CSC Chapter 8 Flashcards
What is the benefit of investing $10,000 in common shares to a young investor?
Over the long term, common shares have proven to be the best opportunity for capital gain.
XYZ Corporation has declared a $0.25 per share dividend to shareholders of record on Tuesday, June 5, 20XX. Ji-Woo wants to receive the dividend as she is an income-oriented investor. What is the last date when Ji-Woo can purchase the shares and receive the dividend?
June 4th
Asad Khan holds 100 common shares of ABC Inc. He purchased his shares two years ago at $37.50. ABC implements a 2:1 split. Which is the correct statement reflecting this split?
Asad would have 200 shares
What is a characteristic of restricted shares?
Restricted shares give the holder the right to participate to an unlimited degree in the earnings of a company and in its assets on liquidation, but do not give the holder full voting rights.
There are three categories of restricted or special shares:
Non-voting – shares that carry no right to vote except perhaps in certain limited circumstances;
Subordinate voting – shares that carry a right to vote where there is another class of shares outstanding that carry a greater voting right on a per share basis; and
Restricted voting – shares that carry a right to vote subject to a limit or restriction on the number or percentage of shares that may be voted by a person, company or group.
What is a characteristic of dividends?
Reinvested dividends in a dividend reinvestment plan are taxable to the shareholder as ordinary cash dividends.
What is a benefit of investing in preferred shares?
Dividend payments are relatively stable.
Minon d’Allaire owns 100 DDF 1st Preferred Cumulative $1.25 shares that she purchased 1 year ago. DDF did not pay a dividend in either of the last 2 years, but has declared dividends for the current year. What is Minon’s entitlement to dividends?
Minon is entitled to all dividends that are currently in arrears and the newly declared dividends.
Harry is discussing a preferred share investment with his clients Marie and Karin. They are concerned about the smaller size of the market compared to common shares and bonds. What type of risk are Marie and Karin likely referring to?
Liquidity risk.
What type of preferred share can help to mitigate the effects of interest rate changes?
