CHAP 3

Who are the last line of all those who receive the remaining funds in the case of bankruptcy?

• Common stockholders

• Bondholders

• Creditors

• Preferred stock holders

... is an investor who is willing to take on additional risk for an investment that has a relatively low additional expected return in exchange for that risk.

• Risk-averse investor

• Risk lover

• Risk neutral

• Institutional investor

The maximum number of shares that a corporation is legally permitted to issue is:

• Issued shares

• Authorized shares

• Treasury shares

• Registered shares

This sentence is true for which type of shares? “If a company is unable to pay dividend in one period, the amount due is carried forward to the next period”.

• Cumulative preference share

• Non-cumulative preference share

• Convertible preference share

• Participating preference share

When the issue this type of shares, the company is required to pay any unpaid preference share dividends from past years before it can make any distribution to ordinary shareholders.

• Cumulative preference share

• Non-cumulative preference share

• Convertible preference share

• Participating preference share

Which type of shares is referred below? “If the company is unable to make the fixed dividend payment, the obligation is not carried forward.”

• Cumulative preference share

• Non-cumulative preference share

• Convertible preference share

• Participating preference share

Which type of shares is given the opportunity to share in excess profit generated by the company?

• Cumulative preference share

• Non-cumulative preference share

• Convertible preference share

• Participating preference share

… entitles the company to buy back the preference shares on a predetermined date and the holder to receive the specified value of the preference share in a cash payment.

• Cumulative preference share

• Redeemable preference share

• Convertible preference share

• Participating preference share

… may be turned into ordinary shares in the issuer company at a future date.

• Cumulative preference share

• Non-cumulative preference share

• Convertible preference share

• Participating preference share

This type of shares has no benefit from excess profit generated by the company.

• Non-participating preference shares

• Participating preference share

• Participating and non-cumulative preference share

• b&c