EQUITIES

During periods of stable interest rates, which type of preferred stock will have the greatest price volatility? A. Cumulative B. Participating C. Callable D. Adjustable Rate

B. Participating

A customer buys 100 shares of preferred at $51 per share. The par value is $50. The dividend rate is 8%. Each dividend payment would be: A $200 B $400 C $600 D $800

A $200 RATE 8% X 50 PAR= $4 ANNUAL. $4 X 100 SHARES= $400. PREFERRED IS PAID SEMI ANNUALLY $400/2 =$200

Preferred dividends may be paid as: I. Cash II. Stock III.Stock of another company A. I only B. II only C. I or II D. I, II, III

A. I only

POP Company has issued 11%, $100 par cumulative preferred stock. Two years ago, POP paid a preferred dividend of $9. Last year, it paid a preferred dividend of $11 per share. This year, POP wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of: A $13 B $15 C $20 D $22

A $13 preferred stock is cumulative, to make a dividend distribution to common shareholders, the company needs to pay all back, unpaid dividends plus this year's dividend (before a common dividend can be made). The stated dividend rate on the preferred is 11% based on $100 par. Two years ago, 9% was paid, so there is a 2% dividend due. Last year, the corporation paid 11%, so there is nothing additional due. Also, this year's dividend of 11% must be paid. The total dividend that must be paid is 13% or $13 per preferred share before a common dividend can be paid.

A customer buys 100 shares preferred at $110 per share. The par value is $100. The dividend rate is 5%. Each dividend payment will be: A $250 B $275 C $500 D $550

A $250 The annual rate is 5% X $100 par value = $5 per share X 100 shares = $500. Since preferred dividends are paid semi-annually, each payment is $250.

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 1 share of preferred stock and a 1/4 warrant to buy one additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have: A 100,000 preferred shares and 25,000 common shares B 100,000 preferred shares and 50,000 common shares C 200,000 preferred shares and 100,000 common shares D 20,000 preferred shares and 200,000 common shares

A 100,000 preferred shares and 25,000 common shares each unit consists of 1 preferred issue, 100,000 units X 1 = 100,000 preferred shares. Since a warrant which enables one to buy 1/4 additional share is also attached to each unit, 100,000 units X 1/4 = 25,000 common shares issued if the warrants are exercised.

ABC Corporation has declared a rights offering to stockholders of record on Tuesday, June 22nd. Under the offer, shareholders need 20 rights to subscribe to 1 new share at a price of $60. Fractional shares can be rounded up to purchase 1 full share. A customer owning 240 shares wishes to subscribe. The market price of the stock is currently $73. The customer can buy: A 12 shares for $720 B 12 shares for $876 C 240 shares for $14,400 D 240 shares for $17,520

A 12 shares for $720 Since 20 rights are needed to buy 1 new share, the customer holding 240 shares, and therefore receiving 240 rights can buy 240 / 20 = 12 shares at $60 each = $720 total for 12 shares.

ABC 8% $100 par preferred is trading at $120 in the market. The current yield is: A 6.7% B 8.6% C 10.6% D 60.6%

A 6.7% $8 / $120 = 6.7%

ABC 10% $100 par preferred is trading at $115 in the market. The current yield is: A 8.7% B 9.5% C 10% D 11.5%

A 8.7% $10/$115= 8.7%

All of the following statements about warrants are true EXCEPT: A At issuance, warrants have intrinsic value B Warrant valuation is directly influenced by the valuation of the company's common stock C Warrant valuation reflects the life of the instrument D Warrant valuation reflects market expectations for future earnings of the company

A At issuance, warrants have intrinsic value

A company wants to raise capital using a security that will give the subscribers voting rights. What should the company issue? A Common stock B Preferred stock C Bonds D Warrants

A Common stock

Which of the following statements are TRUE about sponsored ADRs? I. Sponsored ADRs are sponsored by the issuing foreign corporation II. Sponsored ADRs are sponsored by the country in which the foreign corporation resides III. Sponsored ADRs provide financial statements to the ADR holder in English IV. Sponsored ADRs provide financial statements only in the native language of the issuing corporation A I and III B I and IV C II and III D II And IV

A I and III

Which statements are TRUE about shareholder rights? I. Common shareholders have preemptive rights II. Preferred shareholders have preemptive rights III. Common shareholders have voting rights IV. Preferred shareholders have voting rights A I and III B I and IV C II and III D II and IV

A I and III

Preferred dividends may be paid as: I. Cash II. Stock III. Stock of another company A I only B II only C I or II D I, II, III

A I only

A middle-aged widowed customer has an investment objective of stable income and would also like to receive occasional "extra" income to help pay unexpected bills. What type of preferred stock would be the best recommendation? A Participating preferred B Convertible preferred C Straight preferred D Variable rate preferred

A Participating preferred

If a company repurchases its own common shares, the number of: A outstanding shares will decrease B outstanding shares will increase C issued shares will decrease D unissued shares will increase

A outstanding shares will decrease

All of the following are terms associated with preferred stock EXCEPT: A renewable B cumulative C negotiable D convertible

A renewable

A corporation has issued 50,000,000 shares of common stock at $.50 par. The corporation has 10,000,000 shares of Treasury Stock on its books. The aggregate par value of the outstanding shares is: A $20,000,000 B $40,000,000 C $80,000,000 D $100,000,000

A. $20,000,000 Outstanding stock is: Issued stock (50,000,000 shares) minus Treasury stock (10,000,000 shares) = 40,000,000 shares outstanding at $.50 par = $20,000,000.

American Depositary Receipts would trade on all of the following exchanges EXCEPT the: A. London Stock Exchange B. New York Stock Exchange C. NASDAQ Stock Market D. American Stock Exchange

A. London Stock Exchange

A customer buys 100 shares of preferred at $51 per share. The par value is $50. The dividend rate is 8%. Each dividend payment would be: A. $200 B. $400 C. $600 D. $800

A. $200 annual rate is 8% X $50 par value = $4 per share X 100 shares = $400. Since preferred dividends are paid semi-annually, each payment is for $200.

