Quiz Practice Questions Flashcards
Of the following choices, the only method that will raise new funds for a corporation is to
sell additional common shares through a rights offering
Which statement is FALSE about preferred stock?
Dividends are paid quarterly
During periods of stable interest rates and increasing stock prices, which type of preferred stock will have the greatest price volatility?
Convertible
A customer buys 100 shares preferred at $10 per share. The par value is $100. The dividend rate is 5%. Each dividend payment will be
$250
P/E Ration is a measure of
Valuation
If interest rates fall, issuers most likely will call
preferred issues with above market interest rates
An ADR has been issued where each ADR equals .1111 ordinary shares of the foreign issuer. If a client wished to buy enough ADR to cover 100 ordinary shares, how many ADRs must be purchased?
900
All of the following actions will dilute shareholders’ equity EXCEPT
payment of a stock dividend
ABC company has issued 8%, $100 par, cumulative preferred stock. Two years ago, ABC paid a 4% preferred dividend. Last year, ABC wishes to pay a common dividend. If the preferred stock is now trading at $94, a customer who owns 100 shares of the company’s preferred stock will receive
$1,500
If interest rates fall, issuers most likely will call
preferred issues trading at a premium
Preferred stock market valuation is based primarily on
long term market interest rates level
A customer buys 100 preferred shares at $80 per share. The par value is $100. The dividend rate is 10%. The customer will receive how much in each dividend payment?
$500
Which statement is TRUE when comparing convertible preferred stock and non-convertible preferred stock?
Non-convertible preferred shares will have a higher yield than similar convertible shares of the same issuer
An individual would examine a company’s Price to Earnings Ratio in order to
Determine if the stock is fairly valued
