Question : 137. Preferred stock that the issuing corporation has the option to : 1257675

137. Preferred stock that the issuing corporation has the option to retire by paying a specified amount to the preferred stockholders is called: 
A. Convertible preferred stock.
B. Callable preferred stock.
C. Premium stock.
D. Cumulative preferred stock.
E. Participating preferred stock.

138. Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called: 
A. Financial leverage.
B. Discount on stock.
C. Premium on stock.
D. Preemptive right.
E. Capital gain.

139. Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called: 
A. Cumulative preferred stock.
B. Callable preferred stock.
C. Participating preferred stock.
D. Convertible preferred stock.
E. Preferential preferred stock.

140. Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company’s first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows: 
A. $8,000 preferred; $22,000 common.
B. $16,000 preferred; $14,000 common.
C. $7,500 preferred; $22,500 common.
D. $15,000 preferred; $15,000 common.
E. $0 preferred; $30,000 common.

141. Gracey’s Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey’s also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows: 
A. $15,000 preferred; $15,000 common.
B. $6,000 preferred; $24,000 common.
C. $30,000 preferred; $0 common.
D. $12,000 preferred; $18,000 common.
E. $0 preferred; $30,000 common.

142. Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is: 
A. $1,000.
B. $2,000.
C. $3,000.
D. $4,000.
E. $0.

143. Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as: 
A. Participating preferred stock.
B. Callable preferred stock.
C. Cumulative preferred stock.
D. Convertible preferred stock.
E. Noncumulative preferred stock.

144. A dividend preference for preferred stock means that: 
A. Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.
B. Preferred shareholders are guaranteed dividends.
C. Dividends are paid quarterly.
D. Preferred stockholders prefer dividends more than common stockholders.
E. Dividends must be declared on preferred stock.

145. Alto Company issued 7% preferred stock with a $100 par value. This means that: 
A. Preferred shareholders have a guaranteed dividend.
B. The amount of the potential dividend is $7 per year per preferred share.
C. Preferred shareholders are entitled to 7% of the annual income.
D. The market price per share will approximate $100 per share.
E. Only 7% of the total paid-in capital can be preferred stock.

146. Stock that was reacquired and is still held by the issuing corporation is called: 
A. Capital stock.
B. Treasury stock.
C. Redeemed stock.
D. Preferred stock.
E. Callable stock.