FINRA SIE Exam questions with |\ |\ |\ |\ |\
answers
If interest Rates fall the issuer will most likely call which bonds
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
first? - CORRECT ANSWERS ✔✔High Dividend Rate preferred
|\ |\ |\ |\ |\ |\ |\ |\
issues trading at a premium
|\ |\ |\ |\
What are some actions by a corporation will affect an individuals
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
common shareholder's equity - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\
✔✔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)
|\ |\ |\ |\ |\ |\
Benefits to a Convertible stock compared to a regular debenture -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔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 traits do preferred stock and bonds have in common? How
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
are they different? - CORRECT ANSWERS ✔✔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 |\ |\ |\ |\ |\
When are common dividends declared and paid? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔Quarterly for both |\ |\ |\
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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔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.
|\ |\ |\ |\ |\ |\ |\ |\
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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔10,000 Shares with $560.,000 |\ |\ |\ |\ |\ |\
Explanation |\
400 BP x $1.4 = 560
|\ |\ |\ |\ |\
$560, BP/share = 10,000 Shares of XXYZ|\ |\ |\ |\ |\ |\ |\ |\
Preferred Stock market valuation is based primarily on what?
|\ |\ |\ |\ |\ |\ |\ |\
Performance of stock? |\ |\
Inflation?
Interest rates? - CORRECT ANSWERS ✔✔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.
|\ |\ |\ |\ |\ |\ |\ |\
Rights are? - CORRECT ANSWERS ✔✔Exerciserable, Negotiable
|\ |\ |\ |\ |\ |\ |\
(can be traded), Giftable
|\ |\ |\
Dividends can be paid in the form of? - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔Cash or products |\ |\ |\
Additional shares of ANOTHER company (yes another company)
|\ |\ |\ |\ |\ |\ |\ |\
Additional shares of that company |\ |\ |\ |\ |\
answers
If interest Rates fall the issuer will most likely call which bonds
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
first? - CORRECT ANSWERS ✔✔High Dividend Rate preferred
|\ |\ |\ |\ |\ |\ |\ |\
issues trading at a premium
|\ |\ |\ |\
What are some actions by a corporation will affect an individuals
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
common shareholder's equity - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\
✔✔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)
|\ |\ |\ |\ |\ |\
Benefits to a Convertible stock compared to a regular debenture -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔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 traits do preferred stock and bonds have in common? How
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
are they different? - CORRECT ANSWERS ✔✔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 |\ |\ |\ |\ |\
When are common dividends declared and paid? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔Quarterly for both |\ |\ |\
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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔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.
|\ |\ |\ |\ |\ |\ |\ |\
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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔10,000 Shares with $560.,000 |\ |\ |\ |\ |\ |\
Explanation |\
400 BP x $1.4 = 560
|\ |\ |\ |\ |\
$560, BP/share = 10,000 Shares of XXYZ|\ |\ |\ |\ |\ |\ |\ |\
Preferred Stock market valuation is based primarily on what?
|\ |\ |\ |\ |\ |\ |\ |\
Performance of stock? |\ |\
Inflation?
Interest rates? - CORRECT ANSWERS ✔✔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.
|\ |\ |\ |\ |\ |\ |\ |\
Rights are? - CORRECT ANSWERS ✔✔Exerciserable, Negotiable
|\ |\ |\ |\ |\ |\ |\
(can be traded), Giftable
|\ |\ |\
Dividends can be paid in the form of? - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔Cash or products |\ |\ |\
Additional shares of ANOTHER company (yes another company)
|\ |\ |\ |\ |\ |\ |\ |\
Additional shares of that company |\ |\ |\ |\ |\
