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FINRA SIE Exam Questions and Answers Latest Update Graded A+
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FINRA SIE Exam Questions and Answers Latest Update Graded A+ What factor mainly affects the valuation of preferred stock in the market? Interest rates, as preferred stock functions like a fixed-income security with set payments. Its value is largely influenced by long-term interest rate mov...

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  • August 1, 2024
  • 33
  • 2024/2025
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1 FINRA SIE Exam Questions and Answers Latest Update Graded A+ What factor mainly affects the valuation of preferred stock in the market? ✔✔Interest rates, as preferred stock functions like a fixed -income sec urity with set payments. Its value is largely influenced by long -term interest rate movements. What features are associated with rights? ✔✔Rights can be exercised, traded, or given as gifts. Which bonds are most likely to be called by the issuer when interest rates decrease? ✔✔Preferred shares with high dividend rates that are trading at a premium. What corporate activities can influence a common shareholder’s equity? ✔✔Actio ns such as converting convertible preferred shares or bonds into common stock, buying back common shares, or issuing new common shares. (Note: Stock splits do not alter shareholder equity but do affect the par value and require a shareholder vote.) 2 A client owns 256 shares of ABC common stock. ABC announces a rights offering allowing shareholders to purchase one additional share for every 15 rights at $24 each, with any fractional rights rounded up. How many shares can the client buy with these rig hts? ✔✔The client can acquire up to 18 shares at a cost of $432. The fractional entitlement of 17.06 rights is rounded up to 18 shares. Wha t advantages does convertible stock offer compared to standard debentures? ✔✔Convertible stock usually provides a slightly lower yield than non -convertible debentures but appreciates in value as the price of common stock rises. In what ways are pref erred stock and bonds similar, and how do they differ? ✔✔Both types of securities can be callable by the issuer and provide regular payments. They also have higher claims than common stock. Neither grants voting rights. Preferred stock offers divid ends based on a percentage of its face value, similar to bond yields. Preferred stock does not have a maturity date and can be held indefinitely, whereas bonds have a specific maturity date. Dividends on preferred stock are not obligatory unless a divi dend is declared for common stock, while bond payments are mandatory. 3 How often are dividends for common stock declared and distributed? ✔✔Common stock dividends are declared and paid on a quarterly basis. XXYZ ADR (American Depository Receipt) represents 10% of an XXYZ ordinary share’s value, with the ordinary shares trading on the London Stock Exchange at 400 British Pounds (BP). With the exchange rate at $1.40 per British Pound, and an annual dividend of 12 BP, how many ADR shares can a customer buy with $560,000? ✔✔The customer will purchase 10,000 ADR shares f or $560,000. Explanation: 400 BP x $1.40 = $560 $560,000 / $560 per ADR share = 10,000 ADR shares Dividends can be paid in th e form of? ✔✔Cash or products Additional shares of ANOTHER company (yes another company) Additional shares of that company NOT Options and Not Tax deferments 4 Preferred Stock is? ✔✔Performance based, participating, cumulative (dividends) It is not re fundable or redeemable A corporate bond which is backed solely by full faith and credit of the issuer.. ✔✔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 All of the following are sources of income th at can be used to service debt on municipal revenue bonds Except?

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