Question 1.1. A corporation's distribution of additional shares of its own stock to its stockholders without the receipt

Question 1.1.  A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a: 

       Stock dividend

       Stock subscription

       Premium on stock

       Discount on stock

       Treasury stock

Question 2. 2. Bonds that mature at different dates and end up with the total principal repaid gradually over a number of periods are referred to as: 

       Registered bonds

       Bearer bonds

       Callable bonds

       Sinking fund bonds

       Serial bonds  

Question 3.3. A dividend preference for preferred stock means that: 

       Preferred stockholders receive their dividends before common shareholders

       Preferred shareholders are guaranteed dividends

       Dividends are paid quarterly

       Preferred stockholders prefer dividends more than common stockholders

       Dividends must be declared on preferred stock  

Question 4.4. To provide security to creditors and to reduce interest costs, bonds and notes payable can be secured by: 

       Safe deposit boxes

       Mortgages

       Equity

       The FASB

       Debentures  

Question 5.5. Secured bonds:

       Are also referred to as debentures

       Have specific assets of the issuing company pledged as collateral

       Are backed by the issuer's bank

       Are subordinated to those of other unsecured liabilities

       Are the same as sinking fund bonds  

Question 6.6. A company had net income of $250,000. On January 1, there were 12,000 shares of common stock outstanding. On May 1, the company issued an additional 9,000 shares of common stock. The company declared a $7,900 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company had an earnings per share of: 

       $13.45  

       $13.89

       $11.53

       $26.90

       Amount cannot be determined as problem does not state if there are any dividends in arrears  

Question 7.7. A company issues at 9% bonds at par with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. How much total cash interest is received on April 1 by the bond issuer? 

       $750

       $5,250

       $1,500

       $3,000   

       $6,000  

Question 8.8. A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is. 

       $0

       $33,750    

       $67,500

       $750,000

       $1,550,000  

Question 9.9. The dividend yield is computed by dividing:

       Cash dividends per share by earnings per share

       Earnings per share by cash dividends per share

       Cash dividends per share by the market price per share

       Market price per share by cash dividends per share

       Cash dividends per share by retained earnings  

Question 10.10. Shamrock Company had net income of $30,000. On January 1, there were 8,000 shares of common stock outstanding. On April 1, the company issued an additional 2,000 shares of common stock. There were no other stock transactions. The company has an earnings per share of: 

       $3.75

       $3.00

       $3.33

       $15.00

       $3.16      

Question 11.11. The date the board of directors votes to pay a dividend is called the: 

      Date of stockholders' meeting

      Date of declaration

      Date of record

      Date of payment

      Liquidating date 

Question 12.12. A company's board of directors’ votes to declare a cash dividend of $0.75 per share. The company has 15,000 shares authorized, 10,000 issued and 9,500 shares outstanding. The total amount of the cash dividend is: 

      $375

      $4,125

      $7,125    

      $7,500

      $11,250 

Question 13.13. Sinking fund bonds: 

      Require the issuer to set aside assets in order retire the bonds at maturity

      Require equal payments of both principal and interest over the life of the bond issue

      Decline in value over time

      Are registered bonds

      Are bearer bonds 

Question 14.14. What is the debt to equity ratio for a company who has $700,000 in total liabilities and $3,500,000 in total equity? 

      20%    

      5

      $2,100,000

      2%

      .5 

Question 15. 15. If an issuer sells a bond at any other date than the interest payment date: 

      This means the bond sells at a premium

      This means the bond sells at a discount

      The issuing company will report a loss on the sale of the bond

      The issuing company will report a gain on the sale of the bond

      The buyer normally pays the issuer the purchase price plus any interest accrued since the prior interest payment date 

Question 16.16. The Discount on Bonds Payable account is: 

      A liability

      A contra liability

      An expense

      A contra expense

      A contra equity 

Question 17.17. Bonds with a par value of less than $1,000 are known as: 

      Junk bonds

      Baby bonds

      Callable bonds

      Unsecured bonds

      Convertible bonds 

Question 18.18. When a bond sells at a premium: 

      The contract rate is above the market rate

      The contract rate is equal to the market rate

      The contract rate is below the market rate

      It means that the bond is a zero coupon bond

      The bond pays no interest

Question 19.19. A company purchased equipment and signed a 7-year installment loan at 9% annual interest. The annual payments equal $9,000. The present value factor for an annuity for 7 years at 9% is 5.0330. The present value of the loan is: 

      $9,000

      $5,033

      $63,000

      $57,330

      $45,297    

Question 20.20. Owners of preferred stock often do not have: 

      Ownership rights to assets of the corporation

      Voting rights

      Preference to dividends

      The right to sell their stock on the open market

      Preference to assets at liquidation 

Question 21.21. A bond traded at 102 ½ means that: 

      The bond pays 2.5% interest

      The bond traded at $1,025 per $1,000 bond    

      The market rate of interest is 2.5%

      The bonds were retired at $1,025 each

      The market rate of interest is 2 ½% above the contract rate

Question 22.22. The carrying value of a long-term note payable: 

      Is computed as the future value of all remaining future payments, using the market rate as interest

      Is the face value of the long-term note less the total of all future interest payments

      Is computed as the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance

      Is computed as the present value of all remaining interest payments, discounted using the note's rate of interest

      Decreases each time period the discount on the note is amortized

Question 23.23. The market value of a bond is equal to: 

      The present value of all future cash payments provided by a bond

      The present value of all future interest payments provided by a bond

      The present value of the principal for an interest-bearing bond

      The future value of all future cash payments provided by a bond

      The future value of all future interest payments provided by a bond 

Question 24.24. Amortizing a bond discount: 

      Allocates a part of the total discount to each interest period

      Increases the market value of the Bonds Payable

      Decreases the Bonds Payable account

      Decreases interest expense each period

      Increases cash flows from the bond 

Question 25.25. A bond sells at a discount when the: 

      Contract rate is above the market rate

      Contract rate is equal to the market rate

      Contract rate is below the market rate

      Bond has a short-term life

      Bond pays interest only once a year