Shareholders choose to invest in preferred shares because: a. preferred shares can always be converted into ordinary shares at the shareholder's option b. preferred shares include the right to participate in management decisions through voting privileges c. dividends are distributed to preferred shareholders before ordinary shareholders d. the preferred dividend distributions are generally increased each year

Shareholders choose to invest in preferred shares because: a. preferred shares can always be converted into ordinary shares at the shareholder's option b. preferred shares include the right to participate in management decisions through voting privileges c. dividends are distributed to preferred shareholders before ordinary shareholders d. the preferred dividend distributions are generally increased each year

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 5Q: Indicate whether the following statements are true or false. If the statement is false, explain why....

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When comparing common and preferred stock, indicate whether each of the following statements is true or false. Preferred shareholders are guaranteed to receive a higher dividend amount than common shareholders. Choose... In a year in which dividends are declared, preferred stockholders receive their portion of dividends before Choose... + common stockholders receive theirs. Preferred shareholders are guaranteed to receive a dividend in any year in which the corporation makes a Choose... + profit. For purposes of electing the company's board of directors, only preferred shareholders usually have a vote. Choose...
The cumulative feature of preference share limits the amount of cumulative dividends to the par value of the preference share requires that dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders means that the shareholder can accumulate preference share until it is equal to the par value of ordinary share at which time it can be converted into ordinary share. enables a preference stockholder to accumulated dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
Cumulative shares : Select one: a. Is a type of common shares that allows certain shareholders to own more shares b. Is a type of preferred shares that allows certain shareholders to accumulate greater voting right c. Is none of the available choices. d. Is a type of preferred shares that gives shareholders the right to collect unpaid dividends from prior period
Which one of the following statements is the most correct? A. Preferred stock has a fixed dividend that does not change. B. All classes of common stock have one vote per share. C. Common shareholders elect the CEO of the company D. Dividends are tax-free income for individual investors.
When calculating dilutive earnings per share, a company that has convertible preferred stock outstanding will add the dividends on the convertible preferred stock to the numerator O add the convertible preferred stock dividends, net of their tax effect, to the numerator use the treasury stock method O add the number of convertible preferred stock shares to the denominator
Which one of the following statements apply only to preference shareholders and not to equity shareholders a. Shareholders risk the loss of investment b. Shareholders bear the risk of no dividends in the event of losses c. Shareholders usually have the right to vote d. Dividends are usually given at a set amount in every financial year
Indicate whether the following statements are true or false. If the statement is false, explainwhy.a. If a firm repurchases its stock in the open market, the shareholders who tender thestock are subject to capital gains taxes.b. If you own 100 shares in a company’s stock and the company’s stock splits two-forone,you will own 200 shares in the company following the split.c. Some dividend reinvestment plans increase the amount of equity capital available tothe firm.d. The Tax Code encourages companies to pay a large percentage of their net income inthe form of dividends.e. If your company has established a clientele of investors who prefer large dividends,the company is unlikely to adopt a residual dividend policy.f. If a firm follows a residual dividend policy, holding all else constant, its dividendpayout will tend to rise whenever the firm’s investment opportunities improve.
Contrast the differences between a stock dividend and a stock split. Imagine that you are a stockholder in a company. Determine whether you would prefer to see the company that you researched declare a 100% stock dividend or declare a two-for-one split. Provide support for your answer with one real-world example of your preference.
What does it mean when preferred stock has a cumulative feature? A.A dividend must be paid to the preferred stockholders each year. B. A dividend cannot be paid to the common stockholders. C. If dividends were not paid to preferred stockholders in previous years, these dividends must be paid before any dividends are paid to the common stockholders. D. The stockholders have the right to share in extra dividends. Please explain why the option is correct and remaining incorrect in detail explain each and every option in detail with explanation
Investors purchase preferred stock because: Group of answer choices A)Preferred stock offers an opportunity for a guaranteed annual dividend. B)Preferred dividends are increased each year. C)Preferred shareholders have voting rights. D)Preferred stock can always be converted to common stock. E)None of the above
In what way is a preferred stock usually more similar to a bond than to a common stock? O a. Preferred stockholders are more risky than common stocks O b. Preferred stockholders elect the board of directors of the organization O c. Preferred bondholders participate in the growth of the company through increases in dividends and stock prices O d. Preferred stockholders are typical entitled fixed payments O e. If the company were to go into liquidation, preferred stockholders will be entitled to payments after common stockholders are paid-off
From an employee / investor's perspective, which of the following stock option strategies would result in the highest amount of taxation? O Exercise and sell all shares at each vesting period's market price. O Exercise full each vesting period, sell only enough stock to cover your cost each each vesting period, then sell all remaining shares at end of the grant period. O Exercise each vesting period's full amount and then sell all shares at end of grant period. From an employee / investor's perspective, which stock option exercise strategy contains the highest opportunity cost? Exercise each vesting period's full amount and then sell all shares at the end of the grant period. O Exercise each vesting period's full amount then sell all shares at their 52 week high share price. O Exercise and sell all shares at each vesting period's market price O Perform a "cashless exercise," selling just enough shares to cover cost of the exercise O Exercise in full each vesting period, selling only…