Chapter 15 Conceptual Questions

What is​ stockholders' equity?

The difference between the assets and the liabilities of the entity and is reported on the balance sheet. It represents the​ investors' claims on the company.

What are the retained earnings of a​ firm?

The cumulative earnings of the firm that it has not distributed as dividends. Events other than dividend issues impact retained​ earnings, but this account will most often change each year by net income​ (loss) less dividends declared.

When treasury shares are​ retired, the number of shares issued is reduced.

True

________ preferred shares are preferred shares for which redemption is certain at a specified price on a specified date.

Mandatorily redeemable

________ are shares for which the issuing entity has the right to​ "buy back" the shares at a specified price and future date.

Callable preferred shares

Stinson Corporation has​ 8% participating preferred shares. In 2025 the company pays common shareholders dividends that are​ 11% of common par value.​ What, if​ any, additional dividend will preferred shareholders​ receive?

3%

Which of the following is not a type of​ dividend?

wage dividend

​Investors' perceptions of a​ firm's expected future profitability and prospects is reflected in the​ ________.

market value of a​ firm's common stock