When a Corporation Makes a Cash Distribution Despite Having No

question 101

Multiple Choice

When a corporation makes a cash distribution despite having no retained earnings, this is called a

• A)dividend in arrears.
• B)call provision.
• C)conversion privilege.
• D)liquidating dividend.

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Definitions:

Forward Rate

The interest rate agreed upon today for a loan that will occur at a future date, used in the calculation of the yield curve and in the pricing of forward contracts.

Canadian Security

A financial instrument issued in Canada, such as stocks, bonds, or investment funds.

Exchange Rate

The worth of a currency when exchanged for a different one.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.