How many shares of preferred stock does a corporation have?
A corporation has 40,000 shares of 16% preferred stock outstanding. Also, there are 40,00 shares of common stock outstanding. Par value for each is $100. If an $850,000 dividend is paid, how much goes to the preferred stockholders?
What are the two main categories of stockholders'equity?
Create Study sets, textbooks, questions Log in Sign up Upgrade to remove ads Only $35.99/year Social Science Economics Finance acct. ch. 10/11 review STUDY Flashcards Learn Write Spell Test PLAY Match Gravity Created by EvanGreenlee Terms in this set (45) The two main categories of stockholders' equity are: A. common stock and preferred stock.
When are stockholders eligible for a dividend?
Stockholders are eligible for a dividend if they own the stock on the date of: A. declaration. B. record. C. payment. D. issuance. B Anna's Foods has outstanding 650 shares of 2% preferred stock, $100 par value; and 1,100 shares of common stock, $1 par value. Anna's declares dividends of $20,500.
Why might a company purchase treasury stock?
A A company might purchase treasury stock for all of the following reasons except: A. management wants to decrease the earnings per share of common stock. B. it wants to increase its net assets by buying its stock low and reselling it at a higher price.
Which of the following are not a characteristic of a preferred share?
With the issuance of the stock, both the common stockholders and the preferred stockholders gets a right in the ownership of the company. Therefore, ownership is the characteristic that does not sets the preferred stock apart from the common stock. Hence, it is the correct answer.
Which of the following is a feature of a preferred stock?
Preferred stocks are hybrid securities that have the characteristics of both bonds and stocks. Preferred stocks have dividend priority over common stock. The holders of preferred shares receive dividends before the holders of common shares. Preferred stockholders generally do not have voting rights in the company.
What is a disadvantage of preferred stock?
Disadvantages of preferred shares include limited upside potential, interest rate sensitivity, lack of dividend growth, dividend income risk, principal risk and lack of voting rights for shareholders.
What risk does preferred stock have?
Preferred stockholders also rank higher in the company's capital structure (which means they'll be paid out before common shareholders during a liquidation of assets). Thus, preferred stocks are generally considered less risky than common stocks, but more risky than bonds.
What is preferred stock quizlet?
Preferred stock. A class of ownership in a corporation that has a priority claim on its assets and earnings before common stock, generally with a dividend that must be paid out before dividends to common shareholders are paid.
What are the characteristics of preferred stock quizlet?
Characteristics of preferred stock: fixed div. payment. no maturity. cash dividends that are paid prior to distributions to common stockholders. no voting rights.
What are advantages and disadvantages of preferred stock?
Pros and Cons of Preferred StockProsConsRegular dividendsFew or no voting rightsLow capital loss riskLow capital gain potentialRight to dividends before common stockholdersRight to dividends only if funds remain after interest paid to bondholders1 more row•May 19, 2022
Why do companies not like preferred stock?
There are two reasons for this. The first is that preferred shares are confusing to many investors (and some companies), which limits demand. The second is that common stocks and bonds are generally sufficient options for financing.
What is a tax advantage and disadvantage for preferred stock quizlet?
Preferred stock has both a tax advantage and a tax disadvantage. These two are: in default there are no taxes and dividends are taxed in corporate hands at 70%. corporate dividends are taxed on 30% of the dividends received and expenses are deductible.
Which is the least risky investment?
Savings, CDs, Money Market Accounts, and Bonds The investment type that typically carries the least risk is a savings account. CDs, bonds, and money market accounts could be grouped in as the least risky investment types around.
What preferred stock means?
Preferred stock is a type of stock that offers different rights to shareholders than common stock. Preferred stock holders receive regular dividends and are repaid first in the event of a bankruptcy or merger.
What is true about preferred stocks?
The main difference between preferred and common stock is that preferred stock gives no voting rights to shareholders while common stock does. Preferred shareholders have priority over a company's income, meaning they are paid dividends before common shareholders.
Does the D. rule affect stockholders' equity?
D. has no effect on total stockholders' equity.
Does stockholders' equity increase or decrease?
A. It results in an increase to assets and a decrease to liabilities, while stockholders' equity remains the same.
What is preferred stock?
Preferred stock is a riskier investment than common stock.
Which has greater voting rights: the owner of 100 shares of common stock or the owner of 100 shares of preferred answer?
The owner of 100 shares of preferred stock has greater voting rights than the owner of 100 shares of common stock.
How many shares of common stock were outstanding before the 3 for 1 split?
A 3-for-1 stock split. Prior to the split, 70 million shares of $ 3.00 par common stock were outstanding.
What does management want to decrease?
management wants to decrease the earnings per share of common stock.
Is preferred stock riskier than common stock?
Preferred stock is a riskier investment than common stock.
