Equity Securities Quiz Flashcards
(42 cards)
An American investor that would like to purchase the shares of a foreign company’s stock with the same regulatory protection given a domestic security could
Purchase American depositary receipts on the foreign company
A corporation has issued 10 million shares of common stock that are currently trading for $5 per share. There are 2 million shares of treasury stock. What is the total value of outstanding common stock shares?
$40 million
A shareholder owns 200 shares of stock with cumulative voting rights. If there are five vacancies being voted upon what is the maximum number of votes the shareholder may cast for any one vacancy?
1,000
The equation for outstanding stock is
Issued shares minus treasury stock
Which type of preferred stock would potentially pay dividends in addition to the stated dividend of a company has excess earnings?
Participating preferred
The term for active stock that represents the number of shares owned by the public is
Outstanding stock
If a corporation wishes to retain the right to buy back their preferred stock at a future date they will issue which type of stock?
Callable preferred
Which of the following is true of preferred stock?
It’s gives its owner the right to be paid dividends before common stockholders
All of the following are true concerning preferred stock?
Preferred stock dividends are always paid prior to common stock dividend being paid
Bond interest payments are considered senior to preferred stock dividend payments
Preferred stock certificates can be callable for a period of time throughout their ownership
Jack received a notification that Wee R Dun inc has declared bankruptcy and is in Chapter 11 at this time. Jack owns 1000 share of preferred stock in the company. On the letter jack received the company stated it will be liquidating all company assets and that investors will be paid according to the seniority of their claim.
The order of liquidation will be bonds preferred stock and then commons stock of assets are available
Which of the following best defines treasury stock?
Issued shares minus outstanding shares
Corporations generally issue warrants in connection with which if the following?
Bonds in order to secure a lower interest rate
A company has been in arrears on dividend payments for 3 quarters. Which of the following must get paid before common shareholders can receive a dividend?
Callable preferred convertible preferred and cumulative preferred
ADRs are used to facilitate which of the following?
Domestic trading of foreign securities
If a US corporation was looking for maximum tax relief which of the following investments should the registered representative recommend?
Common stock issued by another US corporation
If a company decides to liquidate its assets which of the following is correct regarding the order of the liquidation?
Bond holders are paid first then preferred stockholders and finally common stockholders
All of the following apply to preferred stock?
Preferred shares are senior to common shares
Preferred shares receive dividends prior to common stock when dividends are declared
Preferred stock is often convertible to common shares
If a common stockholder received a dividend this year which of the following would also be paid a dividend?
Cumulative preferred
Convertible preferred
Participating preferred
Which of the following is true regarding warrants?
Warrants can trade separately from the common stock
Warrants have a longer life than rights
warrants typically have a long life perhaps even the subscription price is above the stocks current market value
Warrants are issued along with a bond offering. The principal reason is
To improve marketability
Tim is an investor in Ajax corporation a publicly traded corporation. As an owner of common stock atom has the right to
Inspect the financial market of Ajax corporation
James owns 300 shares of LYPA stock which is currently trading at $60 per share. The company announces a 1:3 reverse split. what will James own after the split?
100 shares at $180 per share
Which of the following statements about conventional convertible securities financing is true?
The conversion formula is usually fixed
XYZ corporation has been experiencing some financial difficulty in the last few years. However they are confident that the company will be profitable again in the next few years. XYZ would like to borrow some money from investors by sorting issuing bonds but they are concerned that the interest rate they will have to pay will be too high based on their most recent financial report. If XYZ would like to reduce the interest rate on the bonds and increase the marketability of their bonds which of the following could XYZ do?
Attach warrants to the bond
