Corporate Stock Transactions and Equity Accounts Quiz
Test your knowledge on common stock, dividends, ratios, and more in corporate finance. Get ready for insightful questions!
#1
Which of the following best describes common stock?
A type of debt security issued by corporations.
Ownership shares in a corporation with voting rights but no guaranteed dividends.
A short-term investment instrument issued by the government.
A type of preferred stock with fixed dividends.
#2
What is treasury stock?
Stock issued by the government.
Stock that has been repurchased by the issuing company.
Stock issued by a foreign corporation.
Stock that pays a fixed dividend.
#3
Which of the following statements about preferred stock is true?
Preferred stockholders have voting rights.
Preferred stock dividends are tax-deductible for the issuing company.
Preferred stockholders have priority over common stockholders in receiving dividends.
Preferred stockholders receive higher dividends than common stockholders.
#4
What happens to the total stockholders' equity when a company repurchases its own shares?
Total stockholders' equity decreases.
Total stockholders' equity increases.
Total stockholders' equity remains unchanged.
Total stockholders' equity fluctuates based on market conditions.
#5
What is the effect of a stock dividend on a company's equity accounts?
Increase in both common stock and retained earnings.
Decrease in common stock and increase in retained earnings.
Increase in common stock and decrease in retained earnings.
Decrease in both common stock and retained earnings.
#6
Which financial statement reports the changes in equity accounts over a specific period?
Income statement
Balance sheet
Statement of cash flows
Statement of stockholders' equity
#7
What is a stock split?
Issuing additional shares of stock to existing shareholders without charge.
Combining multiple shares of stock into a single share.
Reducing the number of shares outstanding by repurchasing them from shareholders.
Splitting profits among shareholders.
#8
How does a stock dividend differ from a stock split?
A stock dividend increases the number of shares outstanding, while a stock split decreases it.
A stock dividend decreases the number of shares outstanding, while a stock split increases it.
Both a stock dividend and a stock split increase the number of shares outstanding.
Both a stock dividend and a stock split decrease the number of shares outstanding.
#9
What is the effect of a stock split on the market price per share?
It increases the market price per share.
It decreases the market price per share.
It has no effect on the market price per share.
It fluctuates based on market conditions.
#10
What does the price-to-earnings (P/E) ratio indicate about a company?
The company's ability to meet its short-term obligations.
The company's profitability relative to its market value.
The company's ability to generate cash flows from its operations.
The company's liquidity position.
#11
What does the debt-to-equity ratio measure?
The proportion of debt financing relative to equity financing.
The proportion of equity financing relative to debt financing.
The company's ability to generate profits relative to its debt.
The company's liquidity position.
#12
What is the significance of a high price-to-book (P/B) ratio?
The company's stock is undervalued.
The company's stock is overvalued.
The company's stock is fairly valued.
The company's profitability is low.
#13
How does a stock repurchase impact earnings per share (EPS)?
It increases EPS.
It decreases EPS.
It has no impact on EPS.
It depends on the market conditions.
#14
What is the impact of a stock split on the par value of shares?
It increases the par value per share.
It decreases the par value per share.
It has no impact on the par value per share.
It fluctuates depending on market conditions.
#15
What does a high dividend yield indicate about a company?
The company has a low payout ratio.
The company has a high level of retained earnings.
The company is experiencing rapid growth.
The company is returning a significant portion of earnings to shareholders.
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