Exam (elaborations)
Achievable SIE Exam questions with 100% correct answers
- Course
- Institution
Achievable SIE Exam questions with 100% correct answers
[Show more]
Content preview
Achievable SIE Exam questions with100% correct answers
issuer - correct answer ✔✔an organization that distributes and sells securities to investors
security - correct answer ✔✔legal term for investment (stocks, bonds, mutual funds, options, ETFs)
equity - correct answer ✔✔formal term for ownership
two ways to make money on common stock - correct answer ✔✔1. capital appreciation/gains
2. cash dividends
retained earnings - correct answer ✔✔profits retained by a company that are often used to expand and
reinforce business operations, NOT paid by dividend
growth companies - correct answer ✔✔direct profits back into operations and do not pay dividends,
grow faster than the general economy
rights of common stockholders - correct answer ✔✔- right to pro-rate share of dividends
- right to vote
- right to inspect books and records
- right to maintain proportionate ownership
- right to vote for stock splits
- right to assets upon liquidation
- right to transfer ownership
types of dividends - correct answer ✔✔- cash: paid on a per share basis on common stock
- stock: payment of extra shares, same value of position overall
,- product: in form of inventory or another company's stock, not common bc taxable regardless of
investor's desire for product
board of directors (BOD) - correct answer ✔✔group of individuals voted in by stockholders (one vote per
share), large influence over direction and success of company
statutory vote - correct answer ✔✔stockholder applies only the amount of votes they have to each BOD
position being voted on, better for large stockholders
cumulative vote - correct answer ✔✔stockholder applies total amount of votes they have to any BOD
position being voted on, better for small stockholders
proxies - correct answer ✔✔voting materials used by investors unable to attend the annual meeting
two dilutive effects on ownership - correct answer ✔✔issuance of new shares, issuance of convertible
securities
forward stock split - correct answer ✔✔increase numbers of shares, lowers price; same overall value,
require stockholder approval
reverse stock split - correct answer ✔✔decrease number of shares, raise price; same overall value,
require stockholder approval
order of rights to assets upon liquidation - correct answer ✔✔1. unpaid wages
2. unpaid taxes
3. secured creditors (lien)
4. unsecured creditors (no lien)
5. junior unsecured creditors
6. preferred stockholders
7. common stockholders
*lien: right to property if a loan can't be repaid
,transfer agent - correct answer ✔✔maintains book of stockholders, issues and redeems shares when a
transaction occurs, distributes proxies and dividends to stockholders
types of shares - correct answer ✔✔authorized, issued, outstanding, treasury
rights - correct answer ✔✔pre-emptive right: right to purchase new shares at a fixed price before they're
publicly offered (to maintain percent ownership without dilution)
- have intrinsic value at issuance
-little time value, short term (90 days or less)
-outcomes: exercise, trade, expire
warrants - correct answer ✔✔issued at a fixed exercise price at a premium to the market price, as a
"sweetener" directly from the company during the sale of another security
- no intrinsic value at issuance
- have time value, long-term (typically 5 years +)
- outcomes: exercise, trade, expire
negotiable securities - correct answer ✔✔trade in the secondary market between investors
redeemable securities - correct answer ✔✔purchased directly from the issuer, not another investor
primary distribution - correct answer ✔✔sale of securities occurs and proceeds go to the issuer
secondary distribution - correct answer ✔✔stock is sold to the public for the first time, but shares were
previously owned by a party other than the issuer (officers or directors)
types of market within secondary market - correct answer ✔✔-first market: listed stocks trade on stock
exchanges
-second market: unlisted stocks trade OTC
, -third market: listed stocks trade OTC
-fourth market: institutions trade through ECNs
broker-dealers - correct answer ✔✔financial companies that primarily help their customers buy and sell
securities
introducing brokers - correct answer ✔✔smaller broker-dealers that primarily maintain relationships
with customers and facilitate their trades
clearing brokers - correct answer ✔✔large broker-dealers that maintain custody, process orders, and
provide clearing services in addition to facilitating trades for their customers; acts as intermediary
between investors and clearinghouses
clearinghouse - correct answer ✔✔an organization responsible for ensuring a trade is properly finalized,
ensures buyers deliver cash and sellers deliver securities
settlement types - correct answer ✔✔regular-way: two business days after trade
cash: same day if executed by 2:30 pm
selling short - correct answer ✔✔selling borrowed securities, bearish, unlimited risk
*only for sophisticated investors with high risk tolerance
cash dividend dates - correct answer ✔✔declaration date, record date, ex-dividend date, payable date
declaration date - correct answer ✔✔the day the BOD publicly declares the dividend
record date - correct answer ✔✔stockholder must be on the books by this date, controlled by BOD
ex-dividend date - correct answer ✔✔investors buying the stock don't receive the dividend, investors
selling the stock keep the dividend
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Sakayobako30. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $19.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now