Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 15, Problem 3CQ
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2. Which of the following is a characteristic of preferred stock?A. Give voting rights to its owner.B. It is like annuity.C. Investors cannot force the payment of the dividend.D. Dividends are tax-deductible for the firm as opposed to interest payment.
Why might a stock dividend or a stock split be of limited value to an investor? What about a stock repurchase? Does it make sense for a corporation to repurchase its own stock?
Which of the following is a true statement
Multiple Choice
Common Stock owners get a chance to buy new issues of stock offered by the company before the public
can get any
Coproate Dividends are only tax deductible
Common Stockholders have the first chance to get paid Dividends
Public Corporations do not have to pay taxes on the dividends they receive for owning their own stock
Chapter 15 Solutions
Corporate Finance
Ch. 15 - Bond Features What are the main features of a...Ch. 15 - Prob. 2CQCh. 15 - Preferred Stock Preferred stock doesnt offer a...Ch. 15 - Preferred Stock and Bond Yields The yields on...Ch. 15 - Prob. 5CQCh. 15 - Call Provisions A company is contemplating a...Ch. 15 - Prob. 7CQCh. 15 - Preferred Stock Do you think preferred stock is...Ch. 15 - Long-Term Financing As was mentioned in the...Ch. 15 - Internal versus External Financing What is the...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Why would a company choose to not pay dividends on its common stock?arrow_forwardWhich of the following statements is most correct? Group of answer choices Money market transactions include common stock transactions. Preferred stockholders are paid before bondholders but after common stockholders. One of the problems in corporations is that managers often put their own interests ahead of those of the stockholders. U.S. T-bills are considered risky securities. None of the above statements is correct.arrow_forwardB) Common stock hasn’t term to maturity. How then can a stock that does not pay dividends have any value? Give an example of such firms listed in the domestic market of your country.arrow_forward
- Why might a company repurchase its own stock? A) It believes that the market undervalues its shares B) To offset dilutive effects of employee stock options granted C) To recognize an economic gain when the treasury shares are later sold for a profit D) To improve earnings per share by reducing the denominator E) All of the above is it just A and B or is it all of the abovearrow_forwardWhich of the following is not a typical question that must be answered with regard to a private company that is owned by a large number of shareholders? Question 46 options: How and when does the company get money from the sale of its stock? What rate of return does the company promise to pay when it sells stock? What is the dividend yield on preferred shares of companies that hold this stock? Who makes decisions in a company owned by a large number of shareholders?arrow_forwardA firm’s preferred stock often sells at yields below its bonds because:a. Preferred stock generally carries a higher agency rating.b. Owners of preferred stock have a prior claim on the firm’s earnings.c. Owners of preferred stock have a prior claim on a firm’s assets in the event of liquidation.d. Corporations owning stock may exclude from income taxes most of the dividend income they receive.arrow_forward
- Stock Valuation. A number of publicly traded firms pay no dividends yet investors are willing to buy shares in these firms. How is this possible? Does this violate our basic principle of stock valuation?arrow_forwardWhy do some large corporations forgo dividends?arrow_forwardIf stock dividends and stock splits don't give shareholders significant value/ amount, why do you think companies decide to still make use of them?arrow_forward
- -) Which of the following is NOT a reason companies purchase their own stock as treasury stock? O The company wants to increase its EPS O The company wants to have shares available for employee stock options. The company wants to increase stockholders' equity. O The company feels the stock is undervalued in the marketplace. 4arrow_forward(please correct and incorrect option explain and correct answer) Which of the following statements is most correct? Group of answer choices Money market transactions include common stock transactions. Preferred stockholders are paid before bondholders but after common stockholders. One of the problems in corporations is that managers often put their own interests ahead of those of the stockholders. U.S. T-bills are considered risky securities. None of the above statements is correct.arrow_forwardWhat is treasury stock? Why would a company repurchase its own stock? How might they dispose of the treasury stock?arrow_forward
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