Unit 3 Equity Securities

Question 1

Preferred stock prices move _____ to interest rates.

Answer 1

inversely

Question 2

Cumulative Preferred Stock

Answer 2

Pays dividends in arrears (missed payments), before any other common stock holders get dividend

Question 3

Par value of preferred stock

Answer 3

$100

Question 4

Determining to convert convertible securities

Answer 4

1. find conversion ratio ($100par/ CP)
2. Multiply by stock price
3. if $ > convertible security, convert

Question 5

Higher dividend than stated rate is a

Answer 5

Participating preferred stock

Question 6

Class Q common stock

Answer 6

associated with an issuer’s dividend reinvestment plan (DRIP)

Question 7

A rights offering will _______ a company’s EPS

Answer 7

decrease