Podcast
Questions and Answers
What is the term used for common stockholders who are entitled to dividend income only after all other obligations have been met?
What is the term used for common stockholders who are entitled to dividend income only after all other obligations have been met?
- Residual Owners (correct)
- Primary Owners
- Priority Owners
- Guaranteed Owners
What is the main reason investors buy common stocks?
What is the main reason investors buy common stocks?
- To participate in the profits of a firm (correct)
- To avoid the risks associated with other investments
- To hedge against inflation
- To secure guaranteed profit distribution
Which of the following is an advantage of stock ownership?
Which of the following is an advantage of stock ownership?
- High unit cost per share
- Difficulty in buying and selling
- Low purchasing power risk (correct)
- Guaranteed profit distribution
Why are common stocks subject to various risks?
Why are common stocks subject to various risks?
What makes it difficult to predict which stocks will go up in value?
What makes it difficult to predict which stocks will go up in value?
What factor makes common stocks an easy investment to buy and sell?
What factor makes common stocks an easy investment to buy and sell?
Which of the following represents an equity (ownership) position in a firm?
Which of the following represents an equity (ownership) position in a firm?
What process results in increasing the number of shares outstanding by exchanging a specified number of new shares for each outstanding share?
What process results in increasing the number of shares outstanding by exchanging a specified number of new shares for each outstanding share?
When a firm executes a stock split, what is the main reason behind it?
When a firm executes a stock split, what is the main reason behind it?
What privilege do different classes of classified common stock offer to its holders?
What privilege do different classes of classified common stock offer to its holders?
What is the process of repurchasing shares by the issuing firm known as?
What is the process of repurchasing shares by the issuing firm known as?
When does a firm normally execute buybacks (treasury stock)?
When does a firm normally execute buybacks (treasury stock)?
What represents the conversion of one of a firm’s subsidiaries/divisions to a stand-alone company by distributing stock in the new company to existing shareholders?
What represents the conversion of one of a firm’s subsidiaries/divisions to a stand-alone company by distributing stock in the new company to existing shareholders?
What is the process of increasing the number of shares outstanding by exchanging a specified number of new shares for each outstanding (current) share called?
What is the process of increasing the number of shares outstanding by exchanging a specified number of new shares for each outstanding (current) share called?
In which type of offering do existing investors have the opportunity to purchase additional shares on a pro-rata basis?
In which type of offering do existing investors have the opportunity to purchase additional shares on a pro-rata basis?
When do firms normally execute stock spin-offs?
When do firms normally execute stock spin-offs?
