Chapter 1 quiz - Equities

XYZ Company has issued 10%, $100 par cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of:

$25

A customer buys 100 shares of preferred at $101 per share. The par value is $100. The dividend rate is 8%. Each dividend payment will be:

$400

ABC 10% $100 par preferred is trading at $120 in the market. The current yield is

8.33%

What type of preferred stock can move in price as the price of the common stock moves?

Convertible preferred

An investor has 300 shares and is voting for 3 open board seats. Which statement is correct if the election employs the cumulative voting method?

Cumulative voting gives the shareholder a disproportionate voting weight and allows her to cast a maximum of 900 votes for a favored director.

Which statement is TRUE regarding American Depositary Receipts?

Non-sponsored ADRs are not required to provide quarterly and annual reports to shareholders

Which statement is TRUE when comparing preferred stock to common stock:

Preferred interest is paid semi-annually

Common dividends are usually declared:

Quarterly by the Board of Directors of the company

A customer gives a power of attorney to a caretaker to vote his shares on his behalf at the company's annual meeting. Which statement is TRUE?

This is known as a proxy which may be revoked prior to the annual meeting

Which of the following does NOT receive dividends?

Treasury Stock

Which statement is FALSE regarding Treasury Stock?

Treasury Stock has voting rights

All of the following statements about warrants are true EXCEPT:

Warrant valuation rises as the security approaches its maturity

Which statement is TRUE about preferred stock?

When interest rates fall, preferred stock prices rise

All of the following are types of preferred stock EXCEPT?

refundable