Which of the Following Statements Regarding Stock Issues Is Most

question 38

Multiple Choice

Which of the following statements regarding stock issues is most accurate?

• A)The preferred stock issued by young companies typically pays regular cash dividends.
• B)The preferred stock issued by young companies usually gives the owner an option to convert it to common stock on some future date,so it is often called callable preferred stock.
• C)If the company runs into financial difficulties,the preferred stockholders have a senior claim on the assets of the firm relative to any common stockholders.
• D)Preferred stock issued by mature companies such as banks usually has no dividend.
• E)When a company founder decides to sell equity to outside investors for the first time,it is common practice for private companies to issue common stock to raise capital.

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Definitions:

Repossesses Collateral

The act of taking back possession of property used as collateral in a loan agreement, typically after a default by the borrower.

Surplus

The amount by which revenues, resources, or supplies exceed what is needed or used; in finance, it refers to profit or the amount by which income exceeds expenditures.

Revised Article 9

An update to the Uniform Commercial Code that deals with secured transactions; it governs the process of securing assets to back a loan.

UCC

The Uniform Commercial Code is a widespread legislative schema that guides all commercial operations in the United States.