Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:
A. Discount on stock.
B. Preemptive right.
C. Capital gain.
D. Financial leverage.
E. Premium on stock.
Answer: D
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______ refers to the production capability of a facility per unit of time.
A. Capacity B. Inventory buffer C. Demand D. Production volume
Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt. The stock issue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate. Which of the following is likely to occur if the company goes ahead with the stock issue?
A. The ROA will decline. B. Taxable income will decline. C. The tax bill will increase. D. Net income will decrease. E. The times-interest-earned ratio will decrease.
Which of the following practices is most likely to strike the right tone in a business message?
A. Using common words B. Using the passive voice C. Avoiding contractions D. Avoiding personal pronouns
A citizen of York purchased a truck in 20X3 for $50,000. On June 10, 20X9, she donated the truck to York. The fair value of the truck on the date of donation was $30,000. How should York report the truck in its government-wide Statement of Net Assets?
A. Machinery and equipment should be increased $30,000. B. Machinery and equipment should be decreased $20,000. C. No asset should be reported because no expenditures were made to acquire the