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Jan 9, 2024

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Kuhns Corp. has 200,000 shares of preferred stock outstanding that is cumulative. The dividend is $6.50 per share and has not been paid for 3 years. If Kuhns retained earnings and after-tax income this year total $3 million, what could be the maximum payment to the preferred shareholders on a per share basis? a. $6.50 per share b. $15.00 per share C. $19.50 per share d. $13.00 per share Total preferred share= 200,000 Income this year=3000,000 Total prefer dividend accumulate=200,000*6.50*3=3,900,000 Maximum dividend payment=3000,000/200,000=15 Which of the following is not a true statement? a. Common shareholders are legally entitled to some dividend. b. A minority interest can still elect members to the board of directors under cumulative voting even though someone else owns 51% of the stock. C. Common shareholders have a residual claim to income. d. Bondholders may force a corporation into bankruptcy for failure to make interest payments. SED Corporation's shares are currently trading at $52.50. Shareholders have the right to buy 1 share of SED for every 5 rights they own at a price of $48.00. SED'srightstradeat$_ 7

Preferred shareholders have a contractual claim against a corporation for dividends not declared by the Board of Directors. Select one: True False Pre-emptive rights do not protect shareholders from dilution of their ownership position. Select one: True False A common shareholder cannot force a company into bankruptcy for eliminating the dividend. Select one: True False Advantages that the American Depositary Receipts (ADRs) have over investing in actual shares of a foreign stock include all but the following: a. Have annual reports and financial statements presented in French, Spanish and Mandarin. b. ADRs are more liquid and less expensive than buying foreign stock directly. C. Unlike direct foreign stock, ADRs have financial statements presented in a US GAAP or IFRS format. d. Dividends are paid in dollars and easier to collect than actual shares of foreign stock. If @ corporate charter includes a provision for pre-emptive rights, the shareholders: ?fiay purchase existing treasury shares. gét first option to buy additional issues of common shares. ?r.must sell their shares to the company. Sénnot utilize cumulative voting procedures. Share classes are like bond ratings in that they are used to rank the performance of different corporation's stock. Select one: True False

The period during a rights offering when the shares no longer include rights to purchase additional shares of common stock is called the ex-rights period. Select one: True False American Depositary Receipts (ADRs) are: a. certificates in U.S. companies that allow foreign investors to buy shares of American companies. b. certificates that have a legal claim on an ownership interest in a foreign company's common stock. C. receipts sent to foreign shareholders who own American companies. d. proof of ownership for Eurodollar deposits held by Americans. The dividend rate changes quarterly relative to money market rates. To the corporate investor, preferred stock offers which of the following advantages? a. 25% of preferred dividends are tax-exempt. b. A slightly higher yield than debt. C. 100% of preferred dividends are tax-exempt. d. Less risk than bonds due to ownership. All the following statements are true except: Sbison pills discourage potential high takeover bids. gbison pills discourage hostile takeovers. ghareholders must approve the acceptance of poison pill strategies before a corporation can use them. ?fiany institutional investors are opposed to the poison pill. Preferred stock dividends are a deductible expense for a corporation. Select one: True

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False Generally, the receipt of corporate bond interest is more valuable than preferred dividends to corporate investors. Select one: True False The difference between the rights-on and ex-rights price is equal to the subscription price divided by N. Select one: True False A firm has 200,000 outstanding shares and 11 directors. Doug owns 15,500 shares of this firm. How many directors can Doug elect with cumulative voting? WANOHTOW Participating preferred stock is advantageous to common shareholders. Select one: True False The floating rate feature on preferred stock causes more volatility in its price. Select one: True False