A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering.What subscription ratio is the corporation establishing for each new share?
Answer(s): A
6 rights per share. Each share receives a right and there are six million shares receiving rights to one million new shares. So six rights are required for one share.
Bubba owns stock with cumulative voting rights. There are five vacancies on a board and he owns 100 shares of stock. Bubba is entitled to cast the following votes:
Answer(s): C
500 votes. Under cumulative voting, the number of directors is multiplied by the number of shares owned. The votes may be cast all for a single director or divided in any manner among the directors.
The definition of debentures is:
Answer(s): D
securities backed by the general credit of the issuers but no specific collateral. And in the case of some issuers, that may be fairly worthless.
Convertible bonds have all of the following features except:
a normally higher yield than non-convertible bonds of the same issuer. Remember that the QUESTION: says “except” for this feature. Convertible bonds normally do NOT have a higher yield than non- convertible bonds of the same issuer. Convertibles usually have a lower yield than non -convertible sisters.
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