Chapter 4: Equity Market

Stock is riskier than bonds

• True

• False

Stock has long maturity

• True

• False

The company prioritizes paying dividends to shareholders before paying debts to related parties when doing business at a loss.

• True

• False

It is easier to make more money investing in stocks than in bonds.

• True

• False

Preferred stockholders have the right to vote directors and adjust the company's charter.

• True

• False

Preferred stockholders and common stockholders will both depend on the company's business performance to receive dividends.

• True

• False

Both organized exchange and over-the-counter (OTC) markets require a physical location where buyers and sellers can meet.

• True

• False

In an IPO, a firm offers its shares to the public for the first time.

• True

• False

A secondary stock offering occurs when a company issues new shares of stock that are already publicly traded.

• True

• False

What is a cumulative provision?

• A feature of common stock that guarantees dividend payments.

• A requirement for preferred stock that all dividends must be paid before common stock dividends.

• A type of bond provision.

• A rule that allows preferred stockholders to vote on all company issues.