What happens to preferred stock if a company fails to pay dividends?
B) Failure to pay dividends will result in default. C) Preferred stock has a lower-priority claim on the firm's assets than the firm's creditors in the event of default. D) Preferred stock typically pays a fixed dividend.
Can the constant growth dividend model be used effectively to value?
D) The constant growth dividend model can be used effectively to value the common shares of a mixed growth stock. 86. The constant growth dividend model would be useful to determine the value of all but which of the following firms? A) A firm whose earnings and dividends are declining at a fairly steady rate.
Does a 2-for-1 stock dividend increase an investor's wealth immediately?
Assets decrease and stockholders' equity decreases. Conceptually, does a 2-for-1 stock dividend immediately increase an investor's personal wealth? a. No, because the stock price per share drops by half when the number of shares doubles.
When treasury stock is purchased with cash what is the impact?
When treasury stock is purchased with cash, what is the impact on the balance sheet equation? a. No change: The reduction of the asset cash is offset with the addition of the asset treasury stock.
Which of the following is true concerning stock dividend?
The answer is b. A stock dividend does not change a stockholder's ownership percentage.
What's true about dividends?
Dividends increase assets and decrease total stockholders' equity of a corporation. Dividends are a distribution of cash, stock, or other assets to the stockholders. Dividend payments decrease paid-in capital. Dividend payments increase stockholders' equity.
Which of the following is the effect of a stock dividend?
The net effect of the stock dividend is simply an increase in the paid-in capital sub-account and a reduction of retained earnings. The total stockholder equity remains unchanged.
What is a stock dividend?
What Is a Stock Dividend? A stock dividend is a dividend payment to shareholders that is made in shares rather than as cash. The stock dividend has the advantage of rewarding shareholders without reducing the company's cash balance, although it can dilute earnings per share.
What are stock dividends quizlet?
Stock Dividend. A payment made by a firm to its owners in the form of stock, diluting the value of each share outstanding. Stock Split. An increase in a firm's shares outstanding without any change in owner's equity.
Are dividends paid per stock?
A dividend is paid per share of stock — if you own 30 shares in a company and that company pays $2 in annual cash dividends, you will receive $60 per year.
Which of the following is a true statement regarding the effect of a stock split and stock dividend on total assets or liabilities?
Which of the following is a true statement regarding the effect of a stock split and stock dividend on total assets or liabilities? Neither a stock split nor a stock dividend will affect total assets or total liabilities.
How do stock dividends affect the financial statements?
Dividends of any kind, cash or stock, represent a return of profits to the company owners, so they reduce the retained earnings account in the stockholders' equity section of the balance sheet. After all, retained earnings is simply the company's accumulated profits.
What is the effect of a stock dividend on the balance sheet quizlet?
What is the effect of a stock dividend on the balance sheet? The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.
Are stock dividends taxable?
Stock dividends usually don't have tax implications until you sell the shares. So, the amount paid in cash for the fractional share is considered taxable income. Report the sale of fractional shares on Form 8949.
Why do stocks pay dividends?
Simply put, dividends are a way for companies to share their profits with investors. Companies can use dividends to reward investors and entice them to stick around. But for a company to share profits with investors, it must actually have profits to share.
How do stocks trade dividends?
A dividend capture strategy involves purchasing a stock prior to its ex-dividend date, then selling it later. Remember, if you own a stock on its ex-dividend date then you're entitled to receive the dividend that's set to be paid out. It doesn't matter if you sell the stock shortly afterward.
Which simplifying assumptions cover most stock growth patterns?
The three simplifying assumptions that cover most stock growth patterns are. a. dividends that stay constant over time, dividends that grow at a constant rate, and dividends that are equal to zero . b. dividends that have a zero-growth rate, dividends that grow at a varying rate, and dividends that are equal to zero.
Who are the preferred stockholders?
A) Preferred stockholders are considered to be the true owners of public corporations.
How can the value of a growth stock be determined?
C) It implies that the value of a growth stock can be determined by forecasting the future price of the stock.
What is secondary market?
a. In secondary markets, outstanding shares of stock are bought and sold among investors.
Where are secondary market transactions done?
d. In the United States, most secondary market transactions are done on one of the many stock exchanges
Is a firm listed on the NASDAQ larger than a firm listed on the NYSE?
c . Firms listed on the NASDAQ tend to be, on average, larger in size, and their shares trade more frequently than firms whose securities trade on NYSE.
Can preferred stock be converted to common stock?
D) Preferred stock can never be converted to common stock.
