Consider the following statements. ____ 1. A reason companies invest in other companies is to build strategic

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Consider the following statements.
____ 1. A reason companies invest in other companies is to build strategic alliances.
____ 2. All companies are required to pay dividends to their investors.
____3. When market interest rates increase, the market value of a bond increases as well.
____ 4. One way for a company to expand operations into a new industry is to acquire the majority of common stock in another company that already operates in that industry.
_____ 5. Stocks typically have greater upside potential, providing a higher average return to their investors over the long run than do bonds.
_____ 6. Companies purchase debt securities primarily for the dividend revenue they provide.

Required:
Indicate whether each statement is true (T) or false (F).

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Financial Accounting

ISBN: 978-0078025549

3rd edition

Authors: J. David Spiceland, Wayne Thomas, Don Herrmann

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