Equities: Common Stock

ABC corporation has declared a rights offering to stockholders of record on Friday, December 10th. Under the offer, shareholders need 10 rights to subscribe to 1 new share at a price of $19. Fractional shares can be rounded up to purchase 1 full share. As of the ex date, the stock is trading at $24. The value of the right is...

($24-$19) / 10 = $5/10 = $.50 Value 'ex rights'

ABC Corporation has declared a rights offering to stockholders of record on Friday, December 10th. Under the offer, shareholders need 10 rights to subscribe to 1 new share at a price of $19. Fractional share cans be rounded up to purchase 1 full share. As of Wednesday, December 1, the stock is trading at $30. The value of the right is...

($30-$19) / ($10 + $1) = $11/$11 = $1 value 'cum rights'

A customer gives a power of attorney to a caretaker to vote on his shares on his behalf at the company's annual meeting. Which statements are TRUE? A. this is known as a proxy B. this is known as a voting trust C. once given, the power of attorney cannot be revoked D. the power of attorney can be revoked prior to the annual meeting

This is known as a proxy The power of attorney can be revoked prior to the annual meeting

The Board of Directors of a company will set all of the following EXCEPT: A. declaration date B. record date C. ex date D. payable date

ex date

The definition of treasury stock is...

issued stock minus outstanding stock

Common stockholders have which of the following rights? A. inspecting minutes of executive meetings B. maintaining proportionate ownership in the company C. voting for the Board of Directors D. transferring share ownership without restriction by the issuer

maintaining proportionate ownership in the company voting for the Board of Directors transferring shares ownership without restriction by the issuer

If a company repurchases it's own common shares, the number of: A. outstanding shares will decrease B. outstanding shares will increase C. issued shares will decrease D. issued shares will increase

outstanding shares will decrease

A proxy given to a caretaker to vote a stockholder's shares is a:

power of attorney

A customer gives a power of attorney to a caretaker to vote his shares on his behalf at the company's annual meeting. This is called a:

proxy

Stockholder approval is needed if a corporation wishes to do all of the following EXCEPT: A. splits its stock 1 for 2 B. splits its stock 2 for 1 C. repurchase shares for treasury D. issue convertible securities

repurchase shares for treasury

All of the following are rights of a common shareholder EXCEPT the: A. right to vote B. right to receive a dividend C. right to manage D. right to transfer shares

right to manage

Cumulative voting is considered to be an advantage to the...

small investor

A corporation owns 400 shares of ABC stock. ABC is having a rights offering where 20 rights are needed to subscribe to 1 new share. How many new shares can the customer purchase through this rights offering?

20 shares 400 shares / 20 rights = 20 20 x 1 new share = 20 shares

PDQ corporation has declared a rights offering to stockholders of record on Thursday, July 22nd. Under the offer, shareholder needs 20 rights to subscribe 1 new share at $80. Fractional shares can be rounded up to purchase 1 full share. A customer owning 450 shares wishes to subscribe. The market price of the stock currently is $100. The customer can buy...

23 shares for $1,840 450/20=22.5 shares, rounded to 23 $80 x 23 = $1,840

A corporation has issued 50,000,000 shares of common stock at $2 par. The corporation has 10,000,000 shares of treasury stock on its books. The aggregate value of the outstanding shares is...

80,000,000 (50,000,000 [issued]) - (10,000,000 [treasury]) = 40,000,000 40,000,000 x $2 par = 80,000,000

A customer owns 1,000 common shares of ABC Corporation. Which of the following actions will dilute the shareholder's equity? A. ABC declares a 10% stock dividend B. ABC declares that it will call it's convertible preferred stock, which is currently trading at a premium C. ABC declares a 2:1 stock split D. ABC declares that it will issue an additional 1,000,000 common shares

ABC declares that it will call it's convertible preferred stock, which is currently trading at a premium ABC declares that it will issue an additional 1,000,000 common shares

In a corporate liquidation, common stockholders are paid...

