECT ANSWER -A
ABC declares a 5% stock dividend
B++
ABC declares that it will call its convertible preferred stock, which is currently trading at a
premium
C
ABC declares that it will issue an additional $100,000,000 in bonds
D
ABC declares a 4:1 stock split
The market price of common stock will be influenced by which of the following? - CORRECT
ANSWER -A
The par value of the shares
B
++Expectations for future earnings growth
C
Date of incorporation for the issuer
D
Book value of the company
A customer buys 100 shares of XYZ stock at $40. The stock pays a quarterly dividend of $.50.
What is the dividend yield?
A
1%
B
1.25%
C
4%
, D
5% - CORRECT ANSWER - D++
5%
ABC Company has issued 8%, $100 par, cumulative preferred stock. Two years ago, ABC paid a
4% preferred dividend. Last year, ABC paid a 5% preferred stock dividend. This year, ABC
wishes to pay a common dividend. If the preferred stock is now trading at $94, a customer who
owns 100 shares of the company's preferred stock will receive:
A
$700
B
$800
C
$1,000
D
$1,500 - CORRECT ANSWER -D
$1,500
Which statement is BEST regarding participating preferred stock?
A
The dividend rate is fixed
B
The dividend rate varies depending on the decision of the Board of Directors
C
The dividend rate is fixed as to maximum but not as to minimum
D
The dividend rate is fixed as to minimum but not as to maximum - CORRECT ANSWER -
D++
The dividend rate is fixed as to minimum but not as to maximum
