FBLA Securities and Investments Exam Questions With Answers
Common stock - Answer the most "junior security" because it ranks last in line at liquidation. An equity or ownership position that usually allows the owner to vote on major corporate issues such as stock splits, mergers, acquisitions, authorizing more shares, etc.
Transfer agent - Answer issues and redeems certificates. Handles name changes, validates mutilated certificates. Distributes dividends, gains, and and shareholder reports to mutual fund investors.
registrar - Answer audits the transfer agent to make sure the number of authorized shares is never exceeded
dividends - Answer money paid from profits to holders of common and preferred stock whenever the Board of Directors is feeling especially generous
Declaration date - Answer the date the Board of Directors declares a dividend
Record date - Answer the date determined by the Board of Directors upon which the investor must be the "holder of record" in order to receive the upcoming dividend.Settlement of a trade must occur by the record date for the buyer to receive the dividend
payable date - Answer the date that the dividend check is paid to investors
regular way settlement - Answer T + 3, trade plus three business days. T + 1 for Treasury securities
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T + 3 - Answer regular way settlement, trade date plus three business days
Ex-Date - Answer two days before the Record Date of corporate stock. The date upon which the buyer is not entitled to the upcoming dividend. Note that for mutual funds, this date is established by the Board of Directors, usually the day after the Record Date
Pre-emptive right - Answer the right of common stockholders to maintain their proportional ownership if the company offers more shares of stock
subscription right - Answer the securities used in additional offerings of stock to purchase available shares, usually at a slight discount
warrant - Answer long term equity securities giving the owner the right to purchase stock at a set price. OFten attached as a "sweetener" that makes the other security more attractive
currency exchange risk - Answer the risk that the value of the U.S. dollar versus another currency will have a negative impact on businesses and investors.
option - Answer a derivative giving the holder the right to buy or sell something for a stated price up to expiration of the contract. Puts and calls
bullish - Answer an investor who takes a position based on the belief that the market or a particular security will rise. Buyers of stock and call options
bearish - Answer an investor who takes a position based on the belief that the market or a particular security will fall. sellers of stock and buyers of put options
preferred stock - Answer a fixed-income security whose stated dividends must be paid before common stock can receive any dividend payment. Also gets preference ahead of common stock in a liquidation (but behind all bonds and general creditors)
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