SIE Exam: Understanding Products & Their Risks with all
Correct & 100% Verified Answers |Latest Update |
Already Graded A+
What are statutory voting rights? ✔Correct Answer-Allows the shareholder to vote one time
per share for each seat on the board.
If the investor owns 10 shares, she can use 10 shares to vote for position #1 and 10 shares to
vote for position #2.
What are cumulative voting rights? ✔Correct Answer-Allows the shareholder to pool votes
together and then allocate as desired.
If the investor owns 10 shares and there are 2 open seats, she can use all 20 shares to vote for a
single candidate.
When are common stockholders paid in a liquidation? ✔Correct Answer-Last
What are pre-emptive rights? ✔Correct Answer-Give investors the right to acquire additional
shares to maintain a proportionate interest in a company's stock (not increase their position)
when new shares are issued. This prevents dilution.
Are rights and warrants traded as independent securities in the secondary market? ✔Correct
Answer-Yes
Do warrants or rights remain outstanding longer? ✔Correct Answer-Warrants
Are warrants issued with intrinsic value? ✔Correct Answer-No, they are not valuable until the
stock's price increases.
What is the market value of a warrant connected to? ✔Correct Answer-The value of the
underlying stock
What is the exercise price of rights? ✔Correct Answer-Below current market value
What is the exercise price of warrants? ✔Correct Answer-Above the current market value
Are warrants typically issued in connection with another security in order to make that security
more attractive? ✔Correct Answer-Yes
What are characteristics of penny stocks? ✔Correct Answer-Unlisted
, Low-priced
Risky
Volatile
Less liquid than blue chip stocks
What happens when a dividend is issued to an ADR holder? ✔Correct Answer-The ADR holder
can receive a lower dividend than was actually declared by the foreign company. The foreign
government might have withheld a % of the dividend for tax purposes.
Do ADRs have call risk? ✔Correct Answer-No, because they are common stock.
What types of risk do ADRs have? ✔Correct Answer-Currency risk and political risk
Do holders of preferred stock have voting rights? ✔Correct Answer-No, only common stock
holders.
What is a preferred stock dividend quoted as a percentage of? ✔Correct Answer-As a % of par
NOT as a % of the price at which the stock is currently trading
What is cumulative preferred stock? ✔Correct Answer-Entitles investors to receive dividends
in arrears (i.e. entitles them to receive missed dividend payments).
What types of preferred shares provide an advantage to the investor? ✔Correct Answer-
Cumulative
Convertible
Participating preferred
What types of preferred shares provide an advantage to the issuer? ✔Correct Answer-Callable
preferred
Do preferred shares that benefit the investor or issuer pay higher dividends? ✔Correct
Answer-Preferred shares that benefit the issuer
Do preferred or common stock have a higher potential for appreciation/capital gains?
✔Correct Answer-Common stock
What does a transfer agent do? ✔Correct Answer-Responsible for ensuring that investors
receive the appropriate shares in a corporate event (i.e. stock split or stock dividend).
What is regular way trade? ✔Correct Answer-Settles T+2 days
What is the ex-date for regular way trade? ✔Correct Answer-The business day before the
record date.
Correct & 100% Verified Answers |Latest Update |
Already Graded A+
What are statutory voting rights? ✔Correct Answer-Allows the shareholder to vote one time
per share for each seat on the board.
If the investor owns 10 shares, she can use 10 shares to vote for position #1 and 10 shares to
vote for position #2.
What are cumulative voting rights? ✔Correct Answer-Allows the shareholder to pool votes
together and then allocate as desired.
If the investor owns 10 shares and there are 2 open seats, she can use all 20 shares to vote for a
single candidate.
When are common stockholders paid in a liquidation? ✔Correct Answer-Last
What are pre-emptive rights? ✔Correct Answer-Give investors the right to acquire additional
shares to maintain a proportionate interest in a company's stock (not increase their position)
when new shares are issued. This prevents dilution.
Are rights and warrants traded as independent securities in the secondary market? ✔Correct
Answer-Yes
Do warrants or rights remain outstanding longer? ✔Correct Answer-Warrants
Are warrants issued with intrinsic value? ✔Correct Answer-No, they are not valuable until the
stock's price increases.
What is the market value of a warrant connected to? ✔Correct Answer-The value of the
underlying stock
What is the exercise price of rights? ✔Correct Answer-Below current market value
What is the exercise price of warrants? ✔Correct Answer-Above the current market value
Are warrants typically issued in connection with another security in order to make that security
more attractive? ✔Correct Answer-Yes
What are characteristics of penny stocks? ✔Correct Answer-Unlisted
, Low-priced
Risky
Volatile
Less liquid than blue chip stocks
What happens when a dividend is issued to an ADR holder? ✔Correct Answer-The ADR holder
can receive a lower dividend than was actually declared by the foreign company. The foreign
government might have withheld a % of the dividend for tax purposes.
Do ADRs have call risk? ✔Correct Answer-No, because they are common stock.
What types of risk do ADRs have? ✔Correct Answer-Currency risk and political risk
Do holders of preferred stock have voting rights? ✔Correct Answer-No, only common stock
holders.
What is a preferred stock dividend quoted as a percentage of? ✔Correct Answer-As a % of par
NOT as a % of the price at which the stock is currently trading
What is cumulative preferred stock? ✔Correct Answer-Entitles investors to receive dividends
in arrears (i.e. entitles them to receive missed dividend payments).
What types of preferred shares provide an advantage to the investor? ✔Correct Answer-
Cumulative
Convertible
Participating preferred
What types of preferred shares provide an advantage to the issuer? ✔Correct Answer-Callable
preferred
Do preferred shares that benefit the investor or issuer pay higher dividends? ✔Correct
Answer-Preferred shares that benefit the issuer
Do preferred or common stock have a higher potential for appreciation/capital gains?
✔Correct Answer-Common stock
What does a transfer agent do? ✔Correct Answer-Responsible for ensuring that investors
receive the appropriate shares in a corporate event (i.e. stock split or stock dividend).
What is regular way trade? ✔Correct Answer-Settles T+2 days
What is the ex-date for regular way trade? ✔Correct Answer-The business day before the
record date.
