A Company Has Outstanding 9 Million Shares of $2 Par

question 31

Multiple Choice

A company has outstanding 9 million shares of $2 par value common shares and 1 million shares of $4 par value preferred shares.The preferred shares have $0.32 dividend per share.The company declares $600,000 in total dividends for the year.Which of the following is true if dividends in arrears are $30,000?

• A)Preferred shareholders will receive $350,000.Common shareholders will receive $250,000.
• B)Preferred shareholders will receive $60,000.Common shareholders will receive $540,000.
• C)Preferred shareholders will receive $320,000.Common shareholders will receive $280,000.
• D)Preferred shareholders will receive $90,000.Common shareholders will receive $510,000.

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Definitions:

Silver Future

A standardized, exchange-traded contract to buy or sell a specific amount of silver at a future date and price.

Loss

The reduction in value experienced by an investment or business operation when expenses exceed revenues.

Expectations Hypothesis

A theory suggesting that the long-term interest rates reflect market expectations for future short-term rates.

Futures Pricing

The process of determining the price at which a futures contract is bought or sold, typically influenced by supply and demand, interest rates, and expected future market conditions.