SIE Exam Review

These flashcards cover key concepts from the SIE Exam Review, including exam structure, stock types, dividend definitions, bonds, regulatory rules, and economic analysis.

What is authorized stock in the context of common stock?

Authorized stock is a fixed number of shares that may be issued by a corporation.

What distinguishes issued stock from outstanding stock?

Issued stock is the total number of shares sold to investors, while outstanding stock is the shares currently held by the public.

Define treasury stock.

Treasury stock consists of shares that have been repurchased by the corporation and are not currently outstanding; they do not vote or receive dividends.

What is the formula for calculating treasury stock?

Treasury stock = Issued stock - Outstanding stock.

What are cash dividends?

Cash dividends are profits shared with shareholders, declared by the Board of Directors, and are typically paid quarterly.

Explain a stock split.

A stock split increases or decreases the number of shares outstanding but keeps the total investment value the same.

What is the difference between cumulative preferred stock and callable preferred stock?

Cumulative preferred stock accumulates unpaid dividends, while callable preferred stock can be redeemed by the issuer after a set date.

What does the P/E ratio signify?

The price-to-earnings ratio indicates how much investors are willing to pay per dollar of earnings; it's a measure of company valuation.

What rights do common shareholders typically possess?

Common shareholders have the right to inspect company records, transfer ownership, maintain proportionate ownership, receive corporate distributions, and vote on certain corporate matters.

What is the difference between statutory voting and cumulative voting?

Statutory voting allows shareholders to cast a single vote per share for each director, while cumulative voting allows shareholders to allocate their total votes among directors as they choose.

What types of bonds are considered secured bonds?

Secured bonds are backed by specific assets, such as mortgage bonds backed by real estate.

What defines a corporate bond as unsecured?

Unsecured bonds are backed only by the issuer's creditworthiness and promise to pay, without specific asset backing.

What are the two types of yield on bonds?

Nominal yield is the stated interest rate, while current yield is the annual interest payment divided by the market price of the bond.

What does the term 'yield to maturity' (YTM) refer to?

YTM is the total return anticipated on a bond if held until maturity, accounting for interest payments and capital gains or losses.

What is a net worth calculation?

Net worth is calculated as total assets minus total liabilities.

What are American Depositary Receipts (ADRs)?

ADRs are a way for U.S. investors to invest in foreign stocks without dealing with foreign currencies directly.

What does Regulation Best Interest (Reg BI) require from broker-dealers?

Reg BI requires broker-dealers to prioritize customer interests above their own and to disclose conflicts of interest.

What is the purpose of the Securities Exchange Act of 1934?

It regulates the securities industry by establishing rules to prevent fraud and manipulation in the trading of securities.

What is the role of the SEC?

The SEC regulates and enforces securities laws to protect investors and maintain fair, orderly, and efficient markets.

What does the term 'Fiscal Policy' refer to?

Fiscal Policy refers to government spending and tax policies used to influence the economy.

Explain the difference between a primary market and a secondary market.

A primary market is where new securities are issued directly from the issuer to investors, while a secondary market is where existing securities are traded among investors.