Origin Energy Has an Outstanding Issue of Cumulative Preference Shares

question 93

Multiple Choice

Origin Energy has an outstanding issue of cumulative preference shares with an annual fixed dividend of $2.00 per share.It has not paid the preferred dividend for the last 3 years,but intends to pay a dividend on the ordinary shares in the coming year.Before Origin can pay a dividend on the ordinary shares,

• A)preference shareholders may cast all their votes for a single director.
• B)preference shareholders must receive dividends totaling $8.00 per share.
• C)preference shareholders must receive $2.00 per share.
• D)preference shareholders will not necessarily receive any dividend.

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Definitions:

Nondiscriminating Monopolist

A monopolist who charges the same price for their product to all consumers, rather than adjusting the price based on market segmentation or consumer willingness to pay.

Marginal Revenue

The revenue gain from the sale of an additional good or service unit.

Marginal Revenue

The growth in income arising from the sale of an extra unit of a product or service.