TEAS Practice Exam 3 Welcome to your SIE Practice Quizzes. Note: We designed four (4) sets of practice quizzes for each Domain. each quiz set has 25 questions. Domain 1 (Set 3): Understanding Products and their Risks. (25 questions) Please click NEXTÂ to start your Free SIE Practice Quizzes right away. Best of Luck! 1. SIE, Understanding Products and Their Risks,SIE A certificate issued by a company granting its owner the right to purchase securities from the issuer at some specified price years into the future would best be described as A) a proxy. B) a warrant. C) a rights certificate. D) a call option. None 2. SIE, Understanding Products and Their Risks,SIE Which of the following statements about rights and warrants is true? A) Rights are short term; warrants are long term. B) Rights are long term; warrants are short term. C) Rights and warrants are both long term. D) Rights and warrants are both short term. None 3. SIE, Understanding Products and Their Risks,SIE MAS Corporation has enjoyed an extremely profitable year. It has been determined that those owning the MAS 4% preferred, participating to 6% preferred shares, will receive the full participating dividend. The participating shareholders will receive an additional dividend of A) 6%. B) 4% C) 2%. D) 10% None 4. SIE, Understanding Products and Their Risks,SIE All else being equal, which of the following preferred would pay the highest dividend? A) Cumulative preferred B) Straight preferred C) Callable preferred D) Participating preferred None 5. SIE, Understanding Products and Their Risks,SIE A Japanese computer chip manufacturer wants to attract U.S equity investors. Which of the following securities would help the issuer to accomplish this goal? A) Foreign depositary receipts B) American depositary receipts (ADRs) C) Global stocks D) Yen-based stocks None 6. SIE, Understanding Products and Their Risks,SIE Which statement describes rights and warrants? A) Rights are short term; warrants are long term. B) Both rights and warrants are long term. C) Both rights and warrants are short term. D) Rights are long term; warrants are short term. None 7. SIE, Understanding Products and Their Risks,SIE An investor has just received stock rights in the mail allowing the purchase of 250 shares of a stock offering at a discount. With these rights, the investor may take any of the following actions except A) purchase 125 shares at double the discount. B) exercise some rights and sell the rest. C) sell some rights and let the rest expire unexercised. D) sell the rights for a portion of their value. None 8. SIE, Understanding Products and Their Risks,SIE Preferred shareholders have A) no voting or preemptive rights. B) voting rights only. C) preemptive rights only. D) both voting and preemptive rights. None 9. SIE, Understanding Products and Their Risks,SIE What is the primary purpose of an issuer sponsoring an American depositary receipt (ADR)? A) These securities are created to facilitate foreign investment in U.S. companies. B) These securities are created to provide tax relief for U.S. investors. C) These securities are created to attract a U.S. investor base. D) These securities permit the issuer to avoid Securities and Exchange Commission (SEC) jurisdiction. None 10. SIE, Understanding Products and Their Risks,SIE The potential that inflation will devalue the fixed dividend income payments received by preferred shareholders is known as A) interest-rate risk. B) market risk. C) purchasing power risk. D) decreased dividend risk. None 11. SIE, Understanding Products and Their Risks,SIE When the board of directors (BOD) declares a dividend, A) owners of preferred shares must be paid before any payment is made to common shareholders. B) owners of preferred shares must be paid at least the same amount as any payment made to common shareholders. C) owners of preferred shares are paid only after any payment is made to common shareholders. D) owners of common shares must be paid at least the same amount as any payment made to preferred shareholders. None 12. SIE, Understanding Products and Their Risks,SIE An investor needs to decide whether or not they would like to maintain their percentage of ownership in a company that has decided to increase the number of outstanding shares. Which of the following is the best description of what is taking place? A) Warrants will be distributed to existing stockholders and they will have two to five years to decide whether or not to buy the stock at the strike price. B) Warrants will be distributed to existing stockholders with an exercise price equal to the current market value. C) Rights will be distributed to existing stockholders with an exercise price lower than the current market value. D) Rights will be distributed to existing stockholders; they have only two options: exercise the rights or let them expire. None 13. SIE, Understanding Products and Their Risks,SIE What is the tax status of a dividend paid to a U.S.