Company Equity and Stock Types in Finance
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Questions and Answers

What is the proportionate interest after the new issue of shares?

  • 8 percent (correct)
  • 5 percent
  • 9 percent
  • 7 percent
  • A Close Corporation is characterized by:

  • Being owned and controlled by another company
  • Having a parent corporation that controls it
  • Being open to anyone who wants to become a shareholder
  • Having its stock limited to selected people or family members (correct)
  • What is the total Stockholders’ equity at present?

  • $4,000,000 (correct)
  • $5,000,000
  • $2,000,000
  • $3,000,000
  • What is the value of one share after the new issue of shares?

    <p>$166.67</p> Signup and view all the answers

    Dividends may be classified as:

    <p>Cash Dividends – paid to stockholders</p> Signup and view all the answers

    In what type of corporation is the company created under the laws of the Philippines?

    <p>Domestic Corporation</p> Signup and view all the answers

    What is the primary benefit of a company having more equity for creditors?

    <p>Lower interest rates on loans</p> Signup and view all the answers

    What does 'Issued Stock' refer to?

    <p>Shares of authorized stock that have been sold to investors</p> Signup and view all the answers

    Which form of capital stock represents the maximum number of shares a company can sell to investors?

    <p>Authorized Stock</p> Signup and view all the answers

    What is the primary difference between Common Stock and Preferred Stock?

    <p>Voting rights</p> Signup and view all the answers

    What right do Common Stockholders have that gives them the ability to purchase new shares before they are offered to the public?

    <p>Preemptive rights</p> Signup and view all the answers

    What type of voting gives shareholders the ability to cast all votes for one member of the board?

    <p>Cumulative voting</p> Signup and view all the answers

    Which form of business organization does the text describe as having 'Partners' Equity'?

    <p>Partnership</p> Signup and view all the answers

    What type of shares are described as having a maturity date in the text?

    <p>Preferred Shares</p> Signup and view all the answers

    Which type of business entity can buy back its own shares?

    <p>Corporation</p> Signup and view all the answers

    What gives companies more flexibility, according to the text?

    <p>Selling shares of ownership</p> Signup and view all the answers

    Which type of share has a right to dividends before common shareholders?

    <p>Preferred Shares</p> Signup and view all the answers

    What is the main advantage of equity financing over debt financing, based on the text?

    <p>Flexibility in payment terms</p> Signup and view all the answers

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