Part 1 units 1-6 (33Q's) products

Question 1

howey test

Answer 1

1. investment of money made into
2. common enterprise
3. with expectation of profit
4. 3rd party efforts

Question 2

common stock

Answer 2

• issued to raise capital

- provides investors growth

Question 3

Preferred stock

Answer 3

• no voting rights
• income
• priority over common

Question 4

straight (noncumulative)

Answer 4

• Preferred stock

- Missed dividends?? oh well

Question 5

Cumulative preferred stock

Answer 5

• missed dividends pay out

- pay out before common

Question 6

Callable preferred

Answer 6

• preferred stock
• ISSUER may buy back shares AFTER specified date at a specified price
• let company replace high fixed dividend with lower one

Question 7

Dividend disbursement dates

Answer 7

DERP

• Declaration Date
• Exdividend date = Ex-date
• Record Date
• Payable Date

Question 8

Declaration Date

Answer 8

• BOD approves dividend payment

- BOD assign payment and record dates

Question 9

Ex-dividend date = Ex-date
assigned by who?
how many days before record date?

Answer 9

• Assigned by FINRA or exchange

- One business day

Question 10

Record date

Answer 10

• those who own the stock on this date go on record

- Must purchase stock 2 days before this

Question 11

Payable day

Answer 11

• Dividends sent out to owners on record

Question 12

Rights of commonstock holders

Answer 12

• Voting rights
• Transfer ownership
• Books and records

Question 13

Statutory voting rights

Answer 13

whatever amount of shares you have, that’s the maximum amount of votes you can place per issue/chair

example 100 shares, 3 chairs.
maximum 100 votes per chair

Question 14

Cumulative voting rights

Answer 14

• take your shares
• multiply by number of chairs
• that number = amount of votes you have
• can split those votes up however you want

example
100 shares. 3 chairs. 300 votes
1. 200 2. 50 3. 50
or 1. 300 2. 0 3. 0

Question 15

Rights or preemptive rights

Answer 15

• Give current stockholders chance to maintain percentage of ownership
• exercise price below CMV
• Short term

Question 16

Warrants

Answer 16

• long term
• exercise price above market (future price)
• attached to bond offering
  (give lower interest rates out)
• exercise, sell or expire

Question 17

Rule 144

Answer 17

Regulate the sales of Control securities (people who have CONTROL over company)
-can be directors or officers

Question 18

Restricted stock = unregistered

Answer 18

-Acquired from somewhere other than a registered public offering

Question 19

Rule 144 for
Restricted stock (unregistered) +
held by nonaffiliate (non insider)

Answer 19

• 6 month hold

- No volume restriction

Question 20

Rule 144 for
Restricted stock (unregistered) +
Held by an affiliate (insider)

Answer 20

• 6 month hold

- volume limit = greater of 1% of outstanding or average weekly trading volume from past 4 weeks

Question 21

Rule 144 for control stock (registered) + held by affiliate (insider)

Answer 21

• no hold

- volume limit = greater of 1% of outstanding or average weekly trading volume from past 4 weeks

Question 22

ADR

American depository receipts

Answer 22

• simplify foreign investing
• issued by US by a depository bank
• these are US securities
• depositary bank is registered owner of foreign shares

Question 23

ADR dividends are how much?

Answer 23

whatever’s leftover after foreign withholding tax

Question 24

ADR’s have voting rights? or preemptive rights?

Answer 24

generally no

Question 25

Preferred stock par value?

Answer 25

$100

Question 26

Risk of dividends

Answer 26

- purchasing power - interest rate risk - not guaranteed - dissolution priority

Question 27

Convertible preferred

Answer 27

exchange the shares for fixed number of common shares

Question 28

Convertible preferred issue with a higher or lower dividend rate?

Answer 28

Lower

Question 29

Adjustable-rate preferred

Answer 29

- dividends vary with interest rates | - if interest rates high so is dividend rate

Question 30

Participating preferred

Answer 30

-company make more money, you get more money example preferred stock XYZ 6% participating to 9%. If BOD says we did good and wants to reward share holders then you get extra 3% of dividends

Question 31

Par value of bond? | One point = ?

Answer 31

$1000 | $10

Question 32

Term maturity?

Answer 32

Principal aka issue paid on one date

Question 33

Serial maturity

Answer 33

prinicipal or issue paid over period of years

Question 34

Balloon maturity?

Answer 34

Combo of term and serial | bulk paid at the final maturity date

Question 35

Nominal, stated coupon

Answer 35

annual interest

Question 36

Current yield

Answer 36

annual interest/CMV example $80/$1100 = 7.3%

Question 37

yield to maturity

Answer 37

how much money was made if this bond fully matures. | ie interest plus gain if bought on discount, or interest - loss if bought on premium