-based American depositary receipts (ADR) investor? A) These dividends are only taxable to foreign buyers. B) These dividends are tax free. C) These dividends may be taxed by both the foreign country and the United States. D) These dividends are tax deferred. None 14. SIE, Understanding Products and Their Risks,SIE Which of the following preferred stocks' price would remain most stable in an environment of changing interest rates? A) Participating preferred B) Straight preferred C) Nocumulative preferred D) Adjustable rate preferred None 15. SIE, Understanding Products and Their Risks,SIE Each of the following is considered a control person under Securities and Exchange Commission (SEC) Rule 144 except A) corporate officers and directors. B) those persons who own 5% or more of the total beneficial interest of a company's common stock. C) those persons who own 10% or more of the total beneficial interest of a company's common stock. D) another company that owns 10% or more of the company's equity securities. None 16. SIE, Understanding Products and Their Risks,SIE The primary purpose of American depositary receipts (ADRs) is to facilitate the trading of A) U.S. stocks in foreign markets. B) foreign stocks in U.S. markets. C) foreign stocks in both domestic and foreign markets. D) domestic stocks in both foreign and domestic markets. None 17. SIE, Understanding Products and Their Risks,SIE An affiliate has held restricted shares fully paid for six months. In anticipation of the desire to divest the shares, the affiliate should know that A) no limit on the number of shares that can be sold will be imposed. B) while no longer restricted, all sales of these shares must be approved by the issuer's board of directors (BOD). C) any shares sold will be subject to volume restrictions if still an affiliate. D) the shares are no longer restricted, having been held fully paid for six months. None 18. SIE, Understanding Products and Their Risks,SIE Which of the following sell transactions is not subject to the holding period restriction specified in SEC Rule 144? A) Unregistered stock acquired by a corporate affiliate in a stock option program B) Unregistered stock acquired by a nonaffiliate under an investment letter C) Stock acquired by a corporate affiliate in a private placement D) Stock acquired on the NYSE by a corporate affiliate None 19. SIE, Understanding Products and Their Risks,SIE While preferred shares tend to be less volatile than common shares, one type of preferred is noted as being even more stable in price than the others. This would be A) convertible. B) participating. C) callable. D) adjustable rate. None 20. SIE, Understanding Products and Their Risks,SIE Which of the following best describes the trade execution of American depositary receipts (ADRs)? A) Trades are executed domestically in a foreign currency.' B) Trades are executed overseas in a foreign currency. C) Trades are executed overseas in U.S dollars. D) Trades are executed domestically in U.S. dollars. None 21. SIE, Understanding Products and Their Risks,SIE As interest rates rise, prices of preferred stock will A) rise. B) remain unaffected. C) fall. D) become volatile. None 22. SIE, Understanding Products and Their Risks,SIE Rule 144 stipulates that after holding restricted stock fully paid for six months, an affiliate may begin selling shares A) subject to volume restrictions within any 90-day period. B) completely unrestricted. C) subject to the volume restrictions on any single day. D) at the discretion of the issuer's board of directors (BOD). None 23. SIE, Understanding Products and Their Risks,SIE Preferred shareholders who expect missed dividend payments to be eventually paid are most likely to own A) callable preferred stock. B) convertible preferred stock. C) cumulative preferred stock. D) straight preferred stock. None 24. SIE, Understanding Products and Their Risks,SIE Under the provisions of Rule 144, what percentage of outstanding stock may a control person sell every 90 days? A) 1% B) 3% C) 6% D) 4% None 25. SIE, Understanding Products and Their Risks,SIE An affiliate holding unregistered shares can sell under Rule 144 A) as often as wished. B) one time a year. C) two times a year. D) four times a year. None 1 out of 25 Time is Up! Time's up
