Shareholders choose to invest in preferred shares because: a. preferred shares can always be converted into ordinary shares at the shareholder's option b. preferred shares include the right to participate in management decisions through voting privileges c. dividends are distributed to preferred shareholders before ordinary shareholders d. the preferred dividend distributions are generally increased each year
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- Select the statement that is TRUE. A. A preference shareholder will be paid the same rate of dividend each year B. Holding preference shares in a business is more risky than holding ordinary shares C. Preference shareholders can vote at annual general meetings (AGM). D. Preference shares are worth more than ordinary sharesCumulative shares : Select one: a. Is a type of common shares that allows certain shareholders to own more shares b. Is a type of preferred shares that allows certain shareholders to accumulate greater voting right c. Is none of the available choices. d. Is a type of preferred shares that gives shareholders the right to collect unpaid dividends from prior periodThe cumulative feature of preference share limits the amount of cumulative dividends to the par value of the preference share requires that dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders means that the shareholder can accumulate preference share until it is equal to the par value of ordinary share at which time it can be converted into ordinary share. enables a preference stockholder to accumulated dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
- Which one of the following statements apply only to preference shareholders and not to equity shareholders a. Shareholders risk the loss of investment b. Shareholders bear the risk of no dividends in the event of losses c. Shareholders usually have the right to vote d. Dividends are usually given at a set amount in every financial yearWhich one of the following statements is the most correct? A. Preferred stock has a fixed dividend that does not change. B. All classes of common stock have one vote per share. C. Common shareholders elect the CEO of the company D. Dividends are tax-free income for individual investors.When calculating dilutive earnings per share, a company that has convertible preferred stock outstanding will add the dividends on the convertible preferred stock to the numerator O add the convertible preferred stock dividends, net of their tax effect, to the numerator use the treasury stock method O add the number of convertible preferred stock shares to the denominator
- Indicate whether the following statements are true or false. If the statement is false, explainwhy.a. If a firm repurchases its stock in the open market, the shareholders who tender thestock are subject to capital gains taxes.b. If you own 100 shares in a company’s stock and the company’s stock splits two-forone,you will own 200 shares in the company following the split.c. Some dividend reinvestment plans increase the amount of equity capital available tothe firm.d. The Tax Code encourages companies to pay a large percentage of their net income inthe form of dividends.e. If your company has established a clientele of investors who prefer large dividends,the company is unlikely to adopt a residual dividend policy.f. If a firm follows a residual dividend policy, holding all else constant, its dividendpayout will tend to rise whenever the firm’s investment opportunities improve.Contrast the differences between a stock dividend and a stock split. Imagine that you are a stockholder in a company. Determine whether you would prefer to see the company that you researched declare a 100% stock dividend or declare a two-for-one split. Provide support for your answer with one real-world example of your preference.What does it mean when preferred stock has a cumulative feature? A.A dividend must be paid to the preferred stockholders each year. B. A dividend cannot be paid to the common stockholders. C. If dividends were not paid to preferred stockholders in previous years, these dividends must be paid before any dividends are paid to the common stockholders. D. The stockholders have the right to share in extra dividends. Please explain why the option is correct and remaining incorrect in detail explain each and every option in detail with explanation
- From an employee / investor's perspective, which of the following stock option strategies would result in the highest amount of taxation? O Exercise and sell all shares at each vesting period's market price. O Exercise full each vesting period, sell only enough stock to cover your cost each each vesting period, then sell all remaining shares at end of the grant period. O Exercise each vesting period's full amount and then sell all shares at end of grant period. From an employee / investor's perspective, which stock option exercise strategy contains the highest opportunity cost? Exercise each vesting period's full amount and then sell all shares at the end of the grant period. O Exercise each vesting period's full amount then sell all shares at their 52 week high share price. O Exercise and sell all shares at each vesting period's market price O Perform a "cashless exercise," selling just enough shares to cover cost of the exercise O Exercise in full each vesting period, selling only…There are two primary means to earn income as a stockholder. The first method is dividend income, and the second method is earnings from capital gains. With respect to the investor seeking dividend income, when an investor buys a stock from a corporation with a primary focus to earn dividend income, they will typically expect a higher dividend on common stock versus preferred stock. Discuss the dividend payment requirements of a common stock versus preferred stock, in terms of which type of stock has a primary claim on dividend distributions. Explain why the common stock investor demands a higher dividend rate.Investors purchase preferred stock because: Group of answer choices A)Preferred stock offers an opportunity for a guaranteed annual dividend. B)Preferred dividends are increased each year. C)Preferred shareholders have voting rights. D)Preferred stock can always be converted to common stock. E)None of the above