Midterm Exam

Question 1

Equity shares can either have a par value or issued as no par value shares.

Answer 1

FACT

Question 2

The number of authorized shares is always equal to the number of issued and outstanding ordinary shares.

Answer 2

WRONG

Question 3

Ordinary shares have a definite maturity date after which they must be redeemed by the company.

Answer 3

WRONG

Question 4

Ordinary shareholders typically have a right to vote on corporate matters such as election of directors.

Answer 4

FACT

Question 5

The call provision allows the company to redeem preferred shares at a specific price before maturity.

Answer 5

FACT

Question 6

Ordinary shareholders have limited rights, often including voting, reviving dividends, and the right to residual assets.

Answer 6

FACT

Question 7

Preferred shares always have a par value associated with them.

Answer 7

WRONG

Question 8

Preferred shareholders are entitled to receive dividends before ordinary shareholders.

Answer 8

FACT

Question 9

Cumulative dividends mean that if a company skips a dividend payment, it accumulates and must be paid in the future.

Answer 9

FACT