Unit 1

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What are three things stockholders must approve?

1. Issue convertible bonds 2.Mergers 3. Stock splits

All of the following characteristics are advantages of a REIT EXCEPT: A) tax deferral B) diversification C) professional management D) liquidity

A) tax deferral

Which of the following securities typically carries the highest dividend rate? A) Straight preferred. B) Participating preferred. C) Convertible preferred. D) Callable preferred.

D) Callable preferred because it allows the issuer to call the securities away from the investor.

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

D) Warrants are often issued with other securities to make the offering more attractive.

A corporation must have stockholder approval to: A) declare a cash dividend. B)repurchase 100,000 shares of stock for its treasury. C)declare a 15% stock dividend. D)issue convertible bonds.

D) issue convertible bonds.

Your client owns 100 shares of CCC at $25. CCC declares a 25% stock dividend. After the ex-date, what will he own? I.125 shares. II.100 shares. III. Cost of $25. IV. Cost of $20.

I and IV Stock dividends make the number of shares owned increase and the cost per share decrease. The overall value should remain unchanged before and after the adjustment: 125 shares × $20 = $2,500, and 100 shares × $25 = $2,500.

Common stockholders have all of the following rights and privileges EXCEPT: I. Voting on the composition of the board of directors. II. Voting on routine decisions in the company's operations. III. Receiving par value at liquidation. IV. Receiving a dividend when declared.

II and III

Interest rates and stock have what kind of relationship?

Inverse

Price to earnings=

Market price/ earnings per share

An informal network of market makers that offers to trade securities NOT listed on an exchange and interdealer market linked by computer terminals to Financial Industry Regulatory Authority (FINRA) member firms across the country. is called:

Over-the-counter market

A _______ share is an equity security that represents undivided ownership in a portfolio of real estate investments

REIT

Who is responsible for keeping careful account of the number of shares a company is authorized to issue and ensuring that the number outstanding does not exceed this number?

Registrar

Voting method that gives stockholder 1 vote per sear for each share of stock he owns:

Statutory voting

The rate on an adjustable preferred stock may be indexed to the:

Treasury bill rate

An ADR represents:

a foreign security in a domestic market.

Dividend/Current Yield=

annual dividend/current market value of stock

reverse split

less shares, more value

Forward split

more shares, less value

The regular way ex-dividend date is _____ business day(s) before the record date.

one

The record date is set by the _____, at which time a list of stockholders who will receive a dividend is compiled.

corporation

Conversion price of the common stock=

par/number of convertible shares of common stock

A company that has issued cumulative preferred stock: A)pays the preferred dividend before paying the coupons due on its outstanding bonds. B)forces conversion of the preferred that is trading at a discount to par, thereby eliminating the need to pay past-due dividends. C)pays past and current preferred dividends before paying dividends on common stock. D) pays the current dividends on the preferred, but not the past dividends on the preferred, before paying a dividend on the common.

C)pays past and current preferred dividends before paying dividends on common stock.

__________ is most sensitive to earnings changes because, as owners, they have a claim on the earnings of the firm.

Common stock

Current Market Value goes down, what effect will that have on current yield?

Current yield goes up


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