ch11

The advantages of corporations going public include all of the following except:

• Professional management

• Transferability of ownership

• Limited shareholder liability

• Ability to remove assets

In a “pump-and-dump” scheme, the owners of the company:

• Falsely claim the business has high growth potential.

• Artificially raise the price of the stock.

• Sell the stock at a high price.

• Falsely claim the business has high growth potential, artificially raise the price of the stock, and sell the stock at a high price.

  
  

In order to limit the use of a shell company, the SEC has proposed:

• Greater financial disclosures.

• Eliminating this type of company.

• Arresting promoters of shell companies for fraud.

• That its stock only be sold in foreign countries.

  
  

The ownership of common stock in a corporation usually carries the following rights: 

• To vote for directors.

• To declare dividends.

• To share in a distribution of assets if the corporation is to be liquidated

• Both declare dividends and share in a distribution of assets if the corporation is to be liquidated.

  
  

The board of directors' primary functions include all of the following except: 

• Hiring corporate officers.

• Setting officers' salaries.

• Declaring dividends.

• Protecting the interests of the officers.

  
  

Shares that have been sold and are in the hands of stockholders are called: 

• Outstanding

• Issued

• Treasury

• Underwritten

Book value per share of common stock is derived by which of the following: 

• Stockholders equity divided by the number of shares authorized.

• Stockholders equity divided by the number of shares outstanding.

• Net income divided by the number of shares outstanding.

• Net income divided by the number of shares authorized.

The net assets of a corporation are equal to: 

• Total assets-total liabilities.

• Total assets-retained earnings.

• Total assets + total liabilities.

• Total assets + retained earnings.

When shares of stock are sold from one investor to another, they will trade at: 

• Par value

• Book value

• Market value

• Stated value

The market price of a preferred stock will be affected by: 

• The dividend rate.

• The chance that the company will not operate profitably.

• The level of interest rates.

• The dividend rate, the chance that the company will not operate profitably, and the level of interest rates.