Series 7: Investment Products & Regulations

What is the primary difference between common and preferred stock regarding voting rights?

Common stockholders usually have voting rights to elect the board of directors, while preferred stockholders typically do not have voting rights.

If a bond is trading at a price of 105, is it trading at a discount, par, or premium?

The bond is trading at a premium because its price is above the par value of 100.

What is the formula for calculating a mutual fund's Net Asset Value (NAV) per share?

NAV per share = (Total Assets - Total Liabilities) / Total Number of Shares Outstanding.

What right does the holder of a call option possess?

The right to buy the underlying security at a specific strike price before the option expires.

What is the standard settlement timeframe for corporate securities (Regular Way)?

T+2 (Trade date plus two business days).

Which FINRA form must be filed to register an individual with a member firm?

Form U4 (Uniform Application for Securities Industry Registration or Transfer).

In a Joint Tenants with Rights of Survivorship (JTWROS) account, what happens to the assets if one owner dies?

The assets pass entirely to the surviving owner(s), bypassing probate.

What is the chronological order of the four relevant dates for dividend distributions?

Declaration Date, Ex-dividend Date, Record Date, and Payable Date.

How does cumulative preferred stock differ from non-cumulative preferred stock?

Cumulative preferred stock requires that any skipped dividends (dividends in arrears) must be paid to these shareholders before common stockholders receive any dividends.

What is the formula for calculating the Current Yield of a bond?

Current Yield = Annual Interest (Coupon) / Current Market Price.