The Basket Corporation Has the Following Classes of Shares: Preferred

question 18

Multiple Choice

The Basket Corporation has the following classes of shares: Preferred shares, $40, 1,000 shares issued and outstanding, non-cumulative. Common shares, 100,000 shares issued, 50,000 shares outstanding.
In 20A, Basket Corporation was incorporated. It paid no dividends in its first year of existence. In 20B, the board of directors of Basket declared a total dividend of $180,000 to be paid to the holders of preferred and common shares. What was the amount of the dividend paid in 20B on each common share?

• A) $2.80
• B) $2.00
• C) $3.60
• D) $1.80

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Definitions:

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Low-ball Technique

A persuasion strategy by which an initially attractive offer is made to get a person to commit to an action, then terms are made less favorable.

Door-in-the-face Technique

A persuasion strategy where a large, unreasonable request is first made knowing it will be rejected, followed by a smaller, more reasonable request.

Standard-pitch Technique

A method in music production and performance concerning the consistent tuning of instruments to a standardized pitch.