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FINRA SIE Exam Questions and Answers | 100% Pass
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FINRA SIE Exam Questions and Answers | 100% Pass If interest Rates fall the issuer will most likely call which bonds first? - ️️ Correct-High Dividend Rate preferred issues trading at a premium What are some actions by a corporation will affect an individuals common shareholder's equity - ...

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  • September 25, 2024
  • 27
  • 2024/2025
  • Exam (elaborations)
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  • finra sie exam questions and answers 100 pass

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TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024

FINRA SIE Exam Questions and Answers
| 100% Pass

If interest Rates fall the issuer will most likely call which bonds first? - ✔️✔️Correct-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-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-

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-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.


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,TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
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

When are common dividends declared and paid? - ✔️✔️Correct-Quarterly for both

A customer owns 256 shares of ABC common stock. ABC declares a rights offering,

with the terms being that for every 15 rights a shareholder may purchase one additional

share.at $24 a share. Any fractional rights may be rounded up to buy an additional

share.

How many shares may the customer buy with these right? - ✔️✔️Correct-A share holder

can buy a maximum of 18 shares with these rights paying $432 for them.



The 17.06 shares may be rounded up to 18.

XXYZ ADR (American Depository Receipt) represents 10% of the value of an XXYZ

ordinary share. The ordinary shares trade on the London Stock Exchange, where the

current price is 400 British Pounds (BP). The current exchange rate for the British

Pound against the US Dollar is $1.40. The ordinary share pays an annualized dividend

of 12 BP. The XXYZ ADR is listed on the NYSE. If a customer places an order to buy

$560,000 of the ADR on the customer will buy how many shares of the ADR? -

✔️✔️Correct-10,000 Shares with $560.,000


2/27

, TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
Explanation



400 BP x $1.4 = 560



$560, BP/share = 10,000 Shares of XXYZ

Preferred Stock market valuation is based primarily on what?



Performance of stock?

Inflation?

Interest rates? - ✔️✔️Correct-Interest Rates is the correct answer, remember that

preferred stock is much like a bond in that it has fixed payments and is considered fixed

income.



Long term market interest rate levels determine the valuation.

Rights are? - ✔️✔️Correct-Exerciserable, Negotiable (can be traded), Giftable

Dividends can be paid in the form of? - ✔️✔️Correct-Cash or products

Additional shares of ANOTHER company (yes another company)

Additional shares of that company



NOT Options and Not Tax deferments




3/27

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