Series 7

Review 393 SERIES-7 practice questions with answer explanations and community insights.

Question 1

Which of the following preferred issues is likely to fluctuate most in value?

  1. cumulative preferred
  2. callable preferred
  3. convertible preferred
  4. broker preferred

Question 2

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering. What is the subscription price per share?

  1. $4
  2. $6
  3. $7
  4. $10

Question 3

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering. What subscription ratio is the corporation establishing for each new share?

  1. 6 rights per share
  2. 10 rights per share
  3. 6 million rights per share
  4. 10 million rights per share

Question 4

Common stocks for which of the following industries are most likely to decline in value when interest rates rise?

  1. automobile manufacturers
  2. airlines
  3. stock brokers
  4. public utility companies

Question 5

Convertible preferred stock has all of the following characteristics except:

  1. a lower dividend rate than non-convertible preferred
  2. a dilution of earnings if converted into common stock
  3. a requirement for shareholders to always accept the call price when called
  4. required dividend payments to shareholders before any dividends are paid to holders of common stock
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