Corporate Actions Quiz

What is the purpose of a dividend in corporate actions?

• To decrease the company's stock price

• To increase the company's debt

• To attract new employees to the company

• To distribute a portion of the company's profits to its shareholders

Explain the concept of stock splits and how it affects the number of shares outstanding.

• A stock split only affects the price per share, not the number of shares outstanding.

• A stock split increases the number of shares outstanding.

• A stock split decreases the number of shares outstanding.

• A stock split has no effect on the number of shares outstanding.

What is a rights issue and how does it impact existing shareholders?

• A rights issue is when a company offers new shareholders the opportunity to buy additional shares at a discounted price. It impacts existing shareholders by diluting their ownership percentage.

• A rights issue is when a company offers existing shareholders the opportunity to buy additional shares at an increased price. It impacts existing shareholders by increasing their ownership percentage.

• A rights issue is when a company offers existing shareholders the opportunity to buy additional shares at a discounted price. It impacts existing shareholders by giving them the option to maintain their ownership percentage by purchasing more shares or by selling their rights to someone else.

• A rights issue is when a company offers existing shareholders the opportunity to sell their shares at a discounted price. It impacts existing shareholders by reducing the value of their existing shares.

Describe the concept of a bonus issue and its impact on the company's share capital.

• A bonus issue decreases the company's share capital by raising new capital.

• A bonus issue has no impact on the company's share capital.

• A bonus issue decreases the company's share capital without any benefit to the shareholders.

• A bonus issue increases the company's share capital without raising any new capital.

What is a buyback and how does it affect the company's outstanding shares?

• A buyback has no effect on the company's outstanding shares.

• A buyback increases the company's outstanding shares.

• A buyback only affects the company's debt, not the outstanding shares.

• A buyback reduces the company's outstanding shares.

Why do companies choose to issue dividends to their shareholders?

• To distribute profits and reward shareholders.

• To discourage shareholders from investing

• To decrease the company's profits

• To increase the company's debt

How does a stock split affect the market price of a company's shares?

• The market price of a company's shares decreases

• The market price of a company's shares doubles

• The market price of a company's shares increases

• The market price of a company's shares remains the same

What are the benefits of a rights issue for a company?

• It increases the company's debt burden

• It has no impact on the company's financial position

• It allows the company to reduce the number of outstanding shares

• It allows the company to raise capital by offering existing shareholders the opportunity to buy additional shares at a discounted price.

Explain the difference between a bonus issue and a rights issue.

• A bonus issue is when a company issues additional shares to existing shareholders at a discounted price, while a rights issue is when a company offers new shareholders the right to buy additional shares at a discounted price.

• A bonus issue is when a company issues additional shares to existing shareholders for free, while a rights issue is when a company offers existing shareholders the right to buy additional shares at a discounted price.

• A bonus issue is when a company issues additional shares to existing shareholders for a fee, while a rights issue is when a company offers existing shareholders the right to buy additional shares at the current market price.

• A bonus issue is when a company issues additional shares to new shareholders for free, while a rights issue is when a company offers existing shareholders the right to sell their shares at a discounted price.

What are the reasons for a company to initiate a share buyback program?

• To decrease the value of its remaining shares

• To increase the value of its remaining shares, signal confidence in the company's future, or to return excess cash to shareholders.

• To signal lack of confidence in the company's future

• To hoard excess cash from shareholders