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Series 65 Unit 1 Exam
Comprehensive
Questions (Frequently
Tested) with Verified
Answers Graded A+
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1. One difference between common stock and preferred stock is that
common stockholders
A. have a priority claim on earnings.
B. own equity in the company.
C. have voting rights.
D. receive dividends when declared by the board of directors. Answer:
Have voting rights
It is rare to find a preferred stock with voting rights and even rarer to find a common stock without
them. Both receive dividends when, and if, declared by the board of directors, and these dividends are
usually paid quarterly. Both are equity securities, and preferred has the prior claim.
2. Ownership in a corporation is evidenced by holding shares of the
company's
A. common or preferred stock.
B. warrants.
C. common stock only.
D. bonds with a first mortgage on the property. Answer: Common or
preferred stock
If you have equity in a corporation, it means you have an ownership interest. Equity securities (common
and preferred stock) represent ownership in a corporation. A mortgage bond is a debt security, and a
warrant gives the holder the right to acquire equity but, in itself, is not equity.
3. For a profitable and rapidly growing firm, holders of preference
shares are least likely to benefit from the firm's growth if the
preference shares are
A. common.
B. participating.
C. cumulative.
D. convertible. Answer: Cumulative
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Preferred stock shares, sometimes called preference shares, are cumulative if any dividends in arrears
must be paid before the firm pays any common dividends. A profitable and rapidly growing firm is
unlikely to be in arrears on its preferred dividends. Just as important, the return on those shares is fixed,
and regardless of the growth in the company's
Series 65 Unit 1 Exam
Comprehensive
Questions (Frequently
Tested) with Verified
Answers Graded A+
, Contact for further consultation
1. One difference between common stock and preferred stock is that
common stockholders
A. have a priority claim on earnings.
B. own equity in the company.
C. have voting rights.
D. receive dividends when declared by the board of directors. Answer:
Have voting rights
It is rare to find a preferred stock with voting rights and even rarer to find a common stock without
them. Both receive dividends when, and if, declared by the board of directors, and these dividends are
usually paid quarterly. Both are equity securities, and preferred has the prior claim.
2. Ownership in a corporation is evidenced by holding shares of the
company's
A. common or preferred stock.
B. warrants.
C. common stock only.
D. bonds with a first mortgage on the property. Answer: Common or
preferred stock
If you have equity in a corporation, it means you have an ownership interest. Equity securities (common
and preferred stock) represent ownership in a corporation. A mortgage bond is a debt security, and a
warrant gives the holder the right to acquire equity but, in itself, is not equity.
3. For a profitable and rapidly growing firm, holders of preference
shares are least likely to benefit from the firm's growth if the
preference shares are
A. common.
B. participating.
C. cumulative.
D. convertible. Answer: Cumulative
, Contact for further consultation
Preferred stock shares, sometimes called preference shares, are cumulative if any dividends in arrears
must be paid before the firm pays any common dividends. A profitable and rapidly growing firm is
unlikely to be in arrears on its preferred dividends. Just as important, the return on those shares is fixed,
and regardless of the growth in the company's
