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Chap007.docx
Chap007.docx
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Chap007.docx-CHAPTER 7 Equity Markets and Stock
Chap007.docx-CHAPTER 7 Equity Markets and Stock
Chap007.docx-CHAPTER 7 Equity Marke...
Chap007.docx-CHAPTER 7 Equity Markets and Stock
Page 8
CUMULATIVE VOTING
d
38. The benefit of cumulative voting is:
a.
the ability of a small minority of the shareholders to control the entire corporate
board.
b.
limiting access to voting to only shareholders who attend the annual
shareholders’
meeting.
c.
voting for each corporate director in a separate election.
d.
the ability of shareholders, who own fewer shares, to elect at least one corporate
director of their choice.
e.
limiting each shareholder to one vote per open position on the board.
STRAIGHT VOTING
c
39. With straight voting, the only means of guaranteeing yourself a seat on the corporate
board of directors is to:
a.
attend the annual shareholders’ meeting in person.
b.
vote by proxy.
c.
ensure that you have enough votes to control the entire election.
d.
buy the entire firm.
e.
stagger the voting for the board of directors.
SHAREHOLDER RIGHTS
c
40. Which of the following are rights that are generally provided to common
shareholders?
I.
right to vote on a proposed merger
II.
right to share in dividend distributions
III.
right to determine the amount of a quarterly dividend payment
IV.
right to share in any assets remaining after the liabilities have been paid in a
liquidation.
a.
I and II only
b.
II and III only
c.
I, II, and IV only
d.
II, III, and IV only
e.
I, II, III, and IV
SHAREHOLDER RIGHTS
e
41. If shareholders are granted a preemptive right they will be:
a.
given the choice of receiving dividends in cash or in additional shares of stock.
b.
paid dividends prior to the preferred shareholders during the preemptive period
.
c.
granted shares that receive additional voting privileges.
d.
able to determine who the candidates should be for any open seats on the board.
e.
given the first right to purchase any new shares of stock that are issued.
DIVIDENDS
c
42. Dividends become a liability of a firm:
a.
on the first day of each year and are tax deductible expenses as of that date.
b.
on the day they are paid and are tax deductible at that time.
c.
when the dividend is declared but are not tax deductible at any time.
d.
when they are declared and become tax deductible expenses on that date.
e.
on the payment date but are never tax deductible.
Page 9
DIVIDENDS
d
43. Dividends are paid at the discretion of the:
a.
company president.
b.
shareholders.
c.
chief financial officer.
d.
board of directors.
e.
chief executive officer.
PREFERRED STOCK
d
44. Preferred stock:
a.
is a form of debt from a tax point of view.
b.
is always granted voting rights.
c.
pays a guaranteed dividend.
d.
has a higher claim in a liquidation than the common stock.
e.
is a form of debt from a legal perspective.
PREFERRED STOCK
d
45. Preferred stock:
I.
may be callable.
II.
may be convertible.
III.
may have a sinking fund.
IV.
pays dividends that are taxed differently than common stock dividends.
a.
I only
b.
I and III only
c.
II and IV only
d.
I, II, and III only
e.
I, II, III, and IV
DEALER
c
46. A dealer earns a profit by:
a.
charging a commission on each share of stock that he or she buys or sells for a
customer.
b.
charging a flat $2 fee for each trade he or she executes.
c.
retaining the spread.
d.
charging a fee of $.10 a share for each trade he or she executes.
e.
setting a bid price higher than his or her asked price.
NYSE
a
47. The NYSE:
I.
is the largest stock market in the world based on dollar volume of activity.
II.
is principally owned by the Bank of New York.
III.
is a pure dealer market.
IV.
requires that all trades on the floor be between a broker and a specialist.
a.
I only
b.
I and III only
c.
II and III only
d.
II and IV only
e.
I, II, and IV only
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