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Exam Series 6 All Questions

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Exam Series 6 topic 1 question 41 discussion

Actual exam question from FINRA's Series 6
Question #: 41
Topic #: 1
[All Series 6 Questions]

A preemptive right:

  • A. is a call option that is usually attached to a bond as a sweetener.
  • B. gives a bond owner the option to sell the bond back to the issuer at a pre-specified price.
  • C. entitles its owner to buy shares of stock at a specified price within a specified time period in order to maintain his proportionate ownership in the firm.
  • D. is a feature on some preferred stock issues that allows the preferred shareholders to exchange their preferred shares for shares of the common stock of the
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Suggested Answer: C 🗳️
A right entitles its owner to buy shares of stock at a specified price within a specified time period in order to retain his proportionate ownership in a firm. As such, it is a call option, but it is not usually attached to a bond as a sweetener; that would be a warrant.
by lolojepu at April 6, 2025, 1:12 a.m.

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