Explain at least five (5) reasons why a convertible preference shareholder will decide to convert the shares into equity shares.
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Explain at least five (5) reasons why a
convertible preference shareholder will decide to convert the shares
into equity shares.
Step by step
Solved in 2 steps
- 1. Examine the process of liquidating a public company 2, Explain at least five (5) reasons why aconvertible preference shareholder will decide to convert the sharesinto equity shares.If the preference shares are cumulative and fully participating, how much is the dividends to be allocated to ordinary shareholders? 2.If the preference shares of OTSO CORP are cumulative and participating only up to 15%, how much is the dividends to be allocated to ordinary shareholders?Significant influence is normally presumed to exist if the investor owns at least a certain percentage of the investeecompany's ordinary shares. This percentage is_____.Select one:a.10%b.50%c.51%d.20%
- The right of a shareholder to share proportionally in any new stock issue is called a/an ____________ right. Select one: a. coattail b. preemptive c. indenture d. secured e. charterBefore a corporation can issue common shares, it must first issue preferred shares. O True O FalseThe following choice in number 19 are these. C. Ordinary shareholders receive a dividend rate per share equal to the preference share and all excess dividends are shared proportionately between the two classes. D. Preference shareholders receive their full dividend and any excess is given to the ordinary shareholders.
- Identify which category of shareholder's equity is affected by each item and briefly explain how it is affected. 1. Sale of additional ordinary shares of the corporationIn applying the Sec. 318 attribution rules to a stock redemption, the stock of a corporation is only deemed to be proportionately owned by the shareholder when the shareholder owns more than 50% of the corporate stock. This statement is True, correct?Shareholders choose to invest in preferred shares because: a. preferred shares can always be converted into ordinary shares at the shareholder's option b. preferred shares include the right to participate in management decisions through voting privileges c. dividends are distributed to preferred shareholders before ordinary shareholders d. the preferred dividend distributions are generally increased each year
- Walter Corporation has three classes of shares: Series A, Series B, and Class A. How should Walter classify and present the different classes if the characteristics of each class are as follows? Series A shares The shares are mandatorily redeemable and carry a dividend rate of 4%. Series B shares The shares are cumulative, non-voting, and carry a dividend rate of $2 per share. They are subordinated to the Series A shares for dividend distribution. Class A shares The shares are subordinated to both Series A and Series B shares for dividend distribution and participate in the earnings and losses of the company above a non-cumulative dividend of $0.50 per share. The shares have a voting right of one vote per share.In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution. For situations 1 – 2, the ownership of a corporation is: Andy 40 shares Barb 20 shares Cindy 40 shares Situation 1: The corporation redeems 10 shares of stock held by Barb. Situation 2: The corporation redeems 30 shares of stock held by Cindy. Situation 3: The corporation redeems 15 shares of stock held by Andy. Situation 4: Same facts as Situation 1 except Andy is Barb’s father. To answer this be sure to first review the “Attribution Rules”Companies frequently issue both preference shares and ordinary shares. What are the major differences in the rights of shareholders between these two classes of shares?
