Series 99 Corporate Actions & Reorganizations

Question 1

Which of the following best describes a mandatory corporate action?

Accepted Answer

A stock split that automatically affects all shareholders

Answer

A mandatory corporate action such as a stock split is automatically applied to all shareholders without requiring any election or decision.

Question 2

What is the 'record date' in the context of a corporate action?

Accepted Answer

The date by which an investor must own shares to be entitled to the benefit

Answer

The record date is the cutoff date established by the company to determine which shareholders are entitled to receive a dividend or corporate action benefit.

Question 3

In a 3-for-1 stock split, an investor holding 150 shares at $90 each would have after the split:

Accepted Answer

450 shares at $30 each

Answer

In a 3-for-1 split, the number of shares triples and the price per share is divided by 3, so 150 × 3 = 450 shares at $90 ÷ 3 = $30 each.

Question 4

What is the 'ex-dividend date'?

Accepted Answer

The date after which buyers of the stock will not receive the declared dividend

Answer

The ex-dividend date is the first date on which a stock trades without the right to receive the upcoming dividend; buyers on or after this date do not receive the dividend.

Question 5

A reverse stock split is most likely used by a company to:

Accepted Answer

Raise the share price to meet exchange listing requirements

Answer

A reverse stock split consolidates shares into fewer, higher-priced shares, which is commonly done to meet minimum share price requirements for continued exchange listing.

(Series 99) Operations Professional Exam Practice Test

(Series 99) Operations Professional Exam Practice Test

Series 99 Corporate Actions & Reorganizations