Deck 35: Ownership of a Corporation

Question 1

Common stockholders do not possess the right to a share of the assets of a corporation on dissolution.

Answer 1

False

Question 2

A corporation does not have the duty to furnish a prospectus to each purchaser of securities.

Answer 2

False

Question 3

If a corporation's broker holds the stock before issuance of certificates, the broker must transfer the stock according to the written direction of the owner.

Answer 3

True

Question 4

Once the directors of a corporation declare a cash dividend, it cannot later be rescinded.

Question 5

Which of the following best describes a prospectus?

A) It is a document relating to purchase and subsequent resale of company assets and intellectual property.
B) It is a document containing specified information about the stock offering and the corporation.
C) It is a document pertaining to the conduct regulations of the company.
D) It is a document containing information relating to the bylaws of the company.

Question 6

_____ is preferred stock on which all dividends must be paid before the common stock receives any dividend.

A) Treasury stock
B) Participating preferred stock
C) Cumulative preferred stock
D) Noncumulative preferred stock

Question 7

Cumulative preferred stock is preferred stock on which dividends have to be paid only for the current year before common stock dividends are paid.

Question 8

A certificate of stock is written evidence of ownership of stock.

Question 9

Common stockholders receive their proportionate share of the corporation's assets prior to any share going to preferred shareholders.

Question 10

Which of the following is true of dividends paid to shareholders?

A) Dividends can be paid in the form of property manufactured by another organization.
B) Cash dividends can be declared and then rescinded by the directors.
C) Dividends can be paid with stock a corporation owns in another company.
D) Stock dividends cannot be rescinded once declared.

Question 11

The _____ of a corporation is the declared money value of its outstanding stock.

A) preferred stock
B) inventory stock
C) unit stock
D) capital stock

Question 12

Which of the following best describes a share?

A) It is the unit value of a company's total stock.
B) It the unit value of a company's liabilities.
C) It is the total value of a company's assets.
D) It is total value of a company's liabilities.

Question 13

Which of the following best describes watered stock?

A) It is stock on which all dividends must be paid before the common stock receives any dividend.
B) It is stock to which no face value has been assigned.
C) It is stock issued and reacquired by the corporation.
D) It is stock issued as fully paid up, but paid with property of inflated values.

Question 14

The federal Securities Act regulates the sale of securities in interstate commerce.

Question 15

A stock option is a contract entered between a corporation and an individual.

Question 16

What is the purpose of blue-sky laws? Explain.

Question 17

State laws which prevent the sale of worthless stock are known as _____.

A) bylaws
B) unit laws
C) stock laws
D) blue-sky laws

Question 18

A stock owner can use a blank form on the back of the certificate while making a transfer.

Question 19

Which of the following is true of stock?

A) An unregistered owner of stock is not entitled to dividends.
B) Stock cannot be bought before incorporation.
C) Preference stock cannot be sold by the owner without the company's permission.
D) An owner is not allowed to present his stock as a gift to another.

Question 20

A cash dividend may be paid out of paid-in surplus.