Securities Industry Essentials Exam (SIE) Lesson 4 Special Securities Quiz Video
Securities Industry Essentials Exam (SIE) Lesson 4 Special Securities Quiz Video
Quiz Questions
1. These are rights to purchase stock at specific prices that are long-term in nature.
A. purchasing rights
B. preemptive rights
C. option rights
D. warrants
2. To which of the following can warrants be attached to?
A. sale of a common stock
B. sale of a preferred stock
C. sale of a bond
D. all of the above
3. Warrants can be traded but they should be traded along with the stock or bond that comes with them.
A. True
B. False
4. The value of the warrant is based on the ___ that it is tied to.
A. stock
B. dividend of the stock
C. interest rate of the stock
D. par value of the stock
5. Warrants allow trading foreign stocks on the US markets.
A. True
B. False
6. Rights to buy a new stock come about as a result of ___.
A. preemptive rights
B. purchasing rights
C. voting rights
D. warrants
7. How are warrants and rights similar?
A. Both warrants and rights are traded separately from the stock that they are attached to.
B. They both serve as enticement to buy stocks.
C. They are both special securities.
D. all of the above
8. How are warrants and rights different?
A. Warrants are short term in nature while rights are long term in nature.
B. Warrants are long term in nature while rights are short term in nature.
C. Warrants are attached to stocks while rights are not attached to stocks.
D. Rights are attached to stocks while warrants are not attached to stocks.
9. The warrant can be exercised immediately after the issuance of the bond or stock that is attached to it.
A. True
B. False
10. All warrants have expiration dates.
A. True
B. False
11. Why would companies issue warrants?
A. It would lower their tax.
B. It would increase the stock price at the secondary market.
C. It would increase their ability to issue a secondary offering of stocks at a slightly higher price.
D. all of the above
12. In order for a warrant to have an intrinsic value, ___.
A. The warrant must have a price equal to the price of the stock it is attached to.
B. The warrant must have a price higher than the price of the stock it is attached to.
C. The warrant must have a price lower than the price of the stock it is attached to.
D. The warrant must have a constant price regardless of the price of the stock it is attached to.
13. This is a negotiable security that represents securities of a non-U.S. company that trades in the U.S. financial markets.
A. bond
B. right
C. ADR
D. warrant
14. What does ADR stand for?
A. American Dividend Receipts
B. American Differential Receipts
C. American Development Receipts
D. American Depository Receipts
15. The dividends of the ADR are paid ___.
A. in US currency only
B. only in the currency of the country of the investor who bought the ADR
C. in either US currency or the investor’s country currency, whichever has the lower dividend after currency conversion
D. in any currency that the bank offers where the dividend is claimed
16. Non-sponsored ADRs are assembled by banks and brokers without the participation of the issuer of the stock.
A. True
B. False
17. How does the sponsored ADRs and non-sponsored ADRs differ?
A. Issuers of sponsored ADRs does not work with the bank or the broker in creating ADRs while issuers of non-sponsored ADRs work with the bank or the broker in creating ADRs.
B. Issuers of sponsored ADRs must provide annual and quarterly reports in English to the holders of the ADR while this is not required for the issuers of non-sponsored ADRs.
C. Holders of sponsored ADRs have voting and preemptive rights while holders of non-sponsored ADRs do not have voting and preemptive rights.
D. all of the above
18. What are the risks in ADRs?
A. currency risk
B. market risk
C. stock ownership risk
D. all of the above
19. How are foreign taxes handled in ADRs?
A. Foreign taxes reduce depending on the total value of warrant attached to the ADR.
B. Foreign taxes increase depending on the total value of warrant attached to the ADR.
C. The tax withheld can be reclaimed by the ADR holders as a credit when paying their US taxes.
D. The tax withheld can be reclaimed by the ADR holders as a debit when paying their US taxes.
20. What is the advantage of using ADRs?
A. Non-American companies using ADRs have liquidity in the US stock market.
B. Non-American companies using ADRs are not registered in the United States and therefore exempted from the reporting rules by the Securities and Exchange Commission.
C. Using ADRs instead of common stocks reduces time and cost.
D. all of the above