Question :
61. Which of the following not true? A. Callable preferred shares provide the : 1245789
61. Which of the following is not true? A. Callable preferred shares provide the issuer with the right to repurchase preferred shares at a specified price, B. If financing becomes available at a cost lower than the rate fixed for the preferred shares, the issuing firm can reduce its financing costs by issuing new securities and then exercising its option to reacquire the outstanding callable preferred shares at a fixed price. C. The call option is valuable to the issuing firm but makes the shares less attractive to potential owners of the shares.D. Other things equal, a firm will receive a smaller amount from issuing callable preferred shares than from issuing noncallable preferred shares. E. Callable preferred shares provide the issuer with the obligation to repurchase preferred shares at a specified price,
62. Which of the following is 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. Convertible preferred shares require the holder of preferred shares to convert the preferred shares into a specified number of common shares under certain specified conditions. 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. Convertible preferred shares provide the security holders with a relatively assured dividend. E. Convertible preferred shares provide the security holders with a claim that is senior to that of common shareholders.
63. 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
64. 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 aboveE. none of the above
65. Which of the following is/are 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
66. 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.
67. Which of the following is/are 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
68. Which of the following is not true? A. Firms issue common stock for assets other than cash, for example, to acquire another firm. B. Firms generally issue common shares, both at the time of initial incorporation and in subsequent years, for amounts greater than par (or stated) value. C. The firm records the shares exchanged for noncash assets at the fair value of the shares given or, if the firm cannot make a reasonable estimate, at the fair value of the assets received.D. Firms may issue capital stock (preferred or common) for cash or for noncash assets. 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.
69. Corporations often sell, or exchange for goods and services, various call options on their shares. Which of the following is/are not true? A. A call option gives the holder the right to acquire shares of common stock at a fixed or determinable price, called the strike price or exercise price. B. If the market price of the shares increases above the exercise price, the holder of the option can benefit by exercising the option to purchase shares. C. The excess of the market price over the exercise price is the option’s intrinsic value. D. Many firms pay part of the compensation of some employees by issuing call options on their own shares referring to these arrangements as employee stock options (ESOs).E. none of the above
70. 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.
