Part 3

Assume you are the chief accountant making a presentation during the stockholders' annual meeting for your corporation. Provide a brief explanation to stockholders on each of the following questions:

Shares

1. In what ways can shares be "preferred"? In which ways are they similar and different from common shares? Give real-world examples.
2. How does the book value of shares of stock differ from the market value of shares of stock? Use a real-world example in your answer.

Dividends

1. Discuss at least three main issues a board of directors considers when making a dividend declaration decision.
2. How does a share dividend differ from a share split?

Retained Earnings

e) Explain why companies place restrictions on some of their retained earnings.