18 Questions
Which of the following transactions does not require a risk disclosure?
A stock transaction not recommended by a BD or a RR
What is the purpose of the Ex-Dividend Date in dividend distribution?
To trade the stock without the dividend
Who sets the Record Date in the dividend distribution process?
The Board of Directors (BOD)
What is the meaning of the acronym DERP in the context of dividend distribution?
Declaration, Ex-Date, Record, Payment
How many business days does it take for a trade to settle?
2 business days
What is the exception to the Ex-Date rule in dividend distribution?
For cash transactions and mutual funds, the Ex-Date is the business day after the Record Date
What is the purpose of a buyback?
To invest in itself or improve its financial ratios
What is a tender offer?
An offer to buy a security directly from shareholders
Why might a company make a tender offer on its own debt?
To retire the debt early
What is the tax implication of a stock split or stock dividend?
It is never a taxable event
What happens to the number of outstanding shares when a company buys back its own shares?
It decreases
Why might a company prefer share buybacks to paying dividends?
To increase the ownership stake of shareholders
What is the maximum duration for a rights offering?
90 days
What is the main difference between rights and warrants?
All of the above
What happens to the number of shares outstanding in a forward stock split?
Increases
What is the tax consequence of a stock dividend?
Non-taxable
What is the purpose of an antidilution provision?
To prevent dilution of ownership
What is the term for a long-term contract to buy stock at a specific price?
Warrant
Test your knowledge of corporate actions, including rights offerings, preemptive rights, antidilution provisions, warrants, and more. Learn how shareholders can exercise their rights, sell contracts, or let them expire. Understand the key terms and concepts related to corporate actions.
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