SIE Exam Questions & Answers
2023/2024
Do common stock holders have to right to inspect all books of a company? - ANSWER-No, only certain
items suchs as the income statement and balance sheet
Order of asset distribution - ANSWER-Taxes
Secured debt
Unsecured debt
Preferred stock holders
Common stock holders
What type of corporate security is considered the riskiest? - ANSWER-Common stock
Of all securities, common stock has historically - ANSWER-Provided the best hedge against inflation, best
capital appreciation potential
Classifications of marginals securities - ANSWER-Registered securities, OTC securities,
Regulation T - ANSWER-Regarding extension of credit to customers...requires that payment for purchases
of securities be received by the 4th business day after the trade (T+4)
On what IRS form are gains and losses from securities reported on? - ANSWER-1099b
Who must approve stock splits - ANSWER-Common share holders must vote to approve a stock split. The
split must also be approved by the board
Warrants - ANSWER-Long-term option to buy stock. Typically issued with an IPO to make investors more
interested. Gives IPO investors the right to buy more shares of the company at a set price for x number
of years.
,Can be traded
Premium = s-x
Preemptive rights - ANSWER-Short-term Rights granted to existing shareholders that entitle shareholders
to purchase newly issued shares of a corporation's stock, equal in percentage to shares already held,
before the stock is offered to outside buyers.
Rights can be sold and expire. Max maturity = 90 days
If rights are exercised, proportion of ownership remains the same.
Outstanding shares/new shares = # of rights to buy 1 share
DERP - ANSWER-Declaration
Ex-date
Record date
Payable date
Serial bonds - ANSWER-Series of bonds with one issue date and varying/staggered maturities
Balloon maturity - ANSWER-A type of maturity schedule for an issue of bonds that shows a relatively
small number of bonds maturing serially (each year) and a large number maturing in a later year
Current yiels - ANSWER-Annual coupon$/current mkt price$
YTM > coupon - ANSWER-Bond trades at discount
YTM < coupon - ANSWER-Bond trades at a premium
, YTM = Coupon - ANSWER-Bond trades at par
1 Point (bonds) - ANSWER-$10 - corporate bonds
Basis point - ANSWER-1/100 of 1% or .01%
Duration - ANSWER-Measure of the sensitivity of a bond's market price to changes in interest rates.
Ex. Duration of 5 = 5% price move for 1% interest rate move.
Trust Indenture Act of 1939 - ANSWER-Federal law requiring all corporate bonds to be issued under an
INDENTURE agreement approved by the SEC and providing for the appointment of a qualified trustee
free of conflict of interest with the issuer. The Act provides that indentures contain protective clauses for
bondholders.
Regular way settlement for T-notes, bills, and TIPs - ANSWER-T+1 in secondary market
T+3 in primary auction market
Series EE savings bond - ANSWER-Non-marketable federal savings bonds. Denominations of $25-
$10,000. Insured, cannot be used as collateral for a loan. Redeemable prior to maturity (after 1 year)
Max maturity for commercial paper - ANSWER-270 days
Series bonds - ANSWER-Different issue dates, same maturity date
Serial bonds - ANSWER-One issue date, staggered maturity dates
Interest costs go down over the life of the bonds
2023/2024
Do common stock holders have to right to inspect all books of a company? - ANSWER-No, only certain
items suchs as the income statement and balance sheet
Order of asset distribution - ANSWER-Taxes
Secured debt
Unsecured debt
Preferred stock holders
Common stock holders
What type of corporate security is considered the riskiest? - ANSWER-Common stock
Of all securities, common stock has historically - ANSWER-Provided the best hedge against inflation, best
capital appreciation potential
Classifications of marginals securities - ANSWER-Registered securities, OTC securities,
Regulation T - ANSWER-Regarding extension of credit to customers...requires that payment for purchases
of securities be received by the 4th business day after the trade (T+4)
On what IRS form are gains and losses from securities reported on? - ANSWER-1099b
Who must approve stock splits - ANSWER-Common share holders must vote to approve a stock split. The
split must also be approved by the board
Warrants - ANSWER-Long-term option to buy stock. Typically issued with an IPO to make investors more
interested. Gives IPO investors the right to buy more shares of the company at a set price for x number
of years.
,Can be traded
Premium = s-x
Preemptive rights - ANSWER-Short-term Rights granted to existing shareholders that entitle shareholders
to purchase newly issued shares of a corporation's stock, equal in percentage to shares already held,
before the stock is offered to outside buyers.
Rights can be sold and expire. Max maturity = 90 days
If rights are exercised, proportion of ownership remains the same.
Outstanding shares/new shares = # of rights to buy 1 share
DERP - ANSWER-Declaration
Ex-date
Record date
Payable date
Serial bonds - ANSWER-Series of bonds with one issue date and varying/staggered maturities
Balloon maturity - ANSWER-A type of maturity schedule for an issue of bonds that shows a relatively
small number of bonds maturing serially (each year) and a large number maturing in a later year
Current yiels - ANSWER-Annual coupon$/current mkt price$
YTM > coupon - ANSWER-Bond trades at discount
YTM < coupon - ANSWER-Bond trades at a premium
, YTM = Coupon - ANSWER-Bond trades at par
1 Point (bonds) - ANSWER-$10 - corporate bonds
Basis point - ANSWER-1/100 of 1% or .01%
Duration - ANSWER-Measure of the sensitivity of a bond's market price to changes in interest rates.
Ex. Duration of 5 = 5% price move for 1% interest rate move.
Trust Indenture Act of 1939 - ANSWER-Federal law requiring all corporate bonds to be issued under an
INDENTURE agreement approved by the SEC and providing for the appointment of a qualified trustee
free of conflict of interest with the issuer. The Act provides that indentures contain protective clauses for
bondholders.
Regular way settlement for T-notes, bills, and TIPs - ANSWER-T+1 in secondary market
T+3 in primary auction market
Series EE savings bond - ANSWER-Non-marketable federal savings bonds. Denominations of $25-
$10,000. Insured, cannot be used as collateral for a loan. Redeemable prior to maturity (after 1 year)
Max maturity for commercial paper - ANSWER-270 days
Series bonds - ANSWER-Different issue dates, same maturity date
Serial bonds - ANSWER-One issue date, staggered maturity dates
Interest costs go down over the life of the bonds
