SIE - Pass Perfect Mastery Exam 1: Exam #2 Questions & Answers
Rated 100% Correct 2026 Update!!!
1. ABC Corp. has a market price of $15 market price / multiple = Earnings per share
and a Price/Earnings multiple of 10. ans: $1.50.
What was the corporation's Earn-
ings Per Common Share?
2. Corporate dividend payments can (Corporations can pay dividends as cash or in stock,
be made in all of the following ways and can also distribute products produced by that
EXCEPT: company as a dividend to shareholders. For exam-
ple, Proctor & Gamble used to send soap products to
shareholders. A company can make a distribution of
additional shares of that company (a stock dividend);
or can issue a dividend consisting of shares of another
company (typically a wholly owned subsidiary whose
shares are distributed to owners of the parent compa-
ny). Corporations cannot make dividend distributions
consisting of listed options in that company, since the
contracts are created and issued by the Options Clear-
ing Corporation - NOT the company.).
ans: listed options of that company.
3. A corporation has issued 20,000,000 Outstanding stock is: Issued stock (20,000,000 shares)
shares of common stock at $2 - Treasury stock (5,000,000 shares) = 15,000,000
par. The corporation has 5,000,000 shares outstanding at $2 par =
shares of Treasury Stock on its
books. The aggregate value of the ans: $30,000,000 value.
outstanding shares is:
4. PDQ Company $10 par common yield = annual returns.
stock is currently trading at $40. stock is paying $.90 dividend quarterly, annual divi-
PDQ is currently paying a quarterly dend then = $.90 x 4 = $3.60. formula for current yield
, SIE - Pass Perfect Mastery Exam 1: Exam #2 Questions & Answers
Rated 100% Correct 2026 Update!!!
common dividend of $.90 per share. is annual income / market price.
The current yield of PDQ stock is:
ans: $3.60/$40 = 9%.
5. All of the following actions will dilute If the holders of convertible securities convert, ad-
shareholders' equity EXCEPT: ditional common shares are issued to the individu-
als who tender the convertible securities. This dilutes
common equity.
Similarly, if the corporation issues additional common
shares, common equity will be diluted unless the exist-
ing shareholders exercise their "pre-emptive" rights.
Finally, if oflcers are granted stock options, their exer-
cise of those options results in the issuance of addi-
tional common shares, diluting existing shareholders'
equity.
ans: Dilution of an individual stockholder's equity does
not occur if there is a stock dividend or stock split. The
shareholder receives more shares worth proportion-
ately less. However, in total, the shareholder has the
same percentage interest in the corporation.
6. A customer holds 100 shares of ABC If ABC declares and pays a 10% "common" stock divi-
Corp $100 par non-convertible pre- dend, the customer who holds non-convertible or con-
ferred stock. If ABC declares and vertible preferred stock would not benefit in any way.
pays a 10% common stock dividend,
then as of the payable date, the cus- ans: payment of a common stock dividend, the cus-
tomer will now have: tomer would still have 100 shares of the non-convert-
ible preferred stock.
, SIE - Pass Perfect Mastery Exam 1: Exam #2 Questions & Answers
Rated 100% Correct 2026 Update!!!
7. Which statement is TRUE about pre- Preferred stock is a fixed income security, and hence,
ferred stock? when market interest rates move, the only way for the
yield on the security to adjust to the market is to have
the price change.
ans: When interest rates rise, preferred stock prices
fall, increasing the yield on the security; and when in-
terest rates fall, preferred stock prices rise, decreasing
the yield on the security.
8. All of the following are types of pre- Participating preferred (also known as performance
ferred stock EXCEPT: preferred) allows the holder to receive additional divi-
dend distributions from the issuer if the issuer is hav-
ing a good year. Cumulative preferred "accumulates"
any unpaid dividends. Before a common dividend may
be paid, all accumulated dividends must be paid to
cumulative preferred shareholders.
ans: There is no such thing as refundable preferred
stock.
9. All of the following features are Like bonds, preferred stock has a fixed rate, can be
common to both preferred stock callable and pays semi-annually. But unlike bonds,
and bonds EXCEPT: preferred stock has no maturity.
A - Fixed rate
B - Can be callable
C - Fixed maturity date
D - Semi-annual payments
10. ABC 10% $100 par preferred is trad- REFER TO #4 FORMULA.
ing at $120 in the market. The cur-
rent yield is:
Rated 100% Correct 2026 Update!!!
