Series 7 Exam Practice Test 2: Equity Securities

1. Johnny Investor owns 2,000 shares of common stock of a company. The company has four vacancies on the board of directors. If the voting is cumulative, the investor may vote in any of the following ways EXCEPT

2. TUV listed stock closed at $20 on the business day prior to the ex-dividend date. If TUV previously announced a 55-cent dividend, at what price will the stock open the next day?

3. DEF Corporation has previously issued 4% $100 par cumulative preferred stock. In the first two years, it paid $2 and $3 in dividends, respectively. If the company announces a common dividend in the following year, how much does it owe preferred stockholders?

4. Which of the following are TRUE about both common and preferred stock?

I. They are equity securities

II. Dividends are determined by the issuer's board of directors

III. Holders have the right to vote for members of the board of directors

5. Which of the following types of preferred stock would most likely have the highest dividend?

6. All of the following are TRUE of warrants EXCEPT

7. Which TWO of the following best describe ADRs?

I. They are receipts for foreign securities trading in U.S. markets

II. They are receipts for U.S. securities trading in foreign markets

III. They are used to help finance foreign corporations

IV. They are used to help finance U.S. corporations

8. The amount of money a corporation receives above its stated par value when issuing stock is known as

9. ABC Corporation is issuing new shares through a rights offering. If the stock trades at $30, and it costs $24 plus 12 rights to purchase a new share, what is the theoretical value of a right, ex-rights?

10. Penny stocks are non-Nasdaq stocks trading at _________ or less.

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