A Firm Has 1,000 Shares of Common Stock Outstanding with a Par

question 23

Multiple Choice

A firm has 1,000 shares of common stock outstanding with a par value of $15 per share. Upon liquidation, the firm has insufficient funds and requires an additional $5,000 to repay its creditors. Which of the following statements is true about the common shareholders' financial obligation?

• A)If the share is purchased for $8, the stockholders are obligated to pay $2 per share to the creditors.
• B)If the share is purchased for $20, the stockholders are obligated to pay interest equal to $15 per share to the firm.
• C)If the share is purchased for $15, the stockholders are obligated to pay $15 per share to the bondholders.
• D)If the share is purchased for $18, the stockholders are obligated to pay a dividend of $3 per share to the firm.
• E)If the share is purchased for $10, the stockholders are obligated to contribute $5 per share to the firm.

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Definitions:

Harmony and Cohesion

The state of being unified or in agreement within a group, which fosters a positive and collaborative environment.

Climate for Creative Thinking

An environment or organizational culture that fosters innovation, open-mindedness, and the generation of new ideas.

Convergent Thinking

A cognitive process that involves focusing on finding a single, correct solution to a problem by applying logic and analytical skills.

Vision and Mission

A statement of an organization's overarching aspirations and its purpose, serving as a guide for its strategic planning.