1. A stockbroker advises a client to "buy preferred stock. With that type of stock [you] will never have to worry about losing the dividends." Is the broker correct?

2. Lou Hoskins and Shirley Crothers are organizing Red Lodge Metals Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. Lou and Shirley tentatively plan to request authorization for 400,000,000 shares of common stock to be sold to the general public. Lou and Shirley have decided to establish par of $0.03 per share in order to appeal to a wide variety of potential investors. Lou and Shirley believe that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a "bargain" price. Discuss whether Lou and Shirley are behaving in a professional manner. EVALUATION 0-40 points - You have provided a substantive and thorough answer for both questions, numbered your responses and used accounting terminology/theory where appropriate. Your original responses must be a MINIMUM of 100 words in length.