投资学英文版课件problem ch05.docVIP

PAGE 2 PAGE 3 PAGE 1 Chapter 5 Investing in Common Stock TRUE/FALSE 1. The relationship between a firm and its state of incorporation is specified in the bylaws. 2. Stockholders in a publicly held corporation have limited liability. 3. Both corporate earnings and cash dividends received by stockholders are taxed by the federal government. 4. Most stockholders have cumulative voting rights. 5. If a firm operates at a loss, its retained earnings are decreased. 6. Most stockholders of publicly held stock have preemptive rights. 7. Increases in the market value of a stock generate capital gains when the stock is sold. 8. If a cumulative preferred stock pays a dividend, it is said to be in arrears. 9. Preferred stock pays a fixed amount of interest. 10. Preferred stock dividends are usually cumulative. 11. The payout ratio is dividends divided by earnings. 12. Dividend increases usually occur prior to an increase in earnings. 13. The exdividend date follows the date of record. 14. Managements are often reluctant to reduce dividends because reductions may be viewed as indicating financial weakness. 15. If an investor buys stock on the exdividend date, that individual will not receive the dividend. 16. The price of a stock generally adjusts downward for the distribution of dividends. 17.Stock dividends increase the firms cash. 18. A twoforone stock split doubles the number of shares and their price. 19. Stock splits and stock dividends increase the earning capacity of the firm. 20. A onefortwo reverse split increases the price of the stock. 21. Dividend reinvestment plans are a means to postpone federal income tax on dividends(as of 2004). 22. A major advantage associated with dividend reinvestment plans is forced saving. MULTIPLE CHOICE 1. Advantages of the corporate form of business include a. limited liability for stockholders b.avoidance of state taxation c. limited life d.deductibility of dividends