Achievable SIE Exam with all Correct & 100% Verified
Answers |Latest Version |Already Graded A+
issuer ✔Correct Answer-an organization that distributes and sells securities to investors
security ✔Correct Answer-legal term for investment (stocks, bonds, mutual funds, options,
ETFs)
equity ✔Correct Answer-formal term for ownership
two ways to make money on common stock ✔Correct Answer-1. capital appreciation/gains
2. cash dividends
retained earnings ✔Correct Answer-profits retained by a company that are often used to
expand and reinforce business operations, NOT paid by dividend
growth companies ✔Correct Answer-direct profits back into operations and do not pay
dividends, grow faster than the general economy
rights of common stockholders ✔Correct Answer-- right to pro-rate share of dividends
- right to vote
- right to inspect books and records
- right to maintain proportionate ownership
- right to vote for stock splits
- right to assets upon liquidation
- right to transfer ownership
types of dividends ✔Correct Answer-- cash: paid on a per share basis on common stock
- stock: payment of extra shares, same value of position overall
- product: in form of inventory or another company's stock, not common bc taxable regardless
of investor's desire for product
board of directors (BOD) ✔Correct Answer-group of individuals voted in by stockholders (one
vote per share), large influence over direction and success of company
statutory vote ✔Correct Answer-stockholder applies only the amount of votes they have to
each BOD position being voted on, better for large stockholders
cumulative vote ✔Correct Answer-stockholder applies total amount of votes they have to any
BOD position being voted on, better for small stockholders
,proxies ✔Correct Answer-voting materials used by investors unable to attend the annual
meeting
two dilutive effects on ownership ✔Correct Answer-issuance of new shares, issuance of
convertible securities
forward stock split ✔Correct Answer-increase numbers of shares, lowers price; same overall
value, require stockholder approval
reverse stock split ✔Correct Answer-decrease number of shares, raise price; same overall
value, require stockholder approval
order of rights to assets upon liquidation ✔Correct Answer-1. unpaid wages
2. unpaid taxes
3. secured creditors (lien)
4. unsecured creditors (no lien)
5. junior unsecured creditors
6. preferred stockholders
7. common stockholders
*lien: right to property if a loan can't be repaid
transfer agent ✔Correct Answer-maintains book of stockholders, issues and redeems shares
when a transaction occurs, distributes proxies and dividends to stockholders
types of shares ✔Correct Answer-authorized, issued, outstanding, treasury
rights ✔Correct Answer-pre-emptive right: right to purchase new shares at a fixed price
before they're publicly offered (to maintain percent ownership without dilution)
- have intrinsic value at issuance
-little time value, short term (90 days or less)
-outcomes: exercise, trade, expire
warrants ✔Correct Answer-issued at a fixed exercise price at a premium to the market price,
as a "sweetener" directly from the company during the sale of another security
- no intrinsic value at issuance
- have time value, long-term (typically 5 years +)
- outcomes: exercise, trade, expire
negotiable securities ✔Correct Answer-trade in the secondary market between investors
redeemable securities ✔Correct Answer-purchased directly from the issuer, not another
investor
primary distribution ✔Correct Answer-sale of securities occurs and proceeds go to the issuer
,secondary distribution ✔Correct Answer-stock is sold to the public for the first time, but
shares were previously owned by a party other than the issuer (officers or directors)
types of market within secondary market ✔Correct Answer--first market: listed stocks trade
on stock exchanges
-second market: unlisted stocks trade OTC
-third market: listed stocks trade OTC
-fourth market: institutions trade through ECNs
broker-dealers ✔Correct Answer-financial companies that primarily help their customers buy
and sell securities
introducing brokers ✔Correct Answer-smaller broker-dealers that primarily maintain
relationships with customers and facilitate their trades
clearing brokers ✔Correct Answer-large broker-dealers that maintain custody, process orders,
and provide clearing services in addition to facilitating trades for their customers; acts as
intermediary between investors and clearinghouses
clearinghouse ✔Correct Answer-an organization responsible for ensuring a trade is properly
finalized, ensures buyers deliver cash and sellers deliver securities
settlement types ✔Correct Answer-regular-way: two business days after trade
cash: same day if executed by 2:30 pm
selling short ✔Correct Answer-selling borrowed securities, bearish, unlimited risk
*only for sophisticated investors with high risk tolerance
cash dividend dates ✔Correct Answer-declaration date, record date, ex-dividend date,
