Equity

Question 1

Preferred Stock

Answer 1

no vote, paid dividends before common shareholders, no preemptive right, liquidation right

Question 2

Common stock

Answer 2

can vote, preemptive right, last in line for liquidation

Question 3

Dividends in Arrears

Answer 3

dividends skipped that must be paid to preferred shareholders before common holders are paid

Question 4

Preemptive Right

Answer 4

the right to maintain one’s % ownership in the firm by being provided the right to buy new issuance in order to keep same % of ownership

Question 5

Treasury Stock

Answer 5

a company repurchases its own stock

Question 6

Property Dividends

Answer 6

transfer of securities in other entities (other securities owned by comp but not their own)

Question 7

Scrip Dividend

Answer 7

a written promise to pay shareholder’s which includes interest

Question 8

Liquidating Dividends

Answer 8

When divs declared are a higher amt than RE, taken out of APIC

Question 9

Small stock dividend

Answer 9

less than 20-25% of outstanding shares

Question 10

Large stock dividend

Answer 10

> or = 20-25% of outstanding shares

Question 11

Stock Rights

Answer 11

an option to purch certain # of shares at specified price during specified time (preemptive right –> to keep same % of ownership)

Question 12

Quasi Reorganization

Answer 12

allows a firm with neg RE to start fresh and begin paying dividends