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 (D)</p> Signup and view all the answers

Dividends may be classified as:

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

What does 'Issued Stock' refer to?

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

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

<p>Voting rights (C)</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 (A)</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 (D)</p> Signup and view all the answers

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

<p>Partnership (B)</p> Signup and view all the answers

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

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

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

<p>Corporation (D)</p> Signup and view all the answers

What gives companies more flexibility, according to the text?

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

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

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

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