FINRA SIE Exam questions and answers with complete solution

If interest Rates fall the issuer will most likely call which bonds first? - correct answer-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 answer-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 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 traits do preferred stock and bonds have in common? How are they different? - correct answer-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