UCBUGBA102ATopic08PracticeQuestionsSolns - Topic08...

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Topic08 Question 1. In a short sentence, define the following terms: a. Paid-in Capital in Excess of Par represents the amounts paid by investors to acquire shares of stock from the company in excess of par (or stated) value. b. Treasury Stock represents amounts paid by the company to repurchase outstanding shares of the company’s stock. c. Book Value of Stock represents the total stockholders’ equity of the company divided by the shares outstanding. d. Passive Investments in Stock represent either short-term or long-term investments in the stock of other companies for which there is little or no influence by the investor. e. Minority Interest represents the portion that is less than 50% of the voting stock of a subsidiary company that is owned by a stockholder (or stockholders) other than the parent company. UGBA102A Topic08 Practice Questions 1
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Question 2. In a short sentence, explain the difference between the following concepts: Both issued shares and outstanding shares have been sold at one time by the company, however, some issued shares may be subsequently repurchased by the company in the form of treasury stock whereas outstanding shares are held by stockholders. Par value is an arbitrary amount specified in the charter of the company and assigned to each share of stock whereas market value is the amount being paid by investors to acquire each share. c. Both common and preferred stock represent investments by owners of the company, however, preferred stock is a class of capital stock that enjoys certain preferential treatment with regard to dividends or to net
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This note was uploaded on 03/05/2009 for the course UGBA 102A taught by Professor Udpa during the Fall '07 term at University of California, Berkeley.

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UCBUGBA102ATopic08PracticeQuestionsSolns - Topic08...

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