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Chapter 15 - c To provide stock for employee stock...

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CHAPTER 15 1) In the absence of restrictive provisions, what are the basic rights of stockholders of a corporation? a. To share proportionately in profits and losses; b. To share proportionately in management; c. To share proportionately in corporate assets upon liquidation; d. To share proportionately in any new issues of stock of the same class – called the preemptive right. 11) For what reasons might a corporation purchase its own stock? a. To provide tax-efficient distributions of excess cash to shareholders; b. To increase earnings per share and return on equity;
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Unformatted text preview: c. To provide stock for employee stock compensation contracts or to meet potential merger needs; d. To thwart takeover attempts or to reduce the number of stockholders; e. To make a market in the stock. 19) What factors influence the dividend policy of a company? The factors that influence the dividend policy of a company are: • The type of shareholders (taxable or nontaxable, retail or institutional investor) • Securities market • Stability of earnings • Investment opportunities...
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