A customer buys 100 shares preferred at $110 per share. The par value is $100. The dividend rate is 5%. Each dividend payment will be: A. $250 B. $275 C. $500 D. $550

A. $250 annual rate is 5% X $100 par value = $5 per share X 100 shares = $500. Since preferred dividends are paid semi-annually, each payment is $250.

XYZZ ADR represents 10% of the value of an XYZZ ordinary share. The ordinary shares trade on the London Stock Exchange, where the current price is 400 British Pounds (BP). The current exchange rate for the British Pound against the U.S. Dollar is $1.40. The ordinary share pays an annualized dividend of 12 BP, with payment made semi-annually. The XYZZ ADR is listed on the NYSE. If a customer places an order to buy $560,000 of the ADR on the NYSE, how much will the customer receive in each dividend payment? A. $8,400 B. $10,000 C. $16,800 D. $33,600

A. $8,400 XYZZ ordinary share trades = 400 BP in London. BP is worth $1.40. Each ordinary share is worth 400 x $1.4 = $560. The ADR created for the U.S. market is 1/10th of this amount, or $56 per U.S. ADR. A customer who invests $560,000 will buy $560,000 / $56 = 10,000 ADR shares. The annual dividend rate per ordinary share is 12 BP, so the semi-annual payment is 6 BP. Since the ADR is worth 1/10th of an ordinary share, this becomes .6 BP per ADR share x $1.40 exchange rate = $.84 per ADR share x 10,000 shares = $8,400.

ABC 10% $100 par preferred is trading at $115 in the market. The current yield is: A. 8.7% B. 9.5% C. 10% D. 11.5%

A. 8.7% $10 / $115 = 8.7%

A foreign security held in foreign branches of U.S. bank is a(n): A. ADR B. LIBOR C. Eurodollar deposit D. Banker's Acceptance

A. ADR

If a corporation wishes to sell additional shares, which of the following persons can subscribe using pre-emptive rights? A. Common stockholders B. Preferred stockholders C. Convertible preferred stockholders D. Bondholders

A. Common stockholders

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

A. I and II only

Which of the following pay dividends? I Preferred Stock II ADRs III Warrants IV Rights A. I and II only B. II and III only C. I, II, III D. I, II, IV

A. I and II only

Common dividends are usually: I. declared quarterly II. declared semi-annually III. Paid quarterly IV. paid semi-annually A. I and III B. I and IV C. II and III D. II and IV

A. I and III

When comparing the statutory voting method to the cumulative voting method, which of the following statements are TRUE? I. Cumulative voting gives the shareholder a disproportionate voting weight II. Statutory voting gives the shareholder a disproportionate voting weight III. Statutory voting allows the shareholder to apply as many votes per directorship as he has shares IV. Cumulative voting allows the shareholder to apply as many votes per directorship as he has shares A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding American Depositary Receipts? I. Exchange listed ADRs are sponsored II. Exchange listed ADRs are not sponsored III. Sponsored ADRs provide quarterly and annual reports to shareholders IV. Sponsored ADRs do not provide quarterly and annual reports to shareholders A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE regarding warrants? I. The exercise price of a warrant is set at a premium to the stock's current market price II. The exercise price of a warrant is set at a discount to the stock's current market price III. Warrants are exercised when the exercise price is below the market price IV. Warrants are exercised when the exercise price is above the market price A. I and III B. I and IV C. II and III D.II and IV

A. I and III

Which of the following statements are TRUE regarding warrants? I. Warrants give the holder the long term option to buy stock II. Warrants give the holder a 2 month option to buy stock III. The exercise price of a warrant is set at a premium to the stock's current market price IV. The exercise price of a warrant is set at a discount to the stock's current market price A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Which of the following statements are TRUE when comparing preferred stock to common stock: I. Preferred dividends are paid before common II. Preferred dividends are paid after common III. Preferred shareholders have a prior claim to assets upon liquidation before common shareholders IV. Common shareholders have a prior claim to assets upon liquidation before preferred shareholders A. I and III B. I and IV C. II and III D. II and IV

A. I and III

Dividends are paid to the holders of which of the following? I. ADRs II. Rights III. Treasury Stock IV. Warrants A. I only B. I and II C. II and III D. I, II, III, IV

A. I only

Dividends on preferred stock may be paid in: I. Cash II. Common shares of the same issuer III. Common shares of another issuer IV. Preferred stock of the same issuer A. I only B. II and III only C. I and IV only D. I, II, III, IV

A. I only

Which of the following terms describes common stock? A. negotiable B. redeemable C. non-negotiable D. callable

A. negotiable

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

A. outstanding shares will decrease

All of the following actions will dilute the shareholders' equity EXCEPT: A. payment of a stock dividend B. conversion of convertible preferred stock C. exercise of stock options granted to officers D. issuance of additional common shares

A. payment of a stock dividend

A proxy given to a caretaker to vote a stockholder's shares is a: A. power of attorney B. trading authorization C. discretionary authority D. voting trust

A. power of attorney

Of the following choices, the only method that will raise new funds for a corporation is to: A. sell additional common shares through a rights offering B. force conversion of outstanding convertible preferred C. split its common shares 2 for 1 D. call its outstanding preferred

A. sell additional common shares through a rights offering

At the time of issuance, a warrant has: A. time value B. intrinsic value C. dividend rights D. Voting rights

A. time value

A corporation has issued 20,000,000 shares of common stock at $2 par. The corporation has 5,000,000 shares of Treasury Stock on its books. The aggregate value of the outstanding shares is: A. $10,000,000 B. $30,000,000 C. $40,000,000 D. $50,000,000

B. $30,000,000 Outstanding stock is: Issued stock (20,000,000 shares) - Treasury stock (5,000,000 shares) = 15,000,000 shares outstanding at $2 par = $30,000,000 value.

