Chapter 4 Practice Questions
1. Which of the following would not be a right of a common stockholder?
A. The right to transfer shares to someone else
B. The right to vote on a merger or acquisition
C. The right to look at the minutes from the board of directors’ meeting
D. The right to receive a dividend before a preferred stockholder
2. Which of the following is not true of treasury stock?
A. It pays dividends.
B. It has no voting rights.
C. It is equal to issued shares minus outstanding shares.
D. Corporations may acquire their own stock, thereby creating treasury stock and boosting their earnings per share.
3. Long Life Medical Devices has a current share price of $20. Long Life has authorized 100 million shares, issued 40 million shares, and repurchased 5 million shares. What are Long Life’s outstanding shares and market capitalization?
A. 40 million; $800 million
B. 35 million; $700 million
C. 60 million; $1,200 million
D. 5 million; $100 million
4. Which of the following is true of the transfer agent and the registrar?
A. The registrar cancels stock certificates surrendered by the seller and issues new ones in the name of the buyer.
B. The registrar pays out dividends.
C. The registrar makes sure that the company does not issue more shares than were authorized.
D. The registrar and the transfer agent are usually not independent of one another.
5. Sandy buys shares on Friday, March 3. A dividend was declared on February 20. The date of record is March 6 and the payable date is March 21. Will Sandy receive the dividend?
A. Yes, because she purchased the shares before the record date.
B. Yes, because she purchased shares before the ex-date.
C. No, because she did not purchase the shares before the ex-date.
D. No, because she purchased shares after the record date.
6. Happy Dog Corporation executes a 2-for-1 stock split. Sam has 500 shares. Before the split,