SIE Equity Securities 2

Question 1

Cumulative preferred stock means that if a dividend is missed, it must be:

Accepted Answer

Paid before any common dividends in the future

Answer

Waived permanently

Answer

Converted to common stock

Answer

Paid immediately by law

Question 2

A rights offering allows existing shareholders to:

Accepted Answer

Purchase additional shares at a discount before new investors

Answer

Sell their shares at a premium

Answer

Receive extra dividends

Answer

Convert preferred shares to common shares

Question 3

Which market is known as the secondary market for trading existing shares among investors?

Accepted Answer

Over-the-counter market

Answer

Primary market

Answer

New issue market

Answer

IPO market

Question 4

Callable preferred stock allows the issuer to:

Accepted Answer

Redeem the shares at a specified price

Answer

Convert shares into bonds

Answer

Force conversion into common stock at any time

Answer

Suspend dividends indefinitely

Question 5

What is a warrant in the context of securities?

Accepted Answer

A long-term option to buy shares at a fixed price

Answer

A guarantee of dividend payment

Answer

A court order to freeze assets

Answer

A type of bond coupon

Question 6

In a company liquidation, which security holders are paid LAST?

Accepted Answer

Common stockholders

Answer

Secured bondholders

Answer

General creditors

Answer

Preferred stockholders