Equity Securities Flashcards
6 cards from real SIE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Equity Securities flashcards as text
Cumulative preferred stock means that if a dividend is missed, it must be:
Answer: Paid before any common dividends in the future
Cumulative preferred dividends that are skipped accumulate as arrears and must be paid before any common dividends.
A rights offering allows existing shareholders to:
Answer: Purchase additional shares at a discount before new investors
A rights offering gives existing shareholders the privilege to buy new shares at a discount to maintain their ownership percentage.
Which market is known as the secondary market for trading existing shares among investors?
Answer: Over-the-counter market
The over-the-counter (OTC) market is a secondary market where existing securities are traded between investors.
Callable preferred stock allows the issuer to:
Answer: Redeem the shares at a specified price
Callable preferred stock can be redeemed (bought back) by the issuer at a predetermined call price.
What is a warrant in the context of securities?
Answer: A long-term option to buy shares at a fixed price
A warrant is a long-term security giving the holder the right to purchase shares at a set price before expiration.
In a company liquidation, which security holders are paid LAST?
Answer: Common stockholders
In liquidation, common stockholders have the lowest priority and are paid only after all creditors and preferred shareholders.