Bank management - Chapter 3 - Capital

What is common stock primarily associated with?

• Liquidation rights

• Preferred dividends

• Debt obligations

• Ownership in a corporation

What type of return do common stockholders typically receive?

• Fixed rate of return

• No return

• Variable return

• Guaranteed dividends

Preferred stock generally does not provide which of the following?

• Higher claim on assets

• Fixed dividends

• Ownership in a corporation

• Voting rights

What does surplus represent in a bank's capital structure?

• Long-term debt capital

• Net earnings retained

• Excess amount above par value

• Funds for contingencies

What are retained earnings?

• Dividends paid to shareholders

• Net earnings retained in the bank

• Funds set aside for contingencies

• Excess capital above par value

What is the purpose of equity reserve?

• To repay subordinated debt

• To provide funds for contingencies

• To issue new stock

• To pay dividends

What do subordinated notes and debentures represent?

• Retained earnings

• Common stock ownership

• Long-term debt capital

• Preferred stock dividends

In the case of default, who gets paid first?

• Senior debtholders

• Preferred stockholders

• Common stockholders

• Subordinated debt holders

What is a minority interest in consolidated subsidiaries?

• Debt securities

• Ownership shares in other businesses

• Retained earnings

• Common stock

What are equity commitment notes (ECN)?

• Debt securities repayable after stock sale

• Common stock shares

• Retained earnings

• Preferred stock dividends