ABC Corp. has a market price of $15 and a Price/Earnings multiple of 10. What was the corporation's Earnings Per Common Share? A $.67 B $1.50 C $10 D This cannot be determined

B $1.50 15 / 10 = $1.50

A customer buys 100 shares of preferred at $80 per share. The par value is $100. The dividend rate is 10%. The customer will receive how much in each dividend payment? A $400 B $500 C $800 D $1,000

B $500 The annual rate is 10% X $100 par value = $10 per share X 100 shares = $1000. Since preferred dividends are paid semi-annually, each payment is $500

A customer holds 100 shares of ABC Corp $100 par convertible preferred stock convertible at a 10 to 1 ratio. If ABC declares and pays a 10% stock dividend, then as of the payable date, the customer will now have: A 90 shares of ABC preferred stock B 100 shares of ABC preferred stock C 100 shares of ABC preferred stock and 10 shares of ABC common stock D 110 shares of ABC preferred stock

B 100 shares of ABC preferred stock If ABC declares and pays a 10% "common" stock dividend, the customer who holds convertible preferred stock still would have 100 shares. However, the conversion ratio which was initially 10 to 1 would reflect the stock dividend and would get adjusted to an 11 to 1 ratio (10% additional common shares into which the preferred is convertible). With a new conversion ratio of 11 to 1, the conversion price per share becomes: $100 par / 11 shares = $9.09 per share.

ABC 10% $100 par preferred is trading at $120 in the market. The current yield is: A 5% B 8.33% C 10% D 125

B 8.33% annual income $10 / market price $120 = 8.33%

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

B I and IV

Common dividends are paid: I. quarterly II. semi-annually III. on issued shares IV. on outstanding shares A I and III B I and IV C II and III D II and IV

B I and IV

Which of the following statements are TRUE about preferred stock? I. Dividends are paid before common II. Dividends are paid monthly III. Dividends are based on corporate earnings IV. Preferred shareholders have a prior claim to common shareholders A I and II B I and IV C II, III, IV D I, II, III, IV

B I and IV

Which of the following statements are TRUE regarding American Depositary Receipts? I. Non-sponsored ADRs trade over-the-counter II. Non-sponsored ADRs trade on exchanges III. Non-sponsored ADRs provide quarterly reports to shareholders IV. Non-sponsored ADRs provide annual reports to shareholders A I and III B I and IV C II and III D II and IV

B I and IV

Which of the following statements are TRUE regarding warrants? I. Warrants are typically issued with an exercise price that is higher than the stock's current market price II. Warrants are typically issued with an exercise price that is lower than the stock's current market price III. Warrants would be exercised when the stock's market price is below the warrant strike price IV. Warrants would be exercised when the stock's market price is above the warrant strike price A I and III B I and IV C II and III D II and IV

B I and IV

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

B I and IV

Voting of the common stockholder is required for which of the following? I. When a corporation wishes to issue convertible securities II. When a shareholder decides to accept a tender offer for the company's shares III. When a corporation declares a stock split IV. When a corporation declares a cash dividend A III and IV B I, II, III C I, II, IV D I, II, III, IV

B I, II, III

Which of the following do NOT pay dividends? I. Preferred Stock II. ADRs III. Warrants IV. Real Estate Investment Trust Shares A I only B III only C III and IV D II and IV

B III only

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

B Investor expectations about the future of the company

Which statement is TRUE regarding a corporation that has adopted cumulative voting? A Each stockholder must accumulate his votes and cast them for one director B Minority stockholders have the ability to elect the director of their choice C Each director must be elected by a majority of the shareholders D Minority stockholders are given proportionately more votes than majority stockholders

B Minority stockholders have the ability to elect the director of their choice

Callable preferred stock is likely to be redeemed by the issuer if: A interest rates rise B interest rates fall C the common stock price rises D the common stock price falls

B interest rates fall

Common shareholders have all of the following rights EXCEPT the right to: A attend the annual meeting of the company and physically cast their votes B vote for the general managers of the company C give their voting ability to a proxy by signing a power of attorney D vote for each individual proposed for election to the Board of Directors

B vote for the general managers of the company

A customer buys 100 shares of preferred at $101 per share. The par value is $100. The dividend rate is 8%. Each dividend payment will be: A. $80 B. $400 C. $800 D. $808

B. $400 The annual rate is 8% X $100 par value = $8 per share X the number of shares = $800. Since preferred dividends are paid semi-annually, each payment would be $400.

A customer buys 100 shares of preferred at $80 per share. The par value is $100. The dividend rate is 10%. The customer will receive how much in each dividend payment? A. $400 B. $500 C. $800 D. $1,000

B. $500 10% of $100 par = $10 annual dividend per preferred share. Since there are 100 shares, the annual dividend is $1,000. Remember, though, that preferred dividends are paid twice a year, so each payment will be for $500.

PDQ Company $10 par common stock is currently trading at $40. PDQ is currently paying a common dividend of $.20 per share quarterly. The current yield of PDQ stock is: A. 0.5% B. 2.0% C. 5.0% D. 8.0%

B. 2.0% $.80/$40= 2.00%

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 2 shares of preferred stock and a warrant to buy one additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have: A. 100,000 preferred shares and 100,000 common shares B. 200,000 preferred shares and 100,000 common shares C. 200,000 preferred shares and 50,000 common shares D. 50,000 preferred shares and 100,000 common shares

B. 200,000 preferred shares and 100,000 common shares

ABC 8% $100 par preferred is trading at $105 in the market. The current yield is: A. 6.6% B. 7.6% C. 8.6% D. 10.6%

B. 7.6% annual income $8 / market price $105 = 7.6%

ABC 10% $100 par preferred is trading at $120 in the market. The current yield is: A. 5% B. 8.33% C. 10% D. 125

B. 8.33% $10/$120= 8.33

Which of the following would be considered owners of a corporation? I. Common Shareholders II. Preferred Shareholders III. Right Holders IV. Warrant Holders A. I only B. I and II only C. I, II, III, IV D. None of the above

B. I and II only

Which of the following would be considered to be owners of a corporation? I. Common Shareholders II. Preferred Shareholders III. Convertible Bondholders IV. Warrant Holders A. I only B. I and II only C. I, II, IV D. I, II, III, IV