payable date
declaration date ✔Correct Answer-the day the BOD publicly declares the dividend
record date ✔Correct Answer-stockholder must be on the books by this date, controlled by
BOD
ex-dividend date ✔Correct Answer-investors buying the stock don't receive the dividend,
investors selling the stock keep the dividend
stock: one business day prior to record date
cash: day after payable date
, controlled by NYSE for NYSE trades, controlled by FINRA for OTC market
payable date ✔Correct Answer-when dividend is paid to shareholders, controlled by BOD,
reportable to IRS on this date
Financial Industry Regulatory Authority (FINRA) ✔Correct Answer-a self-regulatory
organization (SRO) that is empowered to enforce laws and regulations in finance
American depositary receipts (ADRs) ✔Correct Answer-US-registered receipts for foreign
investments created by domestic financial firms with foreign branches, traded in US dollars in
US markets
-subject to currency exchange risk
-no voting or preemptive rights
- dividends paid in USD
-foreign gov't tax withholding creates a US tax credit
holder of ADR benefits from ✔Correct Answer-weak US dollar or strong foreign currency
buyer of ADR benefits from ✔Correct Answer-strong US dollar or weak foreign currency
Securities Exchange Act of 1933 ✔Correct Answer-requires most issuers to register securities
with the SEC, divulge any "material" information
tender offers ✔Correct Answer-proposal to purchase a security from current investors at a
premium to market price, most likely as part of a hostile takeover of a company
- current investors must be long in stock, can't tender if short position
- offer must be at least 20 business days, and if the offer changes it must be available for at least
10 additional business days
common stock suitability ✔Correct Answer-comes with considerable market risk which makes
it generally suitable for younger investors, hedge against inflation because the stock market
outpaces inflation over time
buybacks ✔Correct Answer-issuers repurchase their own stock, raises EPS
systematic risk ✔Correct Answer-negatively affects the entire market, cannot be diversified
away
- market: investment is negatively affected by a general downturn in the market
- inflation: purchasing power risk, prices rise more than expected
non-systematic risks ✔Correct Answer-affects specific investment/sector, can be reduced by
diversification; smaller company = higher risk profile
- financial, business, regulatory, liquidity, concentration
Answers |Latest Version |Already Graded A+
issuer ✔Correct Answer-an organization that distributes and sells securities to investors
security ✔Correct Answer-legal term for investment (stocks, bonds, mutual funds, options,
ETFs)
equity ✔Correct Answer-formal term for ownership
two ways to make money on common stock ✔Correct Answer-1. capital appreciation/gains
2. cash dividends
retained earnings ✔Correct Answer-profits retained by a company that are often used to
expand and reinforce business operations, NOT paid by dividend
growth companies ✔Correct Answer-direct profits back into operations and do not pay
dividends, grow faster than the general economy
rights of common stockholders ✔Correct Answer-- right to pro-rate share of dividends
- right to vote
- right to inspect books and records
- right to maintain proportionate ownership
- right to vote for stock splits
- right to assets upon liquidation
- right to transfer ownership
types of dividends ✔Correct Answer-- cash: paid on a per share basis on common stock
- stock: payment of extra shares, same value of position overall
- product: in form of inventory or another company's stock, not common bc taxable regardless
of investor's desire for product
board of directors (BOD) ✔Correct Answer-group of individuals voted in by stockholders (one
vote per share), large influence over direction and success of company
statutory vote ✔Correct Answer-stockholder applies only the amount of votes they have to
each BOD position being voted on, better for large stockholders
cumulative vote ✔Correct Answer-stockholder applies total amount of votes they have to any
BOD position being voted on, better for small stockholders
,proxies ✔Correct Answer-voting materials used by investors unable to attend the annual
meeting
two dilutive effects on ownership ✔Correct Answer-issuance of new shares, issuance of
convertible securities
forward stock split ✔Correct Answer-increase numbers of shares, lowers price; same overall
value, require stockholder approval
reverse stock split ✔Correct Answer-decrease number of shares, raise price; same overall
value, require stockholder approval
order of rights to assets upon liquidation ✔Correct Answer-1. unpaid wages
2. unpaid taxes
3. secured creditors (lien)
4. unsecured creditors (no lien)
5. junior unsecured creditors
6. preferred stockholders
7. common stockholders
*lien: right to property if a loan can't be repaid
