Which statements are true? 1. [S1] Preference shares are considered a hybrid type of financing because dividends paid to preference shareholders are tax deductible. [S2] Cumulative preference shares require the payment of dividends but the timing of payment may be adjusted according to the wishes of the board of directors. 2. [S1] By executing a rights offering, we acknowledge the preemptive right of current ordinary shareholders. [S2] When an initial public offering has been made, the underwriter would remit to the issuing entity cash equal to the total issue price less any issuance cost chargeable against the former. 3. [S1] When the entity issues a long-term debt instrument, it exposes itself to solvency risk. [S2] When the board of directors agreed to regularly issue stock dividends, it faces liquidity risk.
Which statements are true?
1. [S1]
2. [S1] By executing a rights offering, we acknowledge the preemptive right of current ordinary shareholders. [S2] When an initial public offering has been made, the underwriter would remit to the issuing entity cash equal to the total issue price less any issuance cost chargeable against the former.
3. [S1] When the entity issues a long-term debt instrument, it exposes itself to solvency risk. [S2] When the board of directors agreed to regularly issue stock dividends, it faces liquidity risk.
Step by step
Solved in 2 steps
