$1$ A higher par value indicates that a corporation is a better investment over one that has a lower

par value.

:$2$ Par value is an arbitrary value assigned to shares of stock for the recording of amounts in the

capital accounts of a corporation.

$3\frac{T}{F}$: A corporation is legally bound to pay dividends to preferred stockholders.

$\_\_\_4$ A company has sufficient Retained Earmings to pay dividends to both common and preferred

stockholders but it chooses not to pay a dividend to the common stockholders. Why might this be

so$?$ A$)$ there is a shortage of cash B$)$ there may be plans to expand the plant C$)$ there may be a

contingent liability like a lawsuit pending D$)$ all of the above E$)$ none of the above $($A$-$C$).$

$\_$a$\_5$ If a company has only one class of stock, it is A$)$ Common B$)$ Preferred

$6$ What is the effect of a stock dividend on a stockholder's proportionate share of ownership in a

corporation? A$)$ it increases B$)$ it decreases C$)$ no change.

$7$ What is the effect of a stock dividend on total stockholders' equity for a corporation? A$)$ it increases

B$)$ it decreases

C$)$ no change.