15-1

2 The preemptive right allows stockholders the right to vote for directors of the company.

FALSE

1 A corporation is incorporated in only one state regardless of the number of states in which it operates.

TRUE

3 Common stock is the residual corporate interest that bears the ultimate risks of loss.

TRUE

23 The pre-emptive right enables a stockholder to a. share proportionately in any new issues of stock of the same class. b. receive cash dividends before other classes of stock without the pre-emptive right. c. sell capital stock back to the corporation at the option of the stockholder. d. receive the same amount of dividends on a percentage basis as the preferred stockholders.

a

22 The pre-emptive right of a common stockholder is the right to a. share proportionately in corporate assets upon liquidation. b. share proportionately in any new issues of stock of the same class. c. receive cash dividends before they are distributed to preferred stockholders. d. exclude preferred stockholders from voting rights.

b

24 In a corporate form of business organization, legal capital is best defined as a. the amount of capital the state of incorporation allows the company to accumulate over its existence. b. the par value of all capital stock issued. c. the amount of capital the federal government allows a corporation to generate. d. the total capital raised by a corporation within the limits set by the Securities and Exchange Commission

b

21 The residual interest in a corporation belongs to the a. management. b. creditors. c. common stockholders. d. preferred stockholders.

c