Which of the following is true regarding preferred stock, common stock & debt? Preferred stock pays a dividend that is a tax deductible expense to the company. Common stock dividends are not tax deductible. Preferred stockholders have voting rights. Preferred shareholders have a higher claim on the firm's earnings than do bondholders. Preferred dividends are a contractual obligation of the firm. Common shareholders have voting rights. Dividends on common stock are perpetual. If a firm stops paying common dividends, it must repay shareholders those dividends it missed. Interest on debt is at at the discretion of management and can be stopped or suspended if the firm has financial difficulty. Preferred and common stock are perpetual - meaning that they have infinite maturities. Preferred & common dividends are not contractual obligations of the firm and are not tax deductible expenses. Preferred dividends, while not contractual, are much more stable than common dividends and are often considered to be like perpetual debt.

Which of the following is true regarding preferred stock, common stock & debt? Preferred stock pays a dividend that is a tax deductible expense to the company. Common stock dividends are not tax deductible. Preferred stockholders have voting rights. Preferred shareholders have a higher claim on the firm's earnings than do bondholders. Preferred dividends are a contractual obligation of the firm. Common shareholders have voting rights. Dividends on common stock are perpetual. If a firm stops paying common dividends, it must repay shareholders those dividends it missed. Interest on debt is at at the discretion of management and can be stopped or suspended if the firm has financial difficulty. Preferred and common stock are perpetual - meaning that they have infinite maturities. Preferred & common dividends are not contractual obligations of the firm and are not tax deductible expenses. Preferred dividends, while not contractual, are much more stable than common dividends and are often considered to be like perpetual debt.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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As a shareholder, preemptive rights are important because it Select one: a. results in higher dividends per share. b. is included in every corporate charter. c. allows managers to buy additional shares below the current market price. d. protects bondholders and thus enables the firm to issue debt with relatively low interest rates e. protects current shareholders against a dilution of ownership interests. You recently sold 100 shares of Pfizer stock, and the transfer was made through a broker. This is an example of: Select one: a. A secondary market transaction. b. A primary market transaction. c. A money market transaction. d. A futures market transaction. e. An over-the-counter market transaction. Which of the following statements is CORRECT? Select one: a. If a coupon bond is selling at par, its current yield equals its yield to maturity. b. If rates fall after its issue, a zero-coupon bond could trade at a price above its maturity (or par) value. c. If rates fall rapidly, a…
(Multiple Choice) A corporation can only pay dividends to shareholders from its: 1. Legal Capital 2. Authorized Shares 3. Retained Earnings 4. Contributed Capital 5. Share Capital
Which one of the following accurately describes the features of preferred stock? Preferred dividends must be paid before dividends can be paid to common stockholders. A frim can go bankrupt for not paying preferred dividends. Preferred dividends are noncumulative. Preferred dividends cannot be deferred indefinitely. Similar to common stock, preferred stock generally carries voting rights.
Which one is the most incorrect? Non-cumulative preferred stocks are entitled only to earnings that have been declared and paid. Preferred stock provides a more stable income to investors than common stock. One of the advantages to the firm associated with preferred stock financing rather than common stock financing is that control of the firm is not diluted. One of the advantages to the firm of financing with preferred stock is that 65% of the dividends paid out are tax deductible.
1. What's the difference between paid-up capital and paid-in capital, please explain detail clearly, if the company buy back their capital , this action will affect to paid-up capital and paid-in capital in same amount or not. 2. Does the unissued stock of the company always equal to autorized stock minus issued stock.
which one is correct please confirm? QUESTION 32 Most states limit dividend policy by requiring that dividends ____. a. not be paid unless the firm generates net earnings during the most recent year b. not be paid when the firm is insolvent c. be paid out of the firm’s capital d. be paid only out of retained earnings
i. Critically examine the factors that necessitate the issue ofpreference shares by companies. ii. Most companies in our part of the world prefer to befinanced by ordinary capital to preference capital. Discuss
1. The pre-emptive right of a common stockholder is the right to Choices; share proportionately in corporate assets upon liquidation. share proportionately in any new issues of stock of the same class. receive cash dividends before they are distributed to preferred stockholders. exclude preferred stockholders from voting rights. 2. In computing diluted earnings per share, interest expense on convertible bond payable should be Choices ignored Added back to net income net of tax Added back to net income at gross Deducted from net income net of tax Clear selection
In some circumstances, corporations will buy back their own stock – called Treasury Stock. Identify three reasons why a company may choose to do so.
Which of the following statements correctly relate to ordinary shares? i) They represent an ownership interest.ii) Ordinary equity holders are the first to have their claims met in the event of the company going into administration.iii) As dividends are the return to the shareholders, they are paid out of operating profits before tax.iv) Control rights often differ between ordinary and other classes of share.
If a preferred stock is of the cumulative type, a. dividends cannot be passed if they are earned. b. unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders. c. dividends must be paid, and if not a liability is created. d.dividends must be paid on an equal basis with common stock, so long as earnings permit.
Is there a type of stock preferable over the other? Should a corporation also utilize borrowing if it is already issuing stock?

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