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Question 1
Go Co. has recently undertaken a corporate share repurchase. The shares that the company repurchases from shareholders are known as:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct When a company repurchases shares from shareholders ' in a share repurchase program or otherwise ' the shares are referred to as treasury stock and are considered issued but not outstanding.
Incorrect! When a company repurchases shares from shareholders ' in a share repurchase program or otherwise ' the shares are referred to as treasury stock and are considered issued but not outstanding.
Question 2
Go Co. has recently undertaken a corporate share repurchase. Go Co. subsequently becomes the target of a hostile takeover transaction. In response, the board begins to look for ways to help ward off the unwanted suitor. One option that it considers is voting the treasury stock against the buyer's proposal. Such an action would be:
Correct
Incorrect!
Correct
Incorrect!
Correct Treasury shares have no voting capacity. The reason for this is exactly because of the worry contemplated here by Go Co. While the board may oppose the deal, shareholders may want the deal to occur. Therefore, it would be inappropriate to allow the board to defeat shareholders by voting the treasury stock.
Incorrect! Treasury shares have no voting capacity. The reason for this is exactly because of the worry contemplated here by Go Co. While the board may oppose the deal, shareholders may want the deal to occur. Therefore, it would be inappropriate to allow the board to defeat shareholders by voting the treasury stock.
Correct
Incorrect!
Question 3
For what reason would a company make a distribution to shareholders?
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Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct There are various reasons why a company would choose to provide a distribution to shareholders. Most of the occasions associated with such a distribution are ways of demonstrating that the company is not simply holding onto money to support the desires of their management.
Incorrect! There are various reasons why a company would choose to provide a distribution to shareholders. Most of the occasions associated with such a distribution are ways of demonstrating that the company is not simply holding onto money to support the desires of their management.
Question 4
CashCow Co. is paying a dividend to shareholders. Danny has purchased shares of the company, but is not clear on whether or not he is entitled to receive the dividend. What determines if he is eligible or not?
Correct The record date is the date which the company sets for identifying which shareholders will be entitled to receive a dividend from the corporation. If a shareholder purchases shares after that date, he is not entitled to the dividend. If the shareholder purchases the shares prior to the record date, then he is entitled to the dividend.
Incorrect! The record date is the date which the company sets for identifying which shareholders will be entitled to receive a dividend from the corporation. If a shareholder purchases shares after that date, he is not entitled to the dividend. If the shareholder purchases the shares prior to the record date, then he is entitled to the dividend.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 5
A type of stock which affords its owner a set of special rights in the event that the firm goes bankrupt is referred to as:
Correct
Incorrect!
Correct
Incorrect!
Correct When a company issues stock that has a special preference ' typically as to dividends, dissolution or voting, that stock is known as preferred stock. In this case, the stock would be said to have a 'preference on dissolution.'
Incorrect! When a company issues stock that has a special preference ' typically as to dividends, dissolution or voting, that stock is known as preferred stock. In this case, the stock would be said to have a 'preference on dissolution.'
Correct
Incorrect!
Question 6
Common stock is always said to have:
Correct
Incorrect!
Correct Common stock can never be limited in its voting rights; i.e. one-share-one-vote is the rule with common stock. Moreover, if the company declares any standard dividend, that dividend must be declared as to all common shareholders.
Incorrect! Common stock can never be limited in its voting rights; i.e. one-share-one-vote is the rule with common stock. Moreover, if the company declares any standard dividend, that dividend must be declared as to all common shareholders.