Question

True/False

1) Bid price > asked price

2) Stock dividends are treated as an interest expense on a firm's income statement.

3) Bondholders are normally denied company voting rights.

4) It is fair to say that preemptive rights are more valuable to small investors than to large ones.

5) Div0= D1=D2=D3 implies constant dividend growth.

Answer 1

Answer to 1:

False

The Ask Price is always greater than Bid Price & difference is called as spread.

Answer to 2:

False

Stock dividends are treated as a dividend income or other income in the income statement.

Answer to 3:

True

Voting rights are only given to the Common Shareholders of the Company.

Answer to 4:

True

Preemptive Rights are given to existing shareholders so that their percentage holding is increased so it is better to give to small investors.