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SIE Exam Knopman Questions with Correct Answers.
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SIE Exam Knopman Questions with Correct Answers.
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SIE Exam Knopman Questions with Correct AnswersCHAPTER 1 Correct Answer-
Statutory vs Cumulative Voting Correct Answer-Statutory: shareholder
can vote one time per share for each seat on the board of directors
Cumulative: shareholder can pool votes together and then allocate them
as desired
Pre-emptive rights Correct Answer-give investors the right to maintain a
proportionate interest in a company's stock, not increase it
Warrants Correct Answer--rights and warrants trade as independent
securities in the secondary market
-warrants typically remain outstanding longer than rights
-warrants are generally not issued with intrinsic value, meaning they are
issued with an exercise price above the current market value of the
stock. they are not valuable until the stock's price increases
- the market value of a warrant is connected to the value of the
underlying stock
ADRs Correct Answer-it is possible for an ADR holder to receive a
lower dividend than what was actually declared by the foreign company
because the foreign government might have withheld a percentage of the
dividend for taxes
,because ADRs are common stock, they do not have call risk. however,
they do have currency and political risk
Cumulative preferred stock Correct Answer-it is a benefit for investors,
as it entitles them to receive missed dividend payments. declared
dividends accumulate until paid.
preferred shares like cumulative that provide an advantage to the
investor pay lower dividends than those that give an advantage to the
issuer (callable preferred). investor is trading away the higher div.
payment for the beneficial features and vice versa
Transfer agent Correct Answer-records changes of ownership in
security, responsible for ensuring investors receive the appropriate
shares in a corporate event such as a stock split or stock dividend
Dividend procedures Correct Answer-for a regular way trade (which
settles T+2) the ex-date is the business day before the record date
In the payment of a cash dividend for a regular way transaction, the
order of the dates is "DERP"
-Declaration date
-Ex-dividend date
-Record date
-Payable date
, Stock split calculation Correct Answer-# of shares after the split =
multiply the number of shares by the first number of the split and divide
by the second.
new price = divide by first number and multiply by the second
CHAPTER 2 Correct Answer-
Bond par value Correct Answer-always assume par value of $1,000 in
the bond unless told otherwise in the question
Bond quote Correct Answer-for bonds with par value of 1000, when
converting quote to a price, multiply by 10. bond with a quote of 97 is
worth $970
When a bond matures Correct Answer-investors receive the principal
(usually $1,000) plus their final semiannual coupon payment. Note that
this interest is calculated based off the bond's par value, not the market
price at which it was purchased
Bond call feature Correct Answer-an issuer will call a bond when
interest rates decline. if an issuer chooses to call away the bond because
of declining interest rates, bondholders will receive par value, their final
semiannual coupon payment, and if applicable, a call premium
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