The Surf's Up Issues 1,000 Shares of 6%, $100 Par

question 82

Multiple Choice

The Surf's Up issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2011. All remaining shares are common stock. The company was not able to pay dividends in 2011, but plans to pay dividends of $18,000 in 2012. Assuming the preferred stock is noncumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2012?

• A) $6,000 to preferred stockholders and $12,000 to common stockholders.
• B) $18,000 to preferred stockholders and $0 to common stockholders.
• C) $12,000 to preferred stockholders and $6,000 to common stockholders.
• D) $9,000 to preferred stockholders and $9,000 to common stockholders.

Understand the impact of stock splits and reverse stock splits on shareholder equity and the number of shares outstanding.

Calculate the outcome of stock splits and reverse stock splits.

Interpret the effects of dividend policies and stock repurchase programs on a company's stock price and shareholders.

Determine the retention ratio and its significance in dividend policy decisions.

---

Definitions:

String Variables

Variables that store sequences of characters, commonly used in programming to handle texts such as names and messages.

Break Statement

A control flow statement used to exit loops or switch statements prematurely in various programming languages.

Switch Statement

A control statement in programming that allows a variable to be tested for equality against a list of values, each with a set of statements to be executed.

Logical Operator

Operators used in programming to perform logical operations like AND, OR, and NOT, typically used in decision-making processes.