B. I and II only

Common dividends are paid: I. quarterly II. semi-annually III. On issued shares IV. on outstanding shares A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements are TRUE regarding the effect of a repurchase of Treasury Stock? I. Outstanding shares are reduced II. Outstanding shares are increased III. earnings Per Share are reduced IV. Earnings Per Share are increased A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE about the time value and intrinsic value of rights and warrants when issued? I. Warrants have time value at issuance II. Warrants have intrinsic value at issuance III. Rights have time value at issuance IV. Rights have intrinsic value at issuance A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which statements are TRUE about the time value and intrinsic value of rights and warrants when issued? I. Warrants have time value but not intrinsic value II. Warrants have intrinsic value but not time value III. Rights have time value but not intrinsic value IV. Rights have intrinsic value but not time value A. I and III B. I and IV C. II and III D. II and IV

B. I and IV

Which of the following statements about warrants are TRUE? I. Warrants are issued to make corporate senior securities offerings more attractive to investors II. Warrants give the holder a perpetual interest in the issuer's underlying common stock III. Warrants trade separately from the stock of the company IV. Warrants have a longer term than rights A. I and II only B. I, III, IV C. II, III, IV D. I, II, III, IV

B. I, III, IV

The market price of common stock will be influenced by which of the following? I. the par value of the shares II. expectations for future earnings of the company III. Expectations for future dividends to be paid by the company IV. Book value of the company A. I and IV B. II and III C. I, II, III D. II and IV

B. II and III

When the market price of ACME Common stock is at $45, which of the following actions, when completed by ACME Corporation, would raise additional capital? I. Declaration of a 2 for 1 stock split II. Announcement of a rights distribution, allowing existing shareholders to buy the stock at $35 per share III. Announcement of a call of ACME $100 par convertible preferred at par, convertible at a 2.5:1 ratio IV. Announcement of an offering of callable preferred stock A. I and II only B. II and IV only C. III and IV only D. I, II, III, IV

B. II and IV only

Which of the following statements are TRUE regarding Treasury Stock? I. Treasury Stock receives dividends II. Treasury Stock votes III Treasury Stock reduces the number of shares outstanding IV. treasury Stock purchases are used to increase reported Earnings Per Share A. I and II B. III and IV C. II, III, IV D. I, II, III, IV

B. III and IV

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

B. Investor expectations about the future of the company

The essential difference between a sponsored and an unsponsored ADR is: A. SEC registration B. Issuer sponsorship C. Bank sponsorship D. Broker-dealer market making

B. Issuer sponsorship

A company's common stock is selling in the market at a "multiple of 10". If the market price of the common stock is currently $10, which statement is TRUE? A. The company has paid dividends of $1 per share this year B. The company has earnings per share of $1 this year C. The company has paid dividends of $100 per share this year D. The company has earnings per share of $100 this year

B. The company has earnings per share of $1 this year

A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights tendered, a shareholder may purchase one additional share at $20 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A. The shareholder can buy a maximum of 10 shares by paying $20 B. The shareholder can buy a maximum of 11 shares by paying $220 C. The shareholder can buy a maximum of 11 shares by paying $420 D. The shareholder can buy a maximum of 110 shares by paying $2,200

B. The shareholder can buy a maximum of 11 shares by paying $220

Which statement is TRUE about the time value and intrinsic value of rights and warrants when issued? A. Both have time value and intrinsic value at issuance B. Warrants have time value and rights have intrinsic value at issuance C. Warrants have intrinsic value and rights have time value at issuance D. Neither has time value or intrinsic value at issuance

B. Warrants have time value and rights have intrinsic value at issuance

The exercise price of a warrant is set at issuance at: A. a discount to the market price of the common stock B. a premium to the market price of the common stock C. the market price of the common stock D. any price designated by the issuer

B. a premium to the market price of the common stock

An investor who wishes to vote at a company's annual meeting: A. must physically attend the meeting B. can vote by proxy C. can vote by assignment D.can vote by appointment

B. can vote by proxy

ADRs are used to: A. facilitate trading of domestic securities in foreign countries B. facilitate trading of foreign securities in the United States C. allow trading of rights on exchanges D. allow trading of warrants on exchanges

B. facilitate trading of foreign securities in the United States

Preferred stock has all of the following features as compared to common stock EXCEPT: A. fixed rate of return B. fixed maturity C. priority claim to dividends declared D. priority claim to assets upon dissolution

B. fixed maturity

Callable preferred stock is likely to be redeemed by the issuer if: A. interest rates rise B. interest rates fall C. the common stock price rises D. the common stock price falls

B. interest rates fall

The definition of Treasury stock is: A. authorized shares minus issued shares B. issued shares minus outstanding shares C. authorized shares minus outstanding shares D. capital in excess of par value minus par value

B. issued shares minus outstanding shares

The definition of Treasury Stock is: A. issued shares which are outstanding B. issued shares which are no longer outstanding C. unissued shares which are outstanding D. unissued shares which are no longer outstanding

B. issued shares which are no longer outstanding

The definition of Treasury Stock is: A. issued stock minus authorized stock B. issued stock minus outstanding stock C. authorized stock minus outstanding stock D. outstanding stock minus authorized stock

B. issued stock minus outstanding stock

Common dividends are usually paid: A. monthly B. quarterly C. semi-annually D. annually

B. quarterly

The Price / Earnings Ratio is a measure of: A. profitability B. valuation C. volatility D. velocity

B. valuation

Voting of the common stockholder is required for all of the following EXCEPT: A. when a corporation declares a stock split B. when a 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

B. when a corporation declares a stock dividend

A company's common stock is selling in the market at a "multiple of 20". If the market price of the common stock is currently $10, what is the earnings per share? A $.02 B $.20 C $.50 D $2.50

C $.50 "multiple" of 20, this means that the market price is 20 times the current earnings per share. Since the market price is at $10 and the P/E ratio is 20, earnings per share is $.50.

A company's common stock is selling in the market at a "multiple of 15". If the market price of the common stock is currently $10, what is the earnings per share? A $.15 B $.16 C $.67 D $1.50

C $.67 $10/15 = .67

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: A $20,000,000 B $40,000,000 C $80,000,000 D $100,000,000

C $80,000,000 Outstanding stock is: Issued stock (50,000,000 shares) minus Treasury stock (10,000,000) = 40,000,000 shares outstanding at $2 par = $80,000,000.

