Corporate Actions Quiz

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Questions and Answers

What are corporate actions in the context of securities?

Processes initiated by individual shareholders to influence the company's financial affairs
Processes initiated by the stock exchange to regulate security trading
Processes initiated by a company that bring actual change to its securities, such as changes in the number of shares or face value (correct)
Processes initiated by the government that impact the stock market

What is the purpose of dividends declared by companies?

To attract new investors to the company
To distribute part of the company's earnings to shareholders as a source of income (correct)
To reduce the company's liabilities
To increase the company's market value

How often are dividends usually distributed to shareholders?

Annually in the form of a single dividend
Quarterly in the form of a single dividend
Every three months in the form of a final dividend
Twice a year in the form of a final dividend and an interim dividend (correct)

Who typically agrees upon corporate actions?

<p>A company’s Board of Directors and authorized by the shareholders (D)</p> Signup and view all the answers

What do corporate actions indicate about a company’s financial affairs?

<p>They provide insight into how the company’s financial affairs will be influenced and how the company’s share price and performance will be affected (B)</p> Signup and view all the answers

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Study Notes

Corporate Actions

Corporate actions refer to events initiated by a company that affect its ownership structure, impacting shareholders' stakes and/or the company's capital.

Dividends

Dividends are corporate actions where companies distribute a portion of their earnings to shareholders, often in cash.
The primary purpose of dividends is to return value to shareholders, demonstrating a company's financial health and profitability.
Dividends are typically distributed quarterly or annually, but the frequency may vary depending on the company's dividend policy.

Decision-Making

Corporate actions, including dividends, are typically agreed upon by a company's board of directors, who consider the company's financial situation, growth prospects, and industry standards.