Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 30 At what payout percentage is a stock dividend typically considered a stock split, in accordance with the recommendation of the Financial Accounting Standards

QUESTION 30

At what payout percentage is a stock dividend typically considered a stock split, in accordance with the recommendation of the Financial Accounting Standards Board?

10%

15%

25%

33%

2.5 points

QUESTION 31

The conversion price divided into the market value of a convertible bond provides the conversion ratio.

True

False

2.5 points

QUESTION 32

The downside protection of a convertible bond's floor value insulates the investor from any possible loss.

True

False

2.5 points

QUESTION 33

Warrants never sell for more than their intrinsic value.

True

False

2.5 points

QUESTION 34

The conversion ratio is the

price at which a convertible security is exchanged into common stock.

ratio of conversion value to market value of a convertible security.

number of shares of common stock into which the convertible may be converted.

ratio of the conversion premium to market value of a convertible security.

2.5 points

QUESTION 35

A $1,000 par value bond with a conversion price of $50 has a conversion ratio of

$40.

40 shares.

$20.

20 shares.

2.5 points

QUESTION 36

The principle device used by the corporation to force conversion

is setting the conversion price above the current market price.

is reducing the amount of interest payments.

is buying bonds back at below par value.

is a call provision.

2.5 points

QUESTION 37

Which of the following is true about warrants?

At high stock prices, the warrant premium is high.

A rising stock price is usually followed by an increase in the price of the warrant.

Both of these options are true.

None of these options are true.

2.5 points

QUESTION 38

Warrants are

long-term options to sell shares of the issuing firm's stock.

fairly stable, low-risk investments.

investments whose value is directly related to the price of the underlying stock.

structured to sell for precisely their intrinsic value.

2.5 points

QUESTION 39

The owner of a call has

the right and the obligation to buy an asset at a given price.

the right and the obligation to sell an asset at a given price.

the right but not the obligation to buy an asset at a given price.

the right but not the obligation to sell an asset at a given price.

2.5 points

QUESTION 40

Which contract is an option?

A call

A put

A futures contract

Both a call and a put

2.5 points

QUESTION 41

All of the following are motivation for firms to issue warrants except for which one?

May allow the firm to issue debt at a lower rate when warrants are included

Used as a sweetener during merger negotiations

Is more desirable than convertible securities for creating new common stock

All of these options are motivations.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Short Term Financial Management

Authors: John Zietlow, Matthew Hill, Terry Maness

5th Edition

1516512405, 9781516512409

More Books

Students also viewed these Finance questions