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Question 1: Multiple Choice [15 mins; 15 points) For each of the following, choose the letter that corresponds to the best answer. Each correct answer
Question 1: Multiple Choice [15 mins; 15 points) For each of the following, choose the letter that corresponds to the best answer. Each correct answer is worth 1.5 points. 1. Assume that Ming Inc. reported the following information: Preferred shares, $3, cumulative, 1,000 shares outstanding, with dividends in arrears for 3 years: 2007, 2008, and 2009. Common shares, 2,000 shares outstanding. Total dividends declared in 2010 were $30,000. What is the total amount of dividends to which common shareholders are entitled? A) $18,000 B) $21,000 C) $27,000 D) $30,000 2. Which of the following statements is correct with respect to preferred shares? A) They must have a par value. B) They are never issued without voting privileges. C) They cannot exist unless there also are common shares. D) They always provide for a fixed payment to be made to the shareholders even for years when no dividends have been declared. 3. Which of the following statements is incorrect? A) Issuance of shares creates cash inflow related to financing activities. B) Payment of a cash dividend creates cash outflow related to investing activities. C) Repurchase of the company's shares creates cash outflow related to financing activities. D) All of the statements above are incorrect
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