CHAP008 - Chapter 8 Stocks, Stock Markets and Market...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 8 Stocks, Stock Markets and Market Efficiency Multiple Choice Questions 1. A share of common stock represents: A) A claim from a lender to a borrower. B) A share in the company's debts. C) A share of ownership of the company. D) An unlimited liability to the owner of the stock. Answer: C LOD: 1 Page: 178 A-Head: The Essential Characteristics of Common Stocks. 2. Two characteristics that make owning stock attractive are: A) Unlimited liability and first claim on assets. B) Share prices are relatively inexpensive and are transferable. C) Each share represents a large percentage of ownership and dividends are fixed. D) Dividends are paid before any other distributions are made and stocks are transferable. E) None of the above. Answer: B LOD: 1 Page: 178 A-Head: The Essential Characteristics of Common Stocks. 3. The fact that common stockholders are residual claimants means: A) The stockholders receive the remains after everyone else is paid. B) The stockholders receive their dividends before any other residuals are paid. C) The stockholders are paid any past due dividends before other claims are paid. D) None of the above. Answer: A LOD: 1 Page: 178 A-Head: The Essential Characteristics of Common Stocks. 4. If a public corporation goes bankrupt and does not have enough assets to pay off all creditors: A) The stockholders are personally liable for the balance. B) The fact that stockholders are residual claimants means they may have to pay in additional capital to cover the obligations. C) The stockholders receive any dividends due before the other creditors are paid. D) The stockholders cannot lose more than their investment. Answer: D LOD: 1 Page: 179 A-Head: The Essential Characteristics of Common Stocks. 200 Cecchetti: Money, Banking, and Financial Markets
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 8 Stocks, Stock Markets and Market Efficiency 5. The concept of limited liability says a stockholder of a corporation: A) Is liable for the corporation's liabilities, but nothing more. B) Cannot receive dividends that exceed their investment. C) Cannot lose more than their investment. D) None of the above. Answer: C LOD: 1 Page: 179 A-Head: The Essential Characteristics of Common Stocks. 6. Which of the following statements is most correct? A) Stockholders have limited liability and have no control over corporate leadership. B) Stockholders can dislodge the managers of the corporation but not the board of directors. C) Stockholders have unlimited liability and can dislodge members of the board of directors. D) Stockholders can dislodge members of the board and have limited liability. Answer: D LOD: 2 Page: 179 A-Head: The Essential Characteristics of Common Stocks. 7. Which of the following statements is most correct? A) Managers, directors, and stockholders almost always share the same interest.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 32

CHAP008 - Chapter 8 Stocks, Stock Markets and Market...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online