Text

A person may become a sharenolder by ___ and having one or more shares allotted to him, or by having shares transferred to him by an existing shareholder, or by ___  and having them allotted to him.

• donating money; recieving bonuses

• performing community service; buying company's goods

• subscribing to the memorandum; applying for shares

Each share of common stock represents ownership in the affairs of the firm.

• True

• False

What does each common share entitle the owner to in the earnings of the firm?

• A fixed dividend regardless of profits

• A percentage of profits in proportion to their shares

• No rights to earnings

• A guaranteed return on investment

Owners of the company do not receive certificates of common stock in proportion to their participation in the firm.

• True

• False

Par value is the price that shares are selling for on the stock market.

• True

• False

What is book value?

• The price the shares are selling for on the stock market

• The value printed on each stock certificate

• The total market capitalization of a company

• The difference between a company's assets and its liabilities divided by the number of shares

Shareholders benefit from limited liability, meaning they are only liable for the value of their shares.

• True

• False

What allows individual shareholders to transfer their shares easily?

• Organized stock exchanges

• Book value

• Par value

• Limited liability