Equities Questions Flashcards
The Board of Directors of a company will set all of the following EXCEPT:
a. Declaration Date
2. Record Date
3. Ex Date
4. Payable Date
The best answer is C.
The ex-date is set by FINRA (the self regulatory organization or SRO that oversees the securities markets in the U.S.) once the Board of Directors sets the Record date. The Board of Directors, when it announces a dividend, sets the Declaration date, Record date, and Payable date.
Which of the following are functions of the transfer agent?
I Mailing dividend payments to shareholders
II Canceling old shares and issuing new shares
III Preparing and mailing proxies
IV Setting the Declaration Date
The best answer is C.
The declaration date is set by the Board of Directors of the company. The transfer agent cancels old shares and issues new shares; and mails voting materials (proxies), annual reports, and dividend payments to the shareholders.
ABC Corporation has declared a cash dividend to stockholders of record on Friday, December 10th. The last day to buy ABC shares BEFORE they go ex dividend is?
a. Tuesday, Dec 7
b. Wednesday, Dec 8
c. Thursday, Dec 9
d. Friday, Dec 10
The best answer is B.
The regular way ex date is 1 business day prior to the record date for cash dividends. The record date is Friday, December 10th, therefore the ex date is Thursday, December 9th. To buy the shares before they go ex dividend, the shares must be purchased before December 9th, meaning they must be purchased on Wednesday, December 8th.
Which of the following best describes the duties of a “Rights Agent”? The Rights Agent:
A. ensures that all common shareholders have voting rights
B. ensures that the correct number of shares are canceled and issued by the transfer agent whenever a transfer occurs
C. repurchases company Treasury Stock when market conditions are favorable
D. accepts shareholder subscriptions to a rights offering
The best answer is D.
The rights agent handles the mechanics of a rights offering. In a rights offering, a company is attempting to sell additional shares directly to its existing shareholders. The company hires a “rights agent” to perform these duties.