AFTER bondholders and preferred shareholders

Common stockholders have which of the following rights? A. the rights to transfer ownership B. the right to inspect the books and records C. the right to maintain proportionate ownership D. the right to vote if the corporation issues convertible bonds

All of them

Corporate dividend payments can be made in the form of: A. Cash or company products B. listed options of the company C. additional common shares of another company D. additional common shares of that company

Cash or company products additional common shares in another company additional common shares in that company

Which of the following are equity security holders of a company? A. Common shareholders B. preferred shareholders C. convertible bondholders D. warrant holders

Common shareholders preferred shareholders

All of the following are the responsibilities of the registrar EXCEPT: A. distributes dividends, corporate reports, and voting material B. acts as a watchdog over the transfer agent C. accounts for the number of shares issued and cancelled D. maintains integrity of the record of all shareholder names

Distributes dividends, corporate reports, and voting materials

A corporation can pay a dividend in which of the following fashions? A. distributing tax credit to shareholders B. distributing the stock of another company to shareholder C. making a stock distribution to shareholders D. making a cash distribution to shareholders

Distributing the stock of another company to shareholders Making a stock distribution Making a cash distribution

The market price of common stock will be influenced by which of the following? A. Expectations for future earnings of the company B. Expectations for future dividends to be paid by the company C. Book value per share D. Par value per share

Expectations for future earnings of the company Expectations for future dividends to be paid by the company

Common shareholders have all the following rights EXCEPT the right to: A. receive a dividend if one is declared by the Board of Directors B. remaining assets in a liquidation after all other claimants C. inspect the minutes of meetings of the Board D. vote for each individual proposed for election to the Board of Directors

Inspect the minutes of meetings of the Board

Which of the following influences the market price of common stock? A. The par value of the shares B. Investor expectations about the future of the company C Stated value of the shares D. Book value of the shares

Investor expectations about the future of the company

Which of the following are functions of the transfer agent? A. Mailing dividends payments to shareholders B. canceling old shares and issuing new shares C. preparing and mailing proxies D. Setting the declaration date

Mailing dividend payments to shareholders canceling old shares and issuing new shares preparing and mailing proxies

A corporation is attempting to sell additional shares to its existing shareholders through a rights distributions. A shareholder who wishes to subscribe must send the purchase amount with the rights certificate to the...

Rights agent

In a rights offering, shareholders who subscribe make payment to the...

Rights agent for the issuer

Which of the following terms describes common stock? A. Negotiable B. Non-negotiable C. Callable D. Non-callable

Negotiable Non-callable

Common dividends can be paid in which of the following forms? A. Rights B. Product C. Stock D. Cash

Product Cash Stock

Common Dividends are usually paid:

Quarterly

Common Dividends are paid: A. Quarterly B. Semi-annually C. on issued shares D. on outstanding shares

Quarterly On outstanding shares

Which of the following are functions of a corporations Board of Directors? A. Mailing dividends payments to shareholders B. Canceling old shares and issuing new ones C. Preparing and mailing proxies D. Setting the declaration date

Setting the declaration date

Which of the following statements are TRUE regarding treasury stock? A. Treasury stock receives dividends B. Treasury stock votes C. Treasury stock reduces the number of shares outstanding D. Treasury stock purchases are used to increase reported earnings per share

Treasury stock reduces the number of shares outstanding Treasury stock purchases are used to increased reported earnings per share

ABC corporation has declared a cash dividend to stockholders of record on Friday, December 10th. The last day to buy ABC shares BEFORE they go ex-dividend is...

Tuesday, December 7th

ABC Corporation has declared a cash dividend to stockholders of record on Monday, November 21st. The last day to buy before they go ex-dividend is...

Wednesday, November 16th

PDQ Corporation has declared a rights offering to stockholders of record. The company has 5,000,000 shares outstanding and is selling an additional 1,000,000 shares via the rights offer. What statements are true regarding a customer who owns 500 shares: A. The customer will receive 100 rights B. Customer will receive 500 rights C. customer may buy 100 shares D. customer may buy 500 shares

the customer will receive 500 rights customer may buy 100 shares

Which of the following are TRUE statements regarding the activities of the registrar? A. The registrar cancels old shares B. the registrar transfers shares to new owners C. the registrar accounts for the number of shares issued D. the registrar keeps the integrity of the shareholder record

the registrar accounts for the number of shares issued the registrar keeps the integrity of the shareholder record

Which of the following statements are TRUE regarding treasury stock? A. treasury stock receives dividends B. treasury stock votes C. treasury stock reduces the number of shares outstanding D. treasury stock purchases are used to increase reported earnings per share

treasury stock reduces the number of shares outstanding treasury stock purchases are used to increase reported earnings per share

Voting of the common stockholder is required for all of the following EXCEPT: A. when the corporation declares a stock split B. when corporation declares a stock dividend C. when a corporation wishes to issue convertible securities D. deciding whether to accept a tender offer for the company's shares

when a corporation declares a stock dividend