If a Company Retires Preferred Stock, Which of the Following

question 144

Multiple Choice

If a company retires preferred stock, which of the following is TRUE?

• A) Total equity will decrease.
• B) Total equity will increase.
• C) The company can record a gain or loss on retirement of stock.
• D) The number of outstanding shares will go up.

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Definitions:

Financial Forecasts

Projections of a company's future income, expenses, and capital requirements, based on assumptions about economic conditions, market trends, and business operations.

Affiliate

A business enterprise located in one state that is directly or indirectly owned and controlled by a company located in another state. Also called foreign subsidiary.

Issuer

An issuer is an entity that releases securities into the market for investors to purchase, often to raise capital for the entity's operations or projects.

Control

refers to having the power to direct the management and policies of a company, often through the ownership of a majority of shares.