Occasionally, Shortages of Raw Materials Prompt Firms to Discontinue Production

question 158

True/False

Occasionally, shortages of raw materials prompt firms to discontinue production and marketing of formerly profitable products.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock that entitles shareholders to receive dividends in arrears before any dividends can be distributed to common stockholders.

Par Value

A value assigned to a security or stock by the company that issues it, typically representing the minimum price the security can be sold for upon its initial offering.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.

Cash Dividend

A payout from a company's profits, determined by the board of directors, given to a group of its stockholders as cash.