Q31. If a shareholder cannot attend the corporation's annual meeting, the shares may still be voted using

a. the preemptive right.

b. a proxy.

c. majority voting rules.

d. the cumulative voting right.

Q32. Southland Tours has net income of $2 million this year. The book value of Southland Tours common equity is $8 million dollars. The company's dividend payout ratio is 60% and is expected to remain this way. What is Southland Tours' internal growth rate?

a. 6%

b. 9%

c. 10%

d. 15%

Q33. Who bears the greatest risk of loss of value if a firm should fail?

a. bondholders

b. preferred stockholders

c. common stockholders

d. All of the above bear equal risk of loss.

Q34. Glacier Inc. preferred stock has a 5% stated dividend percentage, and a $100 par value. What is the value of the stock if your required rate of return is 6% per year?

a. $83.33

b. $94.05

c. $100.00

d. $30.00

Q35. Common stock valuation can be based on the present value of future dividends or alternatively on the present value of the firm's future quarterly net income.

a. True

b. False

Q36. Although under normal operating conditions preferred shareholders do not have voting rights, protective provision generally allow for voting rights in the event of nonpayment of preferred dividends.

a. True

b. False

Q37. Preferred stock is less risky than common stock, but more risky than debt.

a. True

b. False

Q38. Preferred stock is similar to a bond in the following way

a. preferred stock always contains a maturity date.

b. both investments provide a stated income stream.

c. both contain a growth factor similar to common stock.

d. both provide interest payments.

Q39. Preferred stock differs from common stock in that

a. preferred stock usually has a maturity date.

b. preferred stock investors have a higher required return than common stock investors.

c. preferred stock dividends are fixed.

d. common stock investors have a required return and preferred stock investors do not.

Q40. An example of the growth factor in common stock is

a. acquiring a loan to fund an investment in Asia.

b. retaining profits in order to reinvest into the firm.

c. issuing new stock to provide capital for future growth.

d. two strong companies merging together to increase their economy of scale.