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Series 7 Exam Prep - 50 Key Concepts

Pass the Series 7 exam with 50 flashcards covering securities, options, mutual funds, and FINRA regulations.

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Front

What is the primary difference between statutory and cumulative voting for common stock?

Back

Statutory: one vote per share per seat; Cumulative: total votes can be pooled for one seat. Cumulative voting benefits minority shareholders by allowing them to concentrate their influence.

Front

What are preemptive rights?

Back

The right of existing shareholders to maintain their proportionate ownership when new shares are issued. Prevents dilution of ownership and typically allows purchase below market price.

Front

Compare Warrants vs. Rights regarding their timeframes.

Back

Rights are short-term (30-45 days); Warrants are long-term (years or perpetual). Rights are issued below CMV; Warrants are issued above CMV (sweeteners).

Front

What is Cumulative Preferred Stock?

Back

Preferred stock that requires all skipped dividends to be paid before common stockholders receive any. Dividends in arrears must be settled first.

Front

What is Participating Preferred Stock?

Back

Preferred stock that offers a fixed dividend plus a share of corporate profits. Allows the holder to 'participate' in the success of the company beyond the fixed rate.

Front

What is the primary benefit of Convertible Preferred Stock to the investor?

Back

The ability to exchange preferred shares for a fixed number of common shares. Offers the safety of preferred stock with the capital appreciation potential of common stock.

Front

What are American Depositary Receipts (ADRs)?

Back

Certificates representing ownership in shares of a foreign company, trading on U.S. exchanges. Facilitates U.S. investment in foreign companies; dividends are paid in USD.

Front

Define a 'Penny Stock' according to SEC rules.

Back

An unlisted equity security trading at less than $5 per share. Subject to strict disclosure rules and suitability requirements (Rule 15g-9).

Front

What is Treasury Stock?

Back

Stock that was issued and subsequently repurchased by the corporation. Does not have voting rights and does not receive dividends.

Front

What is the sequence of the four dividend dates (DERP)?

Back

Declaration, Ex-Dividend, Record, Payable. The Ex-date is one business day before the Record date.

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