SIE (Pass Perfect Course) Exam With 100% Verified
Solutions
1. Common Stock Owners of the corporation that take on certain risks to receive certain benefits
2. Authorized Stock fixed number of shares that can be issued when a corporation is formed: arbitrary
value
3. Market Value based on an investors expectations of the future
4. outstanding issued shares that are owned by stockholders
shares
5. Market Capital- number of outstanding shares * current market price
ization
6. Treasury Stock issued shares of common stock that are bought back by the issuing corporation
7. Economic Owner Investor buys the securities
8. Record Owner Investor who owns the securities after the settlement date
9. Regular Way Set- T+2
tlement
10. Cash Dividends Company shares part of the corporation's profits with shareholders; declared by
the Board of Directors
11. Stock Spit number of outstanding shares increases while the price of the security decreases
12. Reverse Stock number of shares decreases and the price per share increases
Split
13. Rights short-term securities that give the owner the option to buy a certain number of
shares at a reduced price for 30-60 days
14. buy new shares at a price below the current market price; sell rights to another
investor; do nothing and let the rights expire worthless
, 3 ways Share-
holders exercise
rights
15. Balance Sheet Snapshot of a company's assets/liabilities at a specific point in time
16. Net worth = total assets - total liabilities
17. Assets= quickly converted into cash
18. Liabilities= borrowed things
19. What are 2 ways FIFO, LIFO
to value invento-
ry?
20. FIFO (first in, first Oldest inventory items leave first; increased profits during inflation
out)
21. LIFO (last in, first Newest inventory items leave first; decreased profits during inflation because the
out) current sales are more expensive
22. Income State- financial statement detailing all sources of revenue and expenses for the year
ment
23. Net income= gross income - expenses
24. Dividend (Cur- annual income/ market price
rent) Yield
25. Price Earnings market price per share/earnings per share
Ratio
26. how much money the investor invested
, What is the loss
ability of com-
mon stock?
27. What are the ba- inspect books/records; transfer ownership; preemptive right; corporate distribu-
sic rights of com- tions; corporate assets upon dissolution; vote
mon stock?
28. What are the vot- board of directors; ownership interests; stock splits/reverse stock splits; issuing
ing rights of com- convertible bonds and preferred stocks; issuing stock options
mon stock?
29. What are the two Statutory and cumulative
types of voting
methods?
30. Statutory voting A voting method that permits stockholders to cast one vote per share owned for
each position. This method of voting benefits majority stockholders.
31. Cumulative Vot- a system in which a shareholder can accumulate all of his or her votes and vote
ing them all for one candidate or split them among several candidates
32. Preferred stock a nonvoting share of ownership in a corporation that pays a fixed dividend
33. What is preferred long term interest rate levels
stock market val-
uation based on?
34. How is a pre- payments are not as reliable
ferred stock dif-
ferent than a
bond?
35. cumulative; callable; convertible; participating preferred
Solutions
1. Common Stock Owners of the corporation that take on certain risks to receive certain benefits
2. Authorized Stock fixed number of shares that can be issued when a corporation is formed: arbitrary
value
3. Market Value based on an investors expectations of the future
4. outstanding issued shares that are owned by stockholders
shares
5. Market Capital- number of outstanding shares * current market price
ization
6. Treasury Stock issued shares of common stock that are bought back by the issuing corporation
7. Economic Owner Investor buys the securities
8. Record Owner Investor who owns the securities after the settlement date
9. Regular Way Set- T+2
tlement
10. Cash Dividends Company shares part of the corporation's profits with shareholders; declared by
the Board of Directors
11. Stock Spit number of outstanding shares increases while the price of the security decreases
12. Reverse Stock number of shares decreases and the price per share increases
Split
13. Rights short-term securities that give the owner the option to buy a certain number of
shares at a reduced price for 30-60 days
14. buy new shares at a price below the current market price; sell rights to another
investor; do nothing and let the rights expire worthless
, 3 ways Share-
holders exercise
rights
15. Balance Sheet Snapshot of a company's assets/liabilities at a specific point in time
16. Net worth = total assets - total liabilities
17. Assets= quickly converted into cash
18. Liabilities= borrowed things
19. What are 2 ways FIFO, LIFO
to value invento-
ry?
20. FIFO (first in, first Oldest inventory items leave first; increased profits during inflation
out)
21. LIFO (last in, first Newest inventory items leave first; decreased profits during inflation because the
out) current sales are more expensive
22. Income State- financial statement detailing all sources of revenue and expenses for the year
ment
23. Net income= gross income - expenses
24. Dividend (Cur- annual income/ market price
rent) Yield
25. Price Earnings market price per share/earnings per share
Ratio
26. how much money the investor invested
, What is the loss
ability of com-
mon stock?
27. What are the ba- inspect books/records; transfer ownership; preemptive right; corporate distribu-
sic rights of com- tions; corporate assets upon dissolution; vote
mon stock?
28. What are the vot- board of directors; ownership interests; stock splits/reverse stock splits; issuing
ing rights of com- convertible bonds and preferred stocks; issuing stock options
mon stock?
29. What are the two Statutory and cumulative
types of voting
methods?
30. Statutory voting A voting method that permits stockholders to cast one vote per share owned for
each position. This method of voting benefits majority stockholders.
31. Cumulative Vot- a system in which a shareholder can accumulate all of his or her votes and vote
ing them all for one candidate or split them among several candidates
32. Preferred stock a nonvoting share of ownership in a corporation that pays a fixed dividend
33. What is preferred long term interest rate levels
stock market val-
uation based on?
34. How is a pre- payments are not as reliable
ferred stock dif-
ferent than a
bond?
35. cumulative; callable; convertible; participating preferred