1. ABC Corp. has a market price of $15 market price / multiple = Earnings per share
and a Price/Earnings multiple of 10. ans: $1.50.
What was the corporation's Earn-
ings Per Common Share?
2. Corporate dividend payments can (Corporations can pay dividends as cash or in stock,
be made in all of the following ways and can also distribute products produced by that
EXCEPT: company as a dividend to shareholders. For exam-
ple, Proctor & Gamble used to send soap products to
shareholders. A company can make a distribution of
additional shares of that company (a stock dividend);
or can issue a dividend consisting of shares of another
company (typically a wholly owned subsidiary whose
shares are distributed to owners of the parent compa-
ny). Corporations cannot make dividend distributions
consisting of listed options in that company, since the
contracts are created and issued by the Options Clear-
ing Corporation - NOT the company.).
ans: listed options of that company.
3. A corporation has issued 20,000,000 Outstanding stock is: Issued stock (20,000,000 shares)
shares of common stock at $2 - Treasury stock (5,000,000 shares) = 15,000,000
par. The corporation has 5,000,000 shares outstanding at $2 par =
shares of Treasury Stock on its
books. The aggregate value of the ans: $30,000,000 value.
outstanding shares is:
4. PDQ Company $10 par common yield = annual returns.
stock is currently trading at $40. stock is paying $.90 dividend quarterly, annual divi-
PDQ is currently paying a quarterly dend then = $.90 x 4 = $3.60. formula for current yield
, SIE - Pass Perfect Mastery Exam 1: Exam #2 Questions & Answers
Rated 100% Correct 2026 Update!!!
common dividend of $.90 per share. is annual income / market price.
The current yield of PDQ stock is:
ans: $3.60/$40 = 9%.
5. All of the following actions will dilute If the holders of convertible securities convert, ad-
shareholders' equity EXCEPT: ditional common shares are issued to the individu-
als who tender the convertible securities. This dilutes
common equity.
Similarly, if the corporation issues additional common
shares, common equity will be diluted unless the exist-
ing shareholders exercise their "pre-emptive" rights.
Finally, if oflcers are granted stock options, their exer-
cise of those options results in the issuance of addi-
tional common shares, diluting existing shareholders'
equity.
ans: Dilution of an individual stockholder's equity does
not occur if there is a stock dividend or stock split. The
shareholder receives more shares worth proportion-
ately less. However, in total, the shareholder has the
same percentage interest in the corporation.
6. A customer holds 100 shares of ABC If ABC declares and pays a 10% "common" stock divi-
Corp $100 par non-convertible pre- dend, the customer who holds non-convertible or con-
ferred stock. If ABC declares and vertible preferred stock would not benefit in any way.
pays a 10% common stock dividend,
then as of the payable date, the cus- ans: payment of a common stock dividend, the cus-
tomer will now have: tomer would still have 100 shares of the non-convert-
ible preferred stock.
, SIE - Pass Perfect Mastery Exam 1: Exam #2 Questions & Answers
Rated 100% Correct 2026 Update!!!
7. Which statement is TRUE about pre- Preferred stock is a fixed income security, and hence,
ferred stock? when market interest rates move, the only way for the
yield on the security to adjust to the market is to have
the price change.
ans: When interest rates rise, preferred stock prices
fall, increasing the yield on the security; and when in-
terest rates fall, preferred stock prices rise, decreasing
the yield on the security.
8. All of the following are types of pre- Participating preferred (also known as performance
ferred stock EXCEPT: preferred) allows the holder to receive additional divi-
dend distributions from the issuer if the issuer is hav-
ing a good year. Cumulative preferred "accumulates"
any unpaid dividends. Before a common dividend may
be paid, all accumulated dividends must be paid to
cumulative preferred shareholders.
ans: There is no such thing as refundable preferred
stock.
9. All of the following features are Like bonds, preferred stock has a fixed rate, can be
common to both preferred stock callable and pays semi-annually. But unlike bonds,
and bonds EXCEPT: preferred stock has no maturity.
A - Fixed rate
B - Can be callable
C - Fixed maturity date
D - Semi-annual payments
10. ABC 10% $100 par preferred is trad- REFER TO #4 FORMULA.
ing at $120 in the market. The cur-
rent yield is:
