7

Which of the following is not a basic shareholders' right?

Select one:

a. the right to elect directors

b. the right to vote on a merger

c. the right to share proportionally in regular and liquidating dividends

d. the right to sue the company for massive losses

e. all of the above

Question8

Why can preferred stock be said to be debt in disguise?

Select one:

a. It is sometimes convertible to common stock.

b. It pays a constant amount of dividend at regular intervals.

c. It is often callable by the issuing company.

d. It often has its own credit rating.

e. all of the above

Question9

Which of the following is a disadvantage of using the Dividend Growth Model to price shares?

Select one:

a. It is difficult to use and understand.

b. It does not take into account the time value of money.

c. It cannot be used to analyze components of required return.

d. It cannot be used to value companies that do not currently pay dividends.

e. Its accuracy depends on the accuracy of its estimated variables.

Question10

What is the main reason for companies to issue dual classes of shares?

Select one:

a. maintenance of control by management

b. avoidance of value dilution for current shareholders

c. Each class of shares can be paid a different amount of dividends

d. to take advantage of lower prices on preferred shares

e. to avoid triggering "coattail" provisions