SIE test 1

Stock Right Offering is primarily used as a preemptive right for Shareholders to:

• Get Dividends

• Get a better Equity Position than before

• To maintain their proportion number of shares

• To sell their shares at premium

Warrants are different than Stock Rights, expect Warrants:

• Are short term

• You have to pay a premium to buy

• Let’s the Stock Holder maintain his proportionate share of the company

• Are sold mainly as an appetizer to get the client to buy Preferred Stock

All the following are false regarding Warrants, Expect:

• Has voting rights

• Pay dividend if declared

• Claim on assets if Corporation goes bankrupt

• Only value is future anticipated gain

Which statement regarding rights and warrants is NOT true?

• Rights and warrants can be traded in the secondary market before they expire

• Warrants are frequently issued in bond offerings to improve the marketability of the bond; preemptive rights are offered to existing stockholders to maintain proportionate ownership

• The exercise price of a right is generally above the market value at issue; the exercise price of a warrant is generally below the market value at issue

• If not exercised, rights usually expire in 30 to 45 days; warrants usually expire in two to ten years

Buyer of a Call Option is hoping that Stock Prices will:

• Go down

• Go Up

• Will stay the same

• That the Corporation goes Bankrupt

Which of the following is True regarding a Bond

• Bonds give the owner an equity position within the company

• An Owner of a Bond is a debtor of the corporation

• Each Unit of a Bond is $ 1.00

• Bonds can only be sold back to the Corporation, never the secondary market

All of the following about Bonds are False, expect:

• Give the investor an equity position

• Gives the investor long term income

• Gives the investor a variable rate of return

• Protects the investor if interest rate goes up

Which of the following would be true regarding a corporate Bond selling at 98 1/4

• The value of the bond is $98.50

• The value of the bond is $980.50

• The value of the bond is $928.50

• The value of the bond is $98.25

You would want to sell a bond if inflation was:

• Going up

• Going down

• Going side ways

• Going up or down would not make a difference the interest rate never changes

Which of the following Rate of Return never changes

• 1. Coupon Yield

• 2. 2 . Nominal Yield

• 3. Current Yield

• 4. Yield to Maturity

• Both 1 & 2