SIE Equity Securities 1

Question 1

Which type of stock gives shareholders priority over common stockholders when dividends are distributed?

Accepted Answer

Preferred stock

Answer

Preferred stockholders receive dividends before common stockholders and have priority in liquidation.

Question 2

What is the term for a corporate action that increases the number of outstanding shares while reducing the price per share proportionally?

Accepted Answer

Forward stock split

Answer

A forward stock split increases share count and lowers the price per share, keeping total market value the same.

Question 3

An investor who believes a stock's price will decline would most likely take which position?

Accepted Answer

Short position

Answer

A short position involves selling borrowed shares with the expectation of buying them back at a lower price.

Question 4

What are American Depositary Receipts (ADRs)?

Accepted Answer

Foreign company shares traded on US exchanges in US dollars

Answer

ADRs represent shares of foreign companies and are traded on US exchanges denominated in US dollars.

Question 5

Which of the following best describes the ex-dividend date?

Accepted Answer

The first date a buyer of stock is NOT entitled to the declared dividend

Answer

Purchasing stock on or after the ex-dividend date means the buyer will not receive the upcoming dividend.

SIE - Securities Industry Essentials Practice Test