Unit 1 Test

ABC Corporation has declared a record date of Thursday, May 17, for its next quarterly cash dividend. When is the last day the investor could purchase the stock regular way and receive the dividend? A. Monday, May 14 B. Tuesday, May 15 C. Wednesday, May 16 D. Thursday, May 17

A. Monday, May 14

ABC Corp. has outstanding a 10% noncumulative preferred stock. Two years ago, ABC omitted its preferred dividend. Last year, it paid a dividend to common shareholders, each preferred share must be paid a dividend of A. $5 B. $10 C. $15 D. $25

B. 10

ABC common stock is currently selling for $150 per share with a quarterly dividend of $1.50. The current yield for ABC common stock is A. 1% B. 4% C. 12.5% D. 25%

B. 4% yield= annual dividend/current market value

If a corporation attaches warrants to a new issue of debt securities, which of the following would be a resulting benefit? A. Dilution of shareholders' equity B. Reduction of the debt securities' interest rate C. Reduction of the number of shares outstanding D. Increase in earnings per share

B. Reduction of the debt securitites' interest rate

An ADR represents A. a U.S. security in a foreign market B. a foreign security in a domestic market C. a U.S. security in both a domestic and a foreign market D. a foreign security in both a domestic and foreign market

B. a foreign security in a domestic market

In a portfolio containing multiple stock, preferred stock, convertible preferred stock and guaranteed common stock, changes in interest rates would be most likely to affect the market price of the A. common B. preferred C. convertible preferred D. guaranteed

B. preferred

Shareholder approval is required for all of the following corporate events EXCEPT A. stock splits B. the acceptance of a tender offer C. stock dividends D. the issuance of convertible bonds

C. stock dividends

REITs must I. invest at least 75% of their assets in real estate related activities II. distribute at least 90% of their net investment income III. be organized as trusts IV. pass along losses to shareholders

I, II, and III

If your client wished to purchase a preferred stock that would offer him the highest likelihood of assured income plus the opportunity to take part in the growth of a company's stock, which of these features might he consider? I. Callable II. Convertible III. Cumulative

II and III

Treasury Stock I. has voting rights and is entitled to a dividend when declared II. has no voting rights and no dividend entitlement III. has been issued and repurchased by the company IV. is authorized but unissued stcok

II and III

A corporation has a 2:1 stock split. Before the split, there were 1 million shares of $10 par common stock outstanding. Which of the following are TRUE? I. The par value remains at $10 per share II. The par value is now $5 per share III. There are still 1 million shares outstanding IV. There are now 2 million shares outstanding

II and IV

An investor owns 3,000 shares of a low priced common stock. After a 1:6 reverse split, how many shares would he hold? A. 500 B. 3,000 C. 5,000 D. 18,000

A. 500

Holders of both XYZ preferred stock and common shares are paid an annual dividend of $5 per share and then share equally in further dividends up to $1 per share in any one year. In these circumstances, the preferred stock is known as A. cumulative B. adjustable C. participating D. convertible

C. Participating

Which of the following statements regarding warrants is TRUE? A. Warrants give the holder a perpetual interest in the issuer's stock. B. The term of a warrant is generally shorter than the term of a right. C. Warrants are issued with other securities to make the offering more attractive. D. Warrants are safer than corporate bonds.

C. Warrants are issued with other securities to make the offering more attractive.

Which of the following statements regarding dividend payments on common stock is true? A. They must be paid if the corporation has earnings B. Dividend payments are always in direct proportion to corporate earnings C. Dividends are sometimes paid before preferred stockholders receive theirs D. Dividends on common stock are paid at the discretion of the board of directors and may be paid whether there are earnings or not

D. Dividends on common stock are paid at the discretion of the board of directors and may be paid whether there are earnings or not.

The board of directors is responsible for setting all of the following, EXCEPT A. declaration date B. payable date C. ex-dividend date D. record date

Ex- dividend date

Which of the following have equity positions in a corporation? I. Common stockholders II. Preferred stockholders III. Convertible bondholders IV. Mortgage bondholders

I and II