Chapter 18

Answers & Explanations to Practice Exam 1

Congratulations! If you’ve reached this point, you’ve completed the first SIE practice exam. (If you haven’t, flip back and take the test in Chapter 17. You don’t want to spoil all the surprises, do you?) You should stop here and review your answers.

Review, review, review. And if I haven’t mentioned this yet, reviewing is definitely a good idea. Look at the questions you had problems with, retake all the questions you got wrong, and make sure you get them right the second (or third) time around. If you’re short on time but just can’t wait to see how you fared, you can check out the abbreviated answer key (without the explanations) at the end of this chapter. I explain how the SIE is scored in the section “Making the Grade,” just before the answer key. But I strongly suggest you come back later and — you guessed it — review.

Wait at least several days to a week before taking the same test again. Retaking the test won’t help your cause if you’re just memorizing the answers.

  1. A. (Chapter 6) Common stockholders have equity (ownership) positions, as do preferred stockholders. However, bondholders are creditors, not owners.
  2. C. (Chapter 6) Common stockholders of PXPX Corporation — or, for that matter, any publicly traded corporation — have a residual claim to the assets of the corporation at dissolution. PXPX Corp. common stockholders are entitled to receive a report containing audited financial statements on a yearly, not weekly, ...

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