Chapter 1, Problem 17.3EC

Choose the letter of the correct answer: 1. In which of the following situations would an investor likely account for stock ownership in an investee using the equity method? A. The investor and the investee have many transactions with each other B. The investor owns 15 percent of the investee’s stock   C. The investor and investee reside in close proximity to each other   D. The investor has significant influence over the investee’s management policies   2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account?   A. The investee declares a regular dividend   B. The investor sells some of the stock   C. The investee declares a liquidating dividend   D. The stock’s market value decreases to a point where is it below the investor’s cost

Which of the following methods of valuing shares will be most appropriate for a prospective investor who intends acquiring controlling interest in a target company?A Earnings YieldB Dividend YieldC Net assetsD Accounting Rate of Return

Which factors influence the dividend policy of a company? Also please locate and briefly post the dividend policy of a publicly held company of your choosing and discuss the positive and negative aspects of the policy. What assumptions about the financial health of the business can you derive from the dividend policy? Would the dividend policy make you more or less likely to invest in the company?

What advantages does a company achieve when it possesses significant influence over another company through voting stock ownership?

Why would a corporation have multiple stock share classes?  What are your thoughts??

When an individual owns directly stocks of the company, he has: Group of answer choices a. Direct Financial Interest b. Indirect Financial Interest c. Both Direct and Indirect d. Neither Direct nor Indirect

Which of the following describes preferred stock? a. Stock that sells for a very high price b. Stock that is sold to employees of the company as a performance incentive c. Stock which gives shareholders certain preferences and advantages over common stock d. Stock that is purchased by the corporation for investment purposes

What do you mean by private placement of shares? What are the options for a company?

Define the following terms: ‘stakeholder’; ‘shareholder’ and ‘stakeholder analysis’.Using a named real company of your choice, demonstrate how you would apply thestakeholder analysis process to identify the company’s stakeholder groups andevaluate their needs and influence.