Finance question and answers

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Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Because common shareholders are entitled to the profits that remain after all of a corporation 's
1) _______ other obligations have been met, common shareholders are known as
A) debt owners.
B) temporary owners.
C) owners of last resort.
D) residual owners.
2) An individual who invested $100,000 in average stocks early in the year 2000 would have approximately how much money at the end of 2008?
A) $37,500
B) $96,400
C) $74,000
D) $137,500

2) _______

3) Over the long run, stocks have provided investors with annual returns of around
A) 12% to 14%.
B) 6% to 8%.
C) 10% to
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One issue carries voting rights, and the other issue does not. In this situation, Plum is said to have issued
A) classified stock.
B) treasury stock.
C) buy-back stock.
D) OTC stock.

15) ______

16) Another term for the stated value or face value of a stock is its
A) par value.
B) liquidation value.
C) book value.
D) proxy value.

16) ______

17) The par or stated value of common stock is important for
A) accounting purposes only.
B) helping the investor determine the stock 's intrinsic value.
C) helping the market determine the trading price of the stock.
D) helping the board of directors determine the dividend payout.

17) ______

18) The value that represents the amount of stockholders ' equity in a firm is called the
A) liquidation value.
B) book value.
C) par value.
D) market value.

18) ______

19) Westlake Industries has total assets of $42.5 million, total debt of $29.3 million, and $2.4 million of 6% preferred stock outstanding. If the company has 250,000 shares of common stock outstanding, its book value per share would be
A) $52.80.
B) $43.20.
C) $32.33.
D) $33.60.

19) ______

20) As a general rule, which one of the following statements concerning the various values of common stock is correct?
A) Market values are usually below par values.
B) Book values are usually below market values.
C) Par values are usually above book values.

20) ______

D) Market
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