Question :
61. Which of the following is/are not true? A. Convertible preferred shares give : 1230429
61. Which of the following is/are not true?
A. Convertible preferred shares give the holder of preferred shares the right to convert the preferred shares into a specified number of common shares under certain specified conditions.
B. Changes in the market price of convertible preferred shares will often parallel changes in the market price of common shares because of the conversion option.
C. Convertible preferred shares provide the security holders with the possibility of capital appreciation by converting the preferred shares into common shares if the market price of the common shares rises sufficiently.
D. The issuing firm benefits from issuing convertible preferred shares, because these shares carry a lower dividend rate than purchasers otherwise would have required to buy the shares for a given price.
E. none of the above
62. Preferred shares may provide for redemption by the issuing firm in the future. Redeemable preferred shares carry which of the following redemption rights or obligations?
A. The issuing firm has the right to redeem the preferred stock under certain conditions.
B. Mandatorily redeemable preferred stock has attributes of both long-term debt and shareholders’ equity with the specified redemption time analogous to the maturity date of long-term debt.
C. Some preferred stock is redeemable at the option of the holder with the owner of the preferred stock having the right to require the issuing firm to repurchase the shares.
D. all of the above
E. none of the above
63. In U.S. GAAP, preferred stock subject to redemption at the option of the preferred shareholders appears
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
64. In IFRS, preferred stock subject to redemption at the option of the preferred shareholders appears
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
65. In IFRS, preferred stock subject to mandatory redemption is disclosed
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
66. In U.S. GAAP, preferred stock subject to mandatory redemption is disclosed
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
67. Which of the following is/are true?
A. U.S. GAAP and IFRS classify preferred stock subject to redemption only at the option of the issuing firm as shareholders’ equity.
B. U.S. GAAP and IFRS classify preferred stock subject to mandatory redemption is a liability.
C. U.S. GAAP classify preferred stock subject to redemption at the option of the preferred shareholders appears between liabilities and shareholders’ equity.
D. IFRS classify preferred stock subject to redemption at the option of the preferred shareholders appears as a liability.
E. all of the above
68. Which of the following is not true?
A. All corporations must issue common stock.
B. Common shareholders have a claim on the assets of a firm after creditors and preferred shareholders have received amounts promised to them.
C. Frequently, corporations grant voting rights only to common shares, giving their holders the right to elect members of the board of directors and to decide certain broad corporate policies (spelled out in the stock contract).
D. Some firms issue more than one class of common shares, with each class granted different voting rights.
E. none of the above
69. Which of the following is not true?
A. All corporations must issue common stock.
B. Common shareholders have a claim on the assets of a firm after creditors and preferred shareholders have received amounts promised to them.
C. Frequently, corporations grant voting rights only to common shares, giving their holders the right to elect members of the board of directors and to decide certain broad corporate policies (spelled out in the stock contract).
D. Some firms issue more than one class of common shares, with each class granted different voting rights.
E. Firms generally issue preferred shares, both at the time of initial incorporation and in subsequent years, for amounts greater than par (or stated) value.
70. Which of the following is not true?
A. Firms may issue capital stock (preferred or common) for cash or for noncash assets.
B. Firms usually issue shares for cash at the time of their initial incorporation and at periodic intervals as they need additional shareholder funds.
C. Firms sometimes issue shares to employees as compensation.
D. The issue price for preferred stock usually approximates its par value.
E. none of the above
