Series 7: Equity Securities Exam
2025 Questions and Answers
Equity Securities: Authorized (3) - ANSWER✔✔-(1) The maximum number of shares a
company can issue. (2) Specified initially in the company charter, but can be changed
with shareholder approval. (3) Generally, more shares are authorized than issued for
flexibility to issue more later.
Equity Securities: Issued (2) - ANSWER✔✔-(1) Total number of of a company's shares
that have been sold and are held by shareholders. (2) Can be held by both insiders and
the general public.
Equity Securities: Outstanding - ANSWER✔✔-The shares of a corporation's stock that
have been issued into the hands of the public.
Equity Securities: Treasury Stock (4) - ANSWER✔✔-(1) Stock reacquired by a
corporation to be retired or resold to the public. (2) Treasury stock is issued but not
outstanding, and (3) is not taken into consideration when calculating earnings per share
or dividends (4) or for voting purposes.
Equity Securities: No Par Value (2) - ANSWER✔✔-(1) Stock issued without the
specified par value indicated in the company's articles of incorporation or on the stock
certificate itself. (2) Most shares are classified as no-par value today as prices are
determined by what investors are willing to pay.
Equity Securities: Par Value (3) - ANSWER✔✔-(1) The dollar amount assigned to a
security by the issuer. (2) For equity securities, par value is usually a very small amount
that bears no relationship to its market price, (3) except for preferred stock where par
value is used to calculate dividend payment.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, Equity Securities: Limited Liability (2) - ANSWER✔✔-(1) Type of investment in which a
partner or investor cannot lose more than the amount invested. (2) Thus, the investor
bears no personal responsibility for a company's liabilities.
Equity Securities: Stock Certificate - ANSWER✔✔-A document reflecting legal
ownership of a specific number of share in a corporation.
Equity Securities: Escrow Receipt (3) - ANSWER✔✔-(1) A certificate guaranteeing the
securities underlying an option contract are on deposit, and (2) will be delivered when
the option's exercised. (3) Issued by the bank holding the underlying securities.
Equity Securities: Transfer Agent (2) - ANSWER✔✔-(1) An agent, employed by a
corporation or mutual fund, to maintain shareholder records, (2) including purchases,
sales, and account balances.
Equity Securities: Registrar (2) - ANSWER✔✔-(1) The organization, usually a bank or
trust company, that maintains a registry of the share owners and number of shares held
for a mutual fund, bond, or stock, and (2) ensures that no more shares than authorized
are issued.
Equity Securities: Endorsements - ANSWER✔✔-A signature used to legally transfer a
negotiable instrument, like bearer securities.
Equity Securities: Transfer Procedures (2) - ANSWER✔✔-(1) Bearer securities are
transferred by endorsement or physical delivery of the instrument. (2) Registered
securities are transferred when the registrar amends the registry.
Common Stock: Definition (2) - ANSWER✔✔-(1) Securities representing ownership in a
corporation. (2) Used by corporations to raise business capital.
Common Stock: Rights of Common Stockholders (5) - ANSWER✔✔-(1) A share of the
company's success through pro rata share of dividends or capital appreciation. (2) A
company's assets during liquidation after bondholders, debt holders, and preferred
stockholders. (3) Voting Rights regarding company matters like objectives and stock
splits. (4) Preemptive Rights (5) Access to Corporate books
Common Stockholder Rights: Preemptive Right (2) - ANSWER✔✔-(1) The right of
current stockholders to maintain their fractional ownership of a company by buying
proportional number of shares of any future issue of common stock. (2) Typically valid
only if made explicit in a corporation's charter.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
2025 Questions and Answers
Equity Securities: Authorized (3) - ANSWER✔✔-(1) The maximum number of shares a
company can issue. (2) Specified initially in the company charter, but can be changed
with shareholder approval. (3) Generally, more shares are authorized than issued for
flexibility to issue more later.
Equity Securities: Issued (2) - ANSWER✔✔-(1) Total number of of a company's shares
that have been sold and are held by shareholders. (2) Can be held by both insiders and
the general public.
Equity Securities: Outstanding - ANSWER✔✔-The shares of a corporation's stock that
have been issued into the hands of the public.
Equity Securities: Treasury Stock (4) - ANSWER✔✔-(1) Stock reacquired by a
corporation to be retired or resold to the public. (2) Treasury stock is issued but not
outstanding, and (3) is not taken into consideration when calculating earnings per share
or dividends (4) or for voting purposes.
Equity Securities: No Par Value (2) - ANSWER✔✔-(1) Stock issued without the
specified par value indicated in the company's articles of incorporation or on the stock
certificate itself. (2) Most shares are classified as no-par value today as prices are
determined by what investors are willing to pay.
Equity Securities: Par Value (3) - ANSWER✔✔-(1) The dollar amount assigned to a
security by the issuer. (2) For equity securities, par value is usually a very small amount
that bears no relationship to its market price, (3) except for preferred stock where par
value is used to calculate dividend payment.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, Equity Securities: Limited Liability (2) - ANSWER✔✔-(1) Type of investment in which a
partner or investor cannot lose more than the amount invested. (2) Thus, the investor
bears no personal responsibility for a company's liabilities.
Equity Securities: Stock Certificate - ANSWER✔✔-A document reflecting legal
ownership of a specific number of share in a corporation.
Equity Securities: Escrow Receipt (3) - ANSWER✔✔-(1) A certificate guaranteeing the
securities underlying an option contract are on deposit, and (2) will be delivered when
the option's exercised. (3) Issued by the bank holding the underlying securities.
Equity Securities: Transfer Agent (2) - ANSWER✔✔-(1) An agent, employed by a
corporation or mutual fund, to maintain shareholder records, (2) including purchases,
sales, and account balances.
Equity Securities: Registrar (2) - ANSWER✔✔-(1) The organization, usually a bank or
trust company, that maintains a registry of the share owners and number of shares held
for a mutual fund, bond, or stock, and (2) ensures that no more shares than authorized
are issued.
Equity Securities: Endorsements - ANSWER✔✔-A signature used to legally transfer a
negotiable instrument, like bearer securities.
Equity Securities: Transfer Procedures (2) - ANSWER✔✔-(1) Bearer securities are
transferred by endorsement or physical delivery of the instrument. (2) Registered
securities are transferred when the registrar amends the registry.
Common Stock: Definition (2) - ANSWER✔✔-(1) Securities representing ownership in a
corporation. (2) Used by corporations to raise business capital.
Common Stock: Rights of Common Stockholders (5) - ANSWER✔✔-(1) A share of the
company's success through pro rata share of dividends or capital appreciation. (2) A
company's assets during liquidation after bondholders, debt holders, and preferred
stockholders. (3) Voting Rights regarding company matters like objectives and stock
splits. (4) Preemptive Rights (5) Access to Corporate books
Common Stockholder Rights: Preemptive Right (2) - ANSWER✔✔-(1) The right of
current stockholders to maintain their fractional ownership of a company by buying
proportional number of shares of any future issue of common stock. (2) Typically valid
only if made explicit in a corporation's charter.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
