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FINRA SIE Exam Questions and Answers Already Passed
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FINRA SIE Exam Questions and Answers Already Passed When interest rates decrease, which type of bonds are issuers likely to redeem first? Preferred bonds with high dividend rates trading above face value What actions taken by a company can impact the equity of its common shareholders? Co...

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  • August 1, 2024
  • 32
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • finra sie exam questions and answers already pass

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1 FINRA SIE Exam Questions and Answers Already Passed When interest rates decrease, which type of bonds are issuers likely to redeem first? ✔✔Preferred bonds with high dividend rates trading above face valu e What actions taken by a company can impact the equity of its common shareholders? ✔✔Converting preferred stock or bonds into common shares ✔✔Repurchasing common stock ✔✔Issuing new common shares (Note: While stock splits do not alter shareholder equity, they do require a vote because they affect par value) How does a convertible stock compare to a standard debenture in terms of benefits? ✔✔Convertible stocks generally offer a lower yield but their value tends to increase as the market price of the commo n stock rises What are the commonalities and differences between preferred stock and bonds? ✔✔Both can be called by the issuer and provide regular payments, and they rank above common stock in terms of seniority. Neither has voting rights. Preferred stock dividends are based on a percentage of face value, similar to bond yields. Unlike bonds, preferred stocks do not have a maturity date and can be held indefinitely. Payments to preferred stockholders are contingent upon declared dividends, while bond payme nts are required. 2 How frequently are dividends for common stock declared and disbursed? ✔✔Every three months If a person owns 256 shares of ABC common stock and ABC offers the chance to buy one additional share for every 15 rights held at $24 each, with fractional rights rounded up, how many shares can be purchased? ✔✔The person can buy 18 shares at a total cost of $432, with the fractional rights rounding up from 17.06 to 18. An XXYZ ADR represents 10% of the value of an XXYZ ordinary share, which trade s at 400 British Pounds (BP) on the London Stock Exchange. With an exchange rate of $1.40 per BP and an annual dividend of 12 BP, how many ADR shares can a customer buy with $560,000 on the NYSE? ✔✔The customer will acquire 10,000 ADR shares. Calculation: 400 BP x $1.40 = $560 per ADR share; $560,000 / $560 per ADR share = 10,000 shares What factor primarily affects the market value of preferred stock? ✔✔Interest rates, because preferred stock is similar to bonds with fixed payments and is influenced by long -term market interest rates. What can be done with stock rights? ✔✔Stock rights c an be exercised, transferred, or gifted. 3 In what ways can dividends be distributed? ✔✔Dividends can be given as cash, products, additional shares of the issuing company, or shares of a different company. They cannot be issued as options or tax deferrals. What are the features of preferred stock? ✔✔Preferred stock is based on performance, can participate in additional earnings, and is cumulative in terms of dividends. It is not refundable or redeemable. What kind of corporate bond is backed solely by the issuer's creditworthiness? ✔✔Debenture Trades of all of the following will settle in Fed Funds Except? 1) US Treasury Bonds 2) Treasury Bills 3) Prime Commercial Paper 4) Prime Banker's Acceptances ✔✔3) Prime commercial paper is not traded by the Federal Reserve therefore does not settle in Fed Funds Prime Banker's Acceptances, T Bills, T Bonds, are all settled in Fed Funds 4 All of the following are sources of income that can be used to service debt o n municipal revenue bonds Except? 1) Toll Fees 2) Park Fees 3) Capitalized interest 4) Sales Tax ✔✔Capitalized interest (property tax) is not used in revenue bonds, it is only used in General Obligation Bonds A corporation issued a 7% AA sinking fund de benture at par. Three years later, similar issues are being issues at 8%. Which of the following is true about the outstanding 7% issue? How does the current yield relate to the nominal yield ✔✔The current yield will be higher than the nominal yield. The nominal yield (stated yield) will be 7% The market price of the yield will drop when the new issues are at a higher yield.

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