True/False ( Marks- 1 x 5= 5 )

1. If shareholders do not like the policies that management pursues, their easiest solution is to vote in a different board of directors.
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2. The price at which new shares are sold to investors almost always exceeds par value. The difference is entered into the company's accounts as additional paid-in capital, or capital surplus.

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3. Suppose a firm needs fresh capital, but its management does not want to give up its controlling interest. The existing shares could be labeled Class A, and then Class B shares with limited voting rights could be issued to outside investors.
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4. When securities are priced fairly, then financing at current market rates is a positive NPV transaction.
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5. All large corporations have little debt; it is a necessary condition for maximizing growth.
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Answer rating: 100% (QA)

1 True If shareholders feel that management is not pursuing policies that are in the best interest o... View the full answer