SIE EXAM COVERS TYPES OF PREFERRED SHARES. CAN YOU ANSWER THIS SAMPLE QUESTION?
How familiar are you with preferred shares and the different classes or types of preferreds? The Securities Industry Essentials (SIE) exam asks about preferred shares, Therefore do not go into the SIE exam without first becoming thoroughly familiar with this subject. Here's one of Bob Eder's own questions. Can you answer it correctly? Larry purchases 100 shares of preferred stock issued by XYZ Corp. The shares are "cumulative preferreds." Each share carries a dividend rate of three dollars ($3.00). XYZ Corp. has not paid any dividends on these cumulative preferred shares for the last two years. How much must XYZ Corp. pay on the preferred shares for the current year if it wishes to pay a dividend on its common shares. a. $3.00 per share b. $6.00 per share c. $9.00 per share d. $12.00 per share The answer is (c). A cumulative preferred means that the issuing company, such as XYZ Corp., may not pay any dividends on its common shares unless it f