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Stocks and Shares Basics

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Questions and Answers

What is the primary purpose of issuing stocks for a corporation?

To secure loans for the company
To raise money for expansion (correct)
To distribute ownership to employees
To increase the company's market value

Who receives dividends first when they are paid by the company?

Bondholders
Employees of the company
Preferred stockholders (correct)
Common stockholders

What is the significance of the par value per share mentioned in the text?

It indicates the expected future value of the stock
It is the amount paid to shareholders as dividends
It determines the minimum value of the stock as stated in the corporate charter (correct)
It represents the current market value of the stock

What is the difference between common stock and preferred stock?

Preferred stockholders receive dividends before common stockholders. (B) Signup and view all the answers

What is the significance of market value in the context of stocks?

Market value determines the current price at which stocks can be bought or sold. (E) Signup and view all the answers

What does it mean when a person receives a certificate after buying some shares?

The certificate entitles the holder to a portion of the company's profits. (B) Signup and view all the answers

What is the primary difference between a bondholder and a stockholder?

Bondholders are lenders to the institution, while stockholders are owners of the company. (D) Signup and view all the answers

Which entities can be bond issuers according to the text?

National government, government agencies, and non-bank corporations (D) Signup and view all the answers

What do bondholders receive in addition to the face amount of the bond?

Coupons (payments/interests), usually done semi-annually (A) Signup and view all the answers

What is the significance of the bond's maturity date?

It is the date when bondholders receive the face amount of the bond. (C) Signup and view all the answers

What distinguishes bondholders from stockholders in terms of voting rights?

Bondholders do not have voting rights at the institution's annual meeting. (A) Signup and view all the answers

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