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Match Each of the Following Terms with the Appropriate Definitions

Question 211

Matching

Match each of the following terms with the appropriate definitions.

Premises:

Responses:

Stated value stock

The earning of a higher return on common stock by paying dividends on preferred stock or interest on debt at a rate that is less than the rate of return earned with the assets from issuing preferred stock or debt

Book value per common share

No-par stock to which the directors assign a stated value per share; this amount becomes the minimum legal capital

Preferred stock

The equity of a corporation

Premium on stock

The value assigned to a share of stock by the corporate charter when the stock is authorized

Market value per share

Stockholders equity applicable to common shares divided by the number of common shares outstanding

Stockholders' equity

Stock that gives its owners a priority status over common stockholders in one or more ways, such as the payment of dividends or the distribution of assets

Par value

The difference between the par value of stock and its issue price when it is issued at a price above par value

Cumulative preferred stock

A preferred stock that has the right to be paid both the current and all prior periods' unpaid dividend before any dividend is paid to common stockholders

Call price

The amount that must be paid to call and retire a preferred share

Financial leverage

The price at which stock is bought or sold in the market

Premises:

Stated value stock

Book value per common share

Preferred stock

Premium on stock

Market value per share

Stockholders' equity

Par value

Cumulative preferred stock

Call price

Financial leverage

Responses:

No-par stock to which the directors assign a stated value per share; this amount becomes the minimum legal capital

The equity of a corporation

The value assigned to a share of stock by the corporate charter when the stock is authorized

Stockholders equity applicable to common shares divided by the number of common shares outstanding

Stock that gives its owners a priority status over common stockholders in one or more ways, such as the payment of dividends or the distribution of assets

The difference between the par value of stock and its issue price when it is issued at a price above par value

A preferred stock that has the right to be paid both the current and all prior periods' unpaid dividend before any dividend is paid to common stockholders

The amount that must be paid to call and retire a preferred share

The price at which stock is bought or sold in the market

Correct Answer:

Premises:

Responses:

Stated value stock

Book value per common share

Preferred stock

Premium on stock

Market value per share

Stockholders' equity

Par value

Cumulative preferred stock

Call price

Financial leverage