Exam 17: Common and Preferred Stock Financing

Sharpe Products has one million outstanding shares and seven directors to be elected. Cumulonimbus Holdings owns 200,000 shares of Sharpe. How many directors can Cumulonimbus elect with cumulative voting?

A common stockholder cannot force a company into bankruptcy for eliminating the dividend.

A rights offering is generally financially advantageous to the investor because it provides them with additional shares of stock.

The subscription rate of a new offering is generally _______ than the rights-on price and _______ than the ex-rights price.

An individual investing in preferred stock receiving a before-tax preferred yield of 6.75% and having a tax rate of 25% would receive an after-tax preferred yield of _____. Assume the tax rate on dividends is 15%.

Which of the following statements is true with respect to cumulative voting?

Preferred stock generally carries a higher interest rate than debt.

Common stockholders' rights include all of the following except for which one?

Buggy Whip Manufacturing Company is issuing preferred stock yielding 8%. Selten Corporation is considering buying the stock. Assume that Buggy's tax rate is 0% due to continuing heavy tax losses, and Selten's tax rate is 34%. What is the after-tax preferred yield for Selten? Assume the tax rate on dividends is 15%.

Preferred stock would generally provide a lower before-tax yield to investors than secured debt due to its lower risk.

American Depository Receipts (ADRs) are

The most important feature of the preemptive right is that the rights

The difference between the rights-on and ex-rights price is equal to the subscription price divided by N, where N is the number of rights needed to purchase a new share of stock.

Pre-emptive rights offerings are an especially popular way in Europe to raise money and fund expansions.

Given that there are 4,000,000 shares outstanding in Miller Corp., how many shares will be required for a minority group of stockholders to elect two of the nine members on the board of directors? (Assume cumulative voting is required.)

If a preferred stock is of the cumulative type,

"Preemptive rights" means that

Which of the following is NOT a primary investor in preferred stock?

Which of the following statements about floating rate preferred stock is true?

"Dutch auction" preferred stock