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
Which type of stock gives shareholders priority over common stockholders when dividends are distributed?
Answer: Preferred stock
Preferred stockholders receive dividends before common stockholders and have priority in liquidation.
What is the term for a corporate action that increases the number of outstanding shares while reducing the price per share proportionally?
Answer: Forward stock split
A forward stock split increases share count and lowers the price per share, keeping total market value the same.
An investor who believes a stock's price will decline would most likely take which position?
Answer: Short position
A short position involves selling borrowed shares with the expectation of buying them back at a lower price.
What are American Depositary Receipts (ADRs)?
Answer: Foreign company shares traded on US exchanges in US dollars
ADRs represent shares of foreign companies and are traded on US exchanges denominated in US dollars.
Which of the following best describes the ex-dividend date?
Answer: The first date a buyer of stock is NOT entitled to the declared dividend
Purchasing stock on or after the ex-dividend date means the buyer will not receive the upcoming dividend.
What does the term 'market capitalization' refer to?
Answer: The total value of a company's outstanding shares
Market capitalization equals the current share price multiplied by the total number of outstanding shares.