Solved

Match Each Definition with Its Term

Question 215

Matching

Match each definition with its term

Premises:
The amount that must be paid to call and retire a preferred share
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
The price at which stock is bought or sold in the market
The difference between the par value of stock and its issue price when it is issued at a price above par value
No-par stock to which the directors assign a stated value per share; this amount becomes the minimum legal capital
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 equity of a corporation
The value assigned to a share of stock by the corporate charter when the stock is authorized
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
Stockholders equity applicable to common shares divided by the number of common shares outstanding
Responses:
Cumulative preferred stock
Par value
Premium on stock
Book value per common share
Financial leverage
Call price
Market value per share
Stockholders' equity
Preferred stock
Stated value stock

Correct Answer:

The amount that must be paid to call and retire a preferred share
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
The price at which stock is bought or sold in the market
The difference between the par value of stock and its issue price when it is issued at a price above par value
No-par stock to which the directors assign a stated value per share; this amount becomes the minimum legal capital
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 equity of a corporation
The value assigned to a share of stock by the corporate charter when the stock is authorized
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
Stockholders equity applicable to common shares divided by the number of common shares outstanding
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