FIN 320 Chapter 7

Which of the following are true of dividends?

-They are taxable to individual shareholders. -They are paid at the discretion of the board of directors.

If there are nine directors to be elected, what is the least number of shares you will need to guarantee a seat on the board under cumulative voting?

10 percent of the stock plus 1 share

A website that allows investors to trade directly with one another is called ______.

An ECN

Payments to shareholders that represent a return on the capital contributed to the corporation are referred to as

Dividends

True or false: All classes of stock issued by a firm must have equal voting rights.

False

The two most important stock markets in the United States are the New York Stock Exchange and

Nasdaq

______ refers to the stream of customer orders to buy and sell stocks.

Order Flow

Electronic communication networks increase ____ and ____ in a market.

liquidity; competition

The business of the NYSE is to attract ______.

Order flow

Which of the following statements are true of cumulative preferred dividends? (Select all that apply.)

-Preferred -They cared

Which of the following is true of classes of common stock?

-The classes of common stock often have unequal voting rights. -A primary reason for creating more than one class of stock is to maintain control.

When directors elected by common shareholders defer preferred dividends indefinitely,

common shareholders must also forego dividends

Identify the two types of preferred dividends:

cumulative and noncumulative

A written authorization for one shareholder to vote the stock of another shareholder is called a(n)

Proxy

What right does a proxy give to a shareholder?

the right to vote on behalf of another shareholder