XYZZ ADR represents 10% of the value of an XYZZ ordinary share. The ordinary shares trade on the London Stock Exchange, where the current price is 400 British Pounds (BP). The current exchange rate for the British Pound against the U.S. Dollar is $1.40. The ordinary share pays an annualized dividend of 12 BP. The XYZZ ADR is listed on the NYSE. If a customer places an order to buy $560,000 of the ADR on the NYSE, the customer will buy how may shares of the ADR? A 1,000 B 1,400 C 10,000 D 14,000

C 10,000 XYZZ ordinary share trades for 400 BP in London, and the BP is worth $1.40, each ordinary share is worth 400 x $1.4 = $560. The ADR created for the U.S. market is 1/10th of this amount, or $56 per U.S. ADR. A customer who invests $560,000 will buy $560,000 / $56 = 10,000 ADR shares.

An ADR has been issued where each ADR equals 10 ordinary shares of the foreign issuer. If a client wished to buy enough ADRs to cover 1,000 ordinary shares, how many ADRs must be purchased? A 1 B 10 C 100 D 1,000

C 100 ADR equals 10 ordinary shares, the purchase of 100 ADRs would cover 1,000 ordinary shares. Note that when the foreign shares are inexpensive, it is typical for the ADR to cover a "multiple" of shares; and when the foreign shares are expensive, it is typical for the ADR to cover a "fraction" of shares.

Which of the following securities represent equity ownership of a corporation? I. Convertible preferred stock II. Warrants III. Preferred stock IV. Common stock A IV only B I and III only C I, III, IV D I, II, III, IV

C I, III, IV

Cumulative voting is considered to be an advantage as it: I. allows a proportionate voting weight II. allows a disproportionate voting weight III. Is considered to be an advantage for the smaller investor IV. Is considered to be an advantage for the larger investor A I and III B I and IV C II and III D II and IV

C II and III

If interest rates fall, issuers most likely will call: I. low dividend rate preferred issues II. high dividend rate preferred issues III. preferred issues trading at a premium IV. preferred issues trading at a discount A I and III B I and IV C II and III D II and IV

C II and III

If interest rates fall, issuers most likely will call: I. preferred issues with low interest rates II. preferred issues with high interest rates III. preferred issues with low call premiums IV. preferred issues with high call premiums A I and III B I and IV C II and III D II and IV

C II and III

Which of the following statements are TRUE when comparing convertible preferred stock and non-convertible preferred stock? I. Convertible preferred stock will have a higher yield than non-convertible preferred stock II. Convertible preferred stock will have a lower yield than non-convertible preferred stock III. Convertible preferred stockholders benefit as the market price of the common stock rises IV. Convertible preferred stockholders benefit as the market price of the common stock falls A I and III B I and IV C II and III D II and IV

C II and III

Stockholder approval is needed if a corporation wishes to: I pay a cash dividend II Split its stock 2 for 1 III. repurchase shares for its Treasury IV. issue convertible securities A I and IV B II and III C II and IV D I, II, III, IV

C II and IV

A corporation can pay a dividend in which of the following fashions? I. Distributing tax credits to shareholders II. Distributing the stock of another company to shareholders III. Making a stock distribution to shareholders IV. Making a cash distribution to shareholders A I and II only B I, III, IV C II, III, IV D I, II, III, IV

C II, III, IV

Which of the following are rights of a common shareholder? I Right to manage II Right to transfer shares III Right to receive a dividend IV Right to vote A I and III only B II and IV only C II, III, IV D I, II, III, IV

C II, III, IV

To determine if a stock appears to be overpriced, what would be examined? A The company's Earnings Per Share B The company's Dividend Payout Ratio C The company's Price to Earnings Ratio D The company's Debt to Equity Ratio

C The company's Price to Earnings Ratio

All of the following pay dividends EXCEPT: A Preferred Stock B ADRs C Warrants D Real Estate Investment Trust Shares

C Warrants

As interest rates rise, preferred stock prices will: A remain unaffected B rise C fall D fluctuate

C fall

All of the following are methods of dividend payment EXCEPT: A cash B stock C rights D product

C rights

XYZ Company has issued 10%, $100 par non-cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of: A. $0 B. $5 C. $10 D. $15

C. $10 noncumulative = only make this year's preferred dividend distribution stated dividend rate preferred = 10% based on $100 par, so $10 of preferred dividends must be paid per share.

A corporation has issued 100,000,000 shares of common stock at $1 par. The corporation has 25,000,000 shares of Treasury Stock on its books. The aggregate value of the outstanding shares is: A. $12,500,000 B. $25,000,000 C. $75,000,000 D. $100,000,000

C. $75,000,000 Outstanding stock is: Issued stock (100,000,000 shares) minus Treasury stock (25,000,000 shares) = 75,000,000 shares outstanding at $1 par = $75,000,000.

ABC Company has outstanding 10% noncumulative preferred stock. Two years ago, ABC paid a 6% preferred dividend. Last year, ABC paid a 7% preferred stock dividend. This year, ABC wishes to pay a common dividend. The preferred shareholders must receive: A. 0% B. 7% C. 10% D. 17%

C. 10%

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 2 shares of preferred stock and a warrant to buy one half additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have outstanding: A. 100,000 preferred shares and 100,000 common shares B. 200,000 preferred shares and 100,000 common shares C. 200,000 preferred shares and 50,000 common shares D. 50,000 preferred shares and 100,000 common shares

C. 200,000 preferred shares and 50,000 common shares

PDQ Company $1 par common stock currently trading at $55. PDQ is currently paying a quarterly common dividend of $1.10 per share. The current yield of PDQ stock is: A. 2.0% B. 4.4% C. 8.0% D. 44.0%

C. 8.0% (1.10 X 4) = $4.40 ANNUAL INCOME $4.40 / MARKET PRICE $55 = 8%

PDQ Company $10 par common stock is currently trading at $40. PDQ is currently paying a quarterly common dividend of $.90 per share. The current yield of PDQ stock is: A. 2.25% B. 4% C. 9% D. 10%

