finance chapter 8

Even if the dividend amount and growth rate remain constant

, the value of a stock can vary.

. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect:

A decrease in all stock values.

over the counter

A securities market primarily composed of dealers who buy and sell for their own inventories

Jen owns 30 shares of stock in Delta Fashions and wants to win a seat on the board of directors. The firm has a total of 100 shares of stock outstanding. Each share receives one vote. Presently, the company is voting to elect three new directors. Which one of the following statements must be true given this information?

If cumulative voting applies, Jen is assured one seat on the board.

secondary market

Market where outstanding shares of stock are resold.

Hardy Lumber has a capital structure that includes bonds, preferred stock, and common stock. Which one of the following rights is most apt to be granted to the preferred shareholders?

Right to share in company profits prior to other shareholders.

Corporate shareholders may receive

a tax break on a portion of their dividend income

preferred stock

a type of equity security that has a fixed dividend and a priority status over other equity securities?

Cumulative preferred shares are more valuable than

comparable noncumulative shares

distributions of either cash or stock to shareholders by a corporation called?

dividends

common stock

following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

Emst & Frank stock is listed on NASDAQ. The firm is planning to issue some new equity shares for sale to the general public. This sale will definitely occur in which one of the following markets?

primary

Preferred stock may have all of the following characteristics in common with bonds with the exception of:

tax deductable payments