Series 6: Exercise

Exercise

Answer true or false.

1. 1. _____ For equity investors, potential gains equal potential losses.
2. 2. _____ The right of limited liability applies to only preferred stockholders of a corporation.

Answer the following questions.

1. 3. Put the following dates in the correct order in time:
2. I. Ex-date
3. II. Declaration date
4. III. Payment date
5. IV. Record date
6. A. I, II, III, IV
7. B. II, I, IV, III
8. C. II, IV, III, I
9. D. IV, I, II, III
10. 4. If an investor wants to be eligible for a dividend previously declared with a record date of Friday, June 13, by what date should she purchase the common stock, and what is the ex-dividend date?
11. A. Purchase by Monday, June 9; ex-date Tuesday, June 10
12. B. Purchase by Wednesday, June 11; ex-date Thursday, June 12
13. C. Purchase by Tuesday, June 10; ex-date Tuesday, June 10
14. D. Purchase by Tuesday, June 10; ex-date Wednesday, June 11

Answers

1. 1. False. For equity investors, upside potential is theoretically unlimit