C. 9% $3.60/$40= 9%

All of the following statements are true about ADRs EXCEPT: A. ADRs trade on national stock exchanges B. ADR holders receive dividends C. ADR holders can vote for the Board of Directors D. ADR holders receive the cash value of pre-emptive rights

C. ADR holders can vote for the Board of Directors

All of the following statements are true about American Depositary Receipts EXCEPT: A. ADRs facilitate domestic trading of foreign securities B. ADR holders receive dividends C. ADR holders have voting and pre-emptive rights D. ADRs are issued by domestic banks

C. ADR holders have voting and pre-emptive rights

Dividends on preferred stock may only be paid in: A. Common shares of another issuer B. Common shares of the same issuer C. Cash D. Preferred stock of the same issuer

C. Cash

What type of preferred stock can move in price as the price of the common stock moves? A. Straight preferred B. Cumulative preferred C. Convertible preferred D. Participating preferred

C. Convertible preferred

All of the following statements are true about preferred stock EXCEPT: A. Preferred dividends are paid before common B. In most cases dividends are paid semi-annually C. Corporations must pay preferred dividends D. Preferred shareholders are paid before common shareholders upon liquidation of a corporation

C. Corporations must pay preferred dividends

Preferred stock has which of the following features? I. Fixed rate of return II. Priority claim to assets upon dissolution compared to common stock III. Priority claim to dividends declared compared to common stock IV. Fixed maturity A. I and II only B. III and IV only C. I, II, III D I, II, III, IV

C. I, II, III

Which of the following are terms associated with preferred stock? I. Convertible II. Callable III. Cumulative IV. Redeemable A. I and II B. III and IV C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following are types of preferred stock? I. Performance II. Participating III. Cumulative IV. Refundable A. I and III only B. II and IV only C. I, II, III D. I, II, III, IV

C. I, II, III

Which of the following features are common to both preferred stock and bonds? I. Fixed rate II. Can be callable III. Fixed maturity date IV. Semi-annual payments A. I and II B. III and IV C. I, II, IV D. I, II, III, IV

C. I, II, IV

Corporate dividend payments can be made in the form of: I. Cash or company products II. Listed options of that company III. Additional common shares of another company IV. Additional common shares of that company A. II, III, IV B. I, II, III C. I, III, IV D. I, II, III, IV

C. I, III, IV

Which of the following statements are TRUE about ADRs? I. ADR holders receive dividends II. ADR holders can vote for the Board of Directors III. ADR holders receive the cash value of pre-emptive rights IV. ADRs trade on national stock exchanges A. II, III, IV B. I, II, IV C. I, III, IV D. I, II, III, IV

C. I, III, IV

Which of the following statements are TRUE regarding warrants? I. Warrants are considered to be an equity-related security II. Warrant holders have pre-emptive rights III. Warrants allow the holder to buy the stock of that issuer at a fixed price IV. Warrants are attractive to speculators because of the leverage that they offer A. I and II only B. III and IV only C. I, III, and IV D. I, II, III, IV

C. I, III, and IV

Which of the following statements are TRUE when comparing convertible preferred stock and non-convertible preferred stock? I. Convertible preferred issues will have a higher yield than similar non-convertible yields of the same issuer II. Non-convertible preferred issues will have a higher yield than similar convertible yields of the same issuer III. Convertible preferred stockholders can benefit as the common stock price rises IV. Non-convertible preferred stockholders can benefit as the common stock price rises A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding ADRs? I. ADRs are vehicles for trading United States securities in foreign countries II. ADRs are vehicles for trading foreign securities in the United States III. ADR market prices are influenced by foreign currency exchange fluctuations IV. ADR market prices are not influenced by foreign currency exchange fluctuations A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding ADRs? I. Dividends are declared by the issuer of the underlying stock in U.S. dollars II. Dividends are declared by the issuer of the underlying stock in the foreign currency III. Receipt holders receive dividend payments in U.S. dollars IV. Receipt holders receive dividend payments in the foreign currency A. I and III B. I and IV C. II and III D. II and IV

C. II and III

Which statements are TRUE regarding participating preferred stock? Participating preferred: I. participates in any bond interest payments II. participates in "extra" common dividends declared by the Board of Directors III. has a dividend rate that is fixed as to a minimum but not as to a maximum IV. has a dividend rate that is fixed as to a maximum but not as to a minimum A. I and III B. I and IV C. II and III D. II and IV

C. II and III

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

C. II and IV

Common dividends can be paid in which of the following forms? I. Rights II. Product III. Stock IV. Cash A. I and IV B. I, III, IV C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which of the following statements about warrants are TRUE? I. At issuance, warrants have intrinsic value II. Warrant valuation is directly influenced by the market price of the common stock III. Warrant valuation reflects market expectations for future earnings of the company IV. Warrant valuation reflects the life of the instrument A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV

C. II, III, IV

Which of the following do NOT have an equity position? I. Convertible preferred shareholders II. Preferred shareholders III. Convertible debenture bondholders IV. Subordinated debenture bondholders A. I, II B. I, III, IV C. III, IV D. I, II, III, IV

C. III, IV

A corporation wishes to raise funds to build a new manufacturing facility. Which method is suitable for the issuer to obtain financing? A. Force conversion of outstanding convertible preferred B. Split the outstanding shares of common stock 2 for 1 C. Issue rights to outstanding shares of common stock D. Call outstanding convertible preferred

C. Issue rights to outstanding shares of common stock

During a period of stable interest rates, which type of preferred stock would show the greatest price volatility? A. Cumulative B. Adjustable rate C. Participating D. Callable

C. Participating

To determine if a stock appears to be overpriced, what would be examined? A. The company's Earnings Per Share B. The company's Dividend Payout Ratio C. The company's Price to Earnings Ratio D. The company's Debt to Equity Ratio

