Which statement is correct? Question 8 options: A corporation need only pay dividends when it declares them to be payable. A company can avoid a cumulative dividend on preferred shares if it declares dividends on common shares. Dividends are never discretionary payments. Companies must pay the shareholders interest to compensate for the time value of money lost on the deferral of dividend payments. No entry

Which statement is correct? Question 8 options: A corporation need only pay dividends when it declares them to be payable. A company can avoid a cumulative dividend on preferred shares if it declares dividends on common shares. Dividends are never discretionary payments. Companies must pay the shareholders interest to compensate for the time value of money lost on the deferral of dividend payments. No entry

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter15: Shareholders’ Equity: Capital Contributions And Distributions

Section: Chapter Questions

Problem 10Q

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* Your answer is incorrect. A company may repurchase its own shares for all of the following reasons, except O to reduce the number of shares issued and thereby increase earnings per share and return on equity. to have additional shares available for use in the acquisition of other companies. O to attempt to influence the market price of the shares. O to reduce the number of shares issued in order to meet debt to equity bank covenant requirements.
A corporation that is not taxable issues preferred stock to lower their financing costs because Blank______. Multiple choice question. preferred dividends are non-taxable, whereas interests are taxable preferred dividends are significantly lower than interest payments a new issue of preferred stock does not affect the debt-to-equity ratio of the firm a new issue of preferred stock decreases the total equity of the firm
Why might a company repurchase its own stock? A) It believes that the market undervalues its shares B) To offset dilutive effects of employee stock options granted C) To recognize an economic gain when the treasury shares are later sold for a profit D) To improve earnings per share by reducing the denominator E) All of the above is it just A and B or is it all of the above
A corporation that is not taxable issues preferred stock to lower their financing costs because Blank______. Multiple choice question. a new issue of preferred stock decreases the total equity of the firm a new issue of preferred stock does not affect the debt-to-equity ratio of the firm preferred dividends are significantly lower than interest payments preferred dividends are non-taxable, whereas interests are taxable
To the extent that shares sold during an IPO are discounted from their appropriate price, the proceeds that the issuing firm receives from the IPO are lower than it deserves. Question 21 options: True False
2. Which of the following is a characteristic of preferred stock?A. Give voting rights to its owner.B. It is like annuity.C. Investors cannot force the payment of the dividend.D. Dividends are tax-deductible for the firm as opposed to interest payment.
The excess of issue price over par of common stock is termed a(n) a. income O b. premium C. discount O d. deficit
Which of the following statements are true of preferred dividends? More than one answer may be correct. Multiple select question. Preferred dividends are like interest on a bond. Companies have no obligation to pay the dividends on preferred shares. Directors elected by common shareholders cannot defer preferred dividends indefinitely. Unpaid preferred dividends are not debts of the firm
Which of the following transactions would most likely affect shareholders’ equity? Group of answer choices Retirement of treasury shares Retirement of ordinary shares None of the choices Declaration of a large bonus issue Expiration of stock rights
Mf4. All of the following are advantages of a stock dividend distribution to shareholders on account as of ex-dividend date except? a. preserves cash balances of the firm to be used for other investment opportunities b. decrease in share price may attract new investors to raise additional capital c. bonus share distribution dilutes the share price d. not treated as a taxable event for investors and shareholders until sold e. none of the above
Which of the following statements concerning common stock and the investment banking process is NOT CORRECT? a. The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue. b. The announcement of a large issue of new stock could cause the stock price to fall. This loss is called "market pressure," and it is treated as a flotation cost because it is a cost to stockholders that is associated with the new issue. c. If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market. d. Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm. e. Stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. If stockholders are dissatisfied with…
Why would a company choose to not pay dividends on its common stock?

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	A corporation need only pay dividends when it declares them to be payable.
	A company can avoid a cumulative dividend on preferred shares if it declares dividends on common shares.
	Dividends are never discretionary payments.
	Companies must pay the shareholders interest to compensate for the time value of money lost on the deferral of dividend payments. No entry