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Convertible securities consist of preferred stock and.

  1. treasury stock.
  2. common stock.
  3. bonds.
  4. tracking stock.

Answer(s): C



A public company’s risk profile is currently in balance. The management’s mission statement is to minimize stock devaluation. However, it is forecasting a need for working capital in the short term. Which of the following solutions would BEST assist management in accomplishing its mission?

  1. Redeem outstanding shares
  2. Issue additional shares
  3. Use debt financing
  4. Pay out dividends

Answer(s): C



Which of the following trade payment methods virtually eliminates the seller's credit risk?

  1. Bankers’ acceptance
  2. Cash before delivery
  3. Countertrade
  4. Consignment

Answer(s): B



Kahuna Boards Co. has just experienced a very profitable year and wants to share the success with its shareholders. In order to pay dividends, a sequence of events must occur. Which of the following chronological sequence of events is correct?

1. Stock is sold without the upcoming dividend attached.
2. Dividend is paid.
3. Board of directors announces the dividend.
4. Holders of record are specified.

  1. 3, 4, 1, 2
  2. 3, 4, 2, 1
  3. 4, 3, 2, 1
  4. 4, 3, 1, 2

Answer(s): A






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