C. The company's Price to Earnings Ratio

An individual would examine a company's Price to Earnings Ratio in order to: A. determine whether the company has a reasonable level of liquidity B. assign a credit rating to the company C. determine if the stock is fairly valued D. assess the quality of the company's management

C. determine if the stock is fairly valued

Common stockholders and preferred stockholders BOTH have: A. Voting rights B. pre-emptive rights C. dividend rights D. subscription rights

C. dividend rights

Preferred stock market valuation is based primarily upon: A. future earnings expectations for the issuer B. short term market interest rate levels C. long term market interest rate levels D. future dividend payment expectations for the issuer

C. long term market interest rate levels

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): A. discretionary authority B. voting trust C. proxy D. trading authorization

C. proxy

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

C. 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

C. right to manage

Cumulative voting is considered to be an advantage to the: A. large investor B. institutional investor C. small investor D. novice investor

C. small investor

All of the following statements about warrants are true EXCEPT: A. warrants have a longer term than rights B. warrants are issued to make corporate senior securities offerings more attractive to investors C. warrants give the holder a perpetual interest in the issuer's underlying common stock D. warrants trade separately from the stock of the company

C. warrants give the holder a perpetual interest in the issuer's underlying common stock

At the beginning of the year, an investor buys 1,000 shares of XYZ stock, purchased at $33 per share. Subsequently, the stock rises to $40 by the end of the year and the stock pays a $4 dividend during the year. By the end of the following year, the stock has fallen to $25 and pays the same $4 dividend. What is the stock's dividend yield? A 4% B 10% C 12% D 16%

D 16% Dividend yield is based on the current market share price, not on cost of the stock. The annual dividend amount paid is $4 per year. Since the stock is currently trading at $25 per share, the dividend yield is $4 / $25 = 16%.

ABC Company has issued 10% cumulative preferred stock. Two years ago, ABC paid a 6% preferred dividend. Last year, ABC paid a 7% preferred dividend. This year, ABC wishes to pay a common dividend. The preferred shareholders must receive: A 0% B 7% C 10% D 17%

D 17% ince this is cumulative preferred stock, all missed dividends must be paid before a common dividend can be paid. Two years ago, 4% was missed; last year 3% (10% - 7% = 3%) was missed; and this year's preferred dividend of 10% must be paid before the common dividend is paid. The total preferred dividend to be paid is 17%.

A customer buys 100 shares of XYZ stock at $40. The stock pays a quarterly dividend of $.50. What is the dividend yield? A 1% B 1.25% C 4% D 5%

D 5% Common dividends are paid quarterly. The annual dividend rate is $2.00 ($.50 per calendar quarter x 4). The dividend yield is $2/$40 = 5%.

PDQ Company $1 par common stock currently trading at $34. PDQ is currently paying a quarterly common dividend of $.75 per share. The current yield of PDQ stock is: A 2.2% B 4.4% C 8.0% D 8.8%

D 8.8% $3 /$34 = 8.8%

Common stockholders have which of the following "rights"? I. The right to transfer ownership II. The right to inspect the books and records III. The right to maintain proportionate ownership IV. The right to vote if the corporation wishes to issue convertible bonds A III, IV B I, II, IV C II, III, IV D I, II, III, IV

D I, II, III, IV

Which of the following statements about warrants are TRUE? I. At issuance, warrants are "out of the money" II. Warrant valuation is influenced by the life of the instrument III. Warrant valuation is directly influenced by the valuation of the company's common stock IV. Warrant valuation reflects market expectations for future earnings of the company A I and IV only B II and III only C I, II, IV D I, II, III, IV

D I, II, III, IV

ABC Corporation has recently completed a $20,000,000 offering of 10% debentures due in 2035. Each bond was sold with a warrant attached that allows the holder to buy 10 shares of ABC common stock at $50 per share. The market price of ABC is currently $42. Which statement(s) are TRUE? I. The warrants help to increase the issue's marketability II. The warrants help to lower the interest cost on the issue III. The warrants are "under water" IV. The company will raise an additional $10,000,000 if the warrants are exercised A I only B I and II C III and IV D I, II, III, IV

D I, II, III, IV Warrants are "sweeteners" that are attached to bond and preferred stock offerings to make them more marketable. Because the warrants have potential value, the issue can typically be sold at a lower interest cost (higher price) than if the warrants were not attached. At issuance, the warrants are usually issued "out the money" - as in this example the warrants allow the stock to be purchased at $50 but the stock's current value is $42. Thus, these warrants are said to be "under water" and will not have real value until the stock price rises above $50. If the warrants are exercised, the 20,000 debentures issued ($20,000,000/ $1,000 par) can be converted into 10 shares of stock each for a total issuance of 200,000 shares. The company will receive $50 per share, for a total of $10,000,000.

Which of the following actions by a corporation will affect an individual common shareholder's equity? I. Declaration of a stock dividend or stock split II. Conversion of convertible preferred stock III. Repurchase of common shares IV. Issuance of additional common shares A I and III B II and IV C III and IV D II, III, IV

D II, III, IV

A middle-aged widowed customer has an investment objective of stable income and wants minimal market and liquidity risk. What type of preferred stock would be the best recommendation? A Participating preferred B Convertible preferred C Straight preferred D Variable rate preferred

D Variable rate preferred

In a corporate liquidation, common stockholders are paid: A first B after creditors but before preferred stockholders C after bondholders but before preferred stockholders D last

D last

Corporate dividend payments can be made in all of the following ways EXCEPT: A cash or company products B additional common shares of that company C additional common shares of another company D listed options of that company

D listed options of that company

Which of the following terms applies to common stock? A convertible B redeemable C non-negotiable D non-callable

D non-callable

Which security of the same issuer is likely to give the highest current yield? A warrant B common stock C convertible preferred stock D non-convertible preferred stock

D non-convertible preferred stock

All of the following terms describe rights EXCEPT: A exercisable B negotiable C giftable D redeemable

D redeemable

All of the following statements are true regarding warrants EXCEPT: A warrants allow the holder to buy the stock of that issuer at a fixed price B warrants give the holder a long term option to buy the stock C warrants are attractive to speculators because of the leverage that they offer D warrant holders have pre-emptive rights

D warrant holders have pre-emptive rights

ABC Company has issued 8%, $100 par, cumulative preferred stock. Two years ago, ABC paid a 4% preferred dividend. Last year, ABC paid a 5% preferred stock dividend. This year, ABC wishes to pay a common dividend. If the preferred stock is now trading at $94, a customer who owns 100 shares of the company's preferred stock will receive: A. $700 B. $800 C. $1,000 D. $1,500

D. $1,500

A company's common stock is selling in the market at a "multiple" of 15. If the market price of the common stock is currently $15, what is the earnings per share? A. $.10 B. $.15 C. $.30 D. $1.00

D. $1.00 When a stock is selling at a "multiple" of 15, this means that the market price is 15 times the current earnings per share. Since the market price is at $15 and the P/E ratio is 15, earnings per share is $1.00.