transfer agent ✔Correct Answer-maintains book of stockholders, issues and redeems shares
when a transaction occurs, distributes proxies and dividends to stockholders
types of shares ✔Correct Answer-authorized, issued, outstanding, treasury
rights ✔Correct Answer-pre-emptive right: right to purchase new shares at a fixed price
before they're publicly offered (to maintain percent ownership without dilution)
- have intrinsic value at issuance
-little time value, short term (90 days or less)
-outcomes: exercise, trade, expire
warrants ✔Correct Answer-issued at a fixed exercise price at a premium to the market price,
as a "sweetener" directly from the company during the sale of another security
- no intrinsic value at issuance
- have time value, long-term (typically 5 years +)
- outcomes: exercise, trade, expire
negotiable securities ✔Correct Answer-trade in the secondary market between investors
redeemable securities ✔Correct Answer-purchased directly from the issuer, not another
investor
primary distribution ✔Correct Answer-sale of securities occurs and proceeds go to the issuer
,secondary distribution ✔Correct Answer-stock is sold to the public for the first time, but
shares were previously owned by a party other than the issuer (officers or directors)
types of market within secondary market ✔Correct Answer--first market: listed stocks trade
on stock exchanges
-second market: unlisted stocks trade OTC
-third market: listed stocks trade OTC
-fourth market: institutions trade through ECNs
broker-dealers ✔Correct Answer-financial companies that primarily help their customers buy
and sell securities
introducing brokers ✔Correct Answer-smaller broker-dealers that primarily maintain
relationships with customers and facilitate their trades
clearing brokers ✔Correct Answer-large broker-dealers that maintain custody, process orders,
and provide clearing services in addition to facilitating trades for their customers; acts as
intermediary between investors and clearinghouses
clearinghouse ✔Correct Answer-an organization responsible for ensuring a trade is properly
finalized, ensures buyers deliver cash and sellers deliver securities
settlement types ✔Correct Answer-regular-way: two business days after trade
cash: same day if executed by 2:30 pm
selling short ✔Correct Answer-selling borrowed securities, bearish, unlimited risk
*only for sophisticated investors with high risk tolerance
cash dividend dates ✔Correct Answer-declaration date, record date, ex-dividend date,
payable date
declaration date ✔Correct Answer-the day the BOD publicly declares the dividend
record date ✔Correct Answer-stockholder must be on the books by this date, controlled by
BOD
ex-dividend date ✔Correct Answer-investors buying the stock don't receive the dividend,
investors selling the stock keep the dividend
stock: one business day prior to record date
cash: day after payable date
, controlled by NYSE for NYSE trades, controlled by FINRA for OTC market
payable date ✔Correct Answer-when dividend is paid to shareholders, controlled by BOD,
reportable to IRS on this date
Financial Industry Regulatory Authority (FINRA) ✔Correct Answer-a self-regulatory
organization (SRO) that is empowered to enforce laws and regulations in finance
American depositary receipts (ADRs) ✔Correct Answer-US-registered receipts for foreign
investments created by domestic financial firms with foreign branches, traded in US dollars in
US markets
-subject to currency exchange risk
-no voting or preemptive rights
- dividends paid in USD
-foreign gov't tax withholding creates a US tax credit
holder of ADR benefits from ✔Correct Answer-weak US dollar or strong foreign currency
buyer of ADR benefits from ✔Correct Answer-strong US dollar or weak foreign currency
Securities Exchange Act of 1933 ✔Correct Answer-requires most issuers to register securities
with the SEC, divulge any "material" information
tender offers ✔Correct Answer-proposal to purchase a security from current investors at a
premium to market price, most likely as part of a hostile takeover of a company
- current investors must be long in stock, can't tender if short position
- offer must be at least 20 business days, and if the offer changes it must be available for at least
10 additional business days
common stock suitability ✔Correct Answer-comes with considerable market risk which makes
it generally suitable for younger investors, hedge against inflation because the stock market
outpaces inflation over time
buybacks ✔Correct Answer-issuers repurchase their own stock, raises EPS
systematic risk ✔Correct Answer-negatively affects the entire market, cannot be diversified
away
- market: investment is negatively affected by a general downturn in the market
- inflation: purchasing power risk, prices rise more than expected
non-systematic risks ✔Correct Answer-affects specific investment/sector, can be reduced by
diversification; smaller company = higher risk profile
- financial, business, regulatory, liquidity, concentration
