Series 7: Chapter 1 Practice Questions

Chapter 1 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. A shareholder has 600 shares of a company’s stock. The company employs cumulative voting. What is the maximum number of shares the stockholder could cast for one board member if three board members are up for election?
12. A. 200
13. B. 600
14. C. 1,200
15. D. 1,800
16. 4. Which of the following is not true of treasury stock?
17. A. It pays dividends.
18. B. It has no voting rights.
19. C. It is equal to issued shares minus outstanding shares.
20. D. Corporations may acquire their own stock, thereby creating treasury stock and boosting their earnings per share.
21. 5. Long Life Medical Devices has a current share price of $20. Long Life has authorized 100 million shares, issued 40 million shares, and repurchased 5 million shares. What are Long Life’s outstanding shares and market capitalization?
22. A. 40 million, $800 million
23. B. 35 million, $700 million
24. C. 60 million, $1,200 million
25. D. 5 million, $100 million
26. 6. 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?
27. A. Yes, because she purchased the shares before the record date.
28. B. Yes, because she purchased shares before the ex-date.
29. C. No, because she did not purchase the shares before the