A customer buys 1,000 shares of ABCD $25 par 8% cumulative preferred stock. This preferred issue pays quarterly dividends. This year, it missed the first 3 quarterly dividends. In the 4th quarter, it paid a common dividend of $.25 per share. In order to do this, it must have paid this preferred shareholder: A. $400 B. $500 C. $1,600 D. $2,000

D. $2,000

XYZ Company has issued 10%, $100 par cumulative preferred stock. Two years ago, XYZ omitted its preferred dividend. Last year, it paid a preferred dividend of $5 per share. This year, XYZ wishes to pay a common dividend. In order to make the distribution to common shareholders, each preferred share must be paid a dividend of: A. $5 B. $15 C. $20 D. $25

D. $25

ABC Company has outstanding 6% cumulative preferred stock. Two years ago, ABC paid a 6% preferred dividend. Last year, ABC paid a 4% preferred stock dividend. This year, ABC wishes to pay a common dividend. The preferred shareholders must receive: A 0% B 2% C 6% D 8%

D. 8% Cumulative preferred stock= all unpaid dividends PLUS this year's preferred dividend must be paid before a common dividend is paid. 2 years ago the full 6% preferred dividend was paid, so there is no arrearage; last year only 4% was paid, so 2% was missed. Before a common dividend can be paid this year, the missing 2% plus this year's 6% preferred dividend, or a total of 8% must be paid.

Securities that are the means by which foreign issues are traded in the United States are termed: A. Rights B. Options C. Warrants D. ADRs

D. ADRs

Which of the following actions taken by a corporation will raise additional capital? A. Declaration of a stock split B. Announcement of a call of all convertible preferred shares at par C. Declaration of a stock dividend D. Announcement of a rights distribution allowing existing shareholders to buy the additional stock

D. Announcement of a rights distribution allowing existing shareholders to buy the additional stock

In a corporate liquidation, the last to get paid is: A. Unpaid wages and taxes B. Bondholders C. Preferred stockholders D. Common stockholders

D. Common stockholders

During periods of stable interest rates and increasing stock prices, which type of preferred stock will have the greatest price volatility? A. Cumulative B. Reset C. Callable D. Convertible

D. Convertible

Which statements are TRUE regarding warrants? I. Warrants generally have a life of 5 years or less II. At issuance, the exercise price of the warrant is set higher than the current market price of the underlying common stock III. The price of the warrant will vary with the price movements of the underlying stock IV. The price of the warrant will vary depending upon the time to expiration of the warrant A. I and II only B. III and IV only C. II, III, IV D. I, II, III, IV

D. I, II, III, IV

Which of the following statements are TRUE regarding rights? I. Rights give the holder the long term option to buy stock II. Rights give the holder a very short term option to buy stock III. The exercise price of a right is set at a premium to the stock's current market price IV. The exercise price of a right is set at a discount to the stock's current market price A. I and III B. I and IV C. II and III D. II and IV

D. II and IV

Which of the following actions by a corporation will affect an individual common shareholder's equity? I. Declaration of a stock dividend or stock split II. conversion of convertible preferred stock III. Repurchase of common shares IV. Issuance of additional common shares A. I and III B. II and IV C. III and IV D. II, III, IV

D. II, III, IV

The common stockholder has all of the following rights EXCEPT: A. Voting rights B. Pre-emptive rights C. Dividend rights D. Management rights

D. Management rights

What term would apply to Authorized Stock? A. Issued B. Outstanding C. Voting D. Par Value

D. Par Value

All of the following are types of preferred stock EXCEPT: A. Performance B. Participating C. Cumulative D. Refundable

D. Refundable

Which statement is BEST regarding participating preferred stock? A. The dividend rate is fixed B. The dividend rate varies depending on the decision of the Board of Directors C. The dividend rate is fixed as to maximum but not as to minimum D. The dividend rate is fixed as to minimum but not as to maximum

D. The dividend rate is fixed as to minimum but not as to maximum

A customer owns 256 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 15 rights tendered, a shareholder may purchase one additional share at $24 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE? A. The shareholder can buy a maximum of 15 shares by paying $360 B. The shareholder can buy a maximum of 16 shares by paying $384 C. The shareholder can buy a maximum of 17 shares by paying $408 D. The shareholder can buy a maximum of 18 shares by paying $432

D. The shareholder can buy a maximum of 18 shares by paying $432 The terms of the rights offering are that fractional holdings are rounded up to buy 1 additional share. This person owns 256 shares and thus, will receive 256 rights. 256 rights / 15 rights per share = 17.06 shares, which is rounded up to 18 shares @ $24 each = $432 necessary to subscribe.

American Depositary Receipts pay dividends in: A. Eurodollars B. European currency Units C. Foreign Currency D. U.S. Dollars

D. U.S. Dollars

A corporation can pay a dividend in all of the following fashions EXCEPT: A. making a cash distribution to shareholders B. making a stock distribution to shareholders C. distributing the stock of another company to shareholders D. distributing tax credits to shareholders

D. distributing tax credits to shareholders

All of the following statements are true regarding the effect of the purchase of Treasury Stock EXCEPT: A. the number of outstanding shares is reduced B. the earnings per share is increased C. the market price of the stock will increase D. the number of authorized shares will be reduced

D. the number of authorized shares will be reduced