Chapter 2 Practice Questions

1. 1. Which of the following is not a right of common stockholders?
2. A. The right to keep a proportionate share of the company if more shares are issued
3. B. The right to vote for or against board members
4. C. The right to vote on whether to pay a dividend
5. D. The right to inspect the books of the company
6. 2. Which of the following is not a right of common stockholders?
7. A. The right to transfer their shares to someone else
8. B. The right to vote on a merger or acquisition
9. C. The right to look at the minutes from the board of directors’ meeting
10. D. The right to receive a dividend before a preferred stock holder
11. 3. Sandy buys shares on Friday, March 3. A dividend is declared on February 20. The date of record is March 6 and the payable date is March 21. Will Sandy receive the dividend?
12. A. Yes, because she purchased the shares before the record date.
13. B. Yes, because she purchased shares before the ex-date.
14. C. No, because she did not purchase the shares before the ex-date.
15. D. No, because she purchased shares after the record date.
16. 4. Which of the following is not a way stocks can be held?
17. A. Direct registration
18. B. Street name
19. C. Beneficial ownership
20. D. Stock certificate
21. 5. Happy Dog Corporation executes a 2-for-1 stock split. Sam has 500 shares. Before the split, each share was trading at $40 per share. How many shares does Sam have after the split, and what are they trading for?
22. A. 250 shares at $80 each
23. B. 1,000 shares at $20 each
24. C. 500 shares at $80 each
25. D. 250 shares at $40 each
26. 6. Which of the following is true of the transfer agent and the registrar?
27. A. The registrar cancels stock certificates surrendered by the seller and issues new ones in the name of the buyer.
28. B. The registrar pays out dividends.
29. C. The registrar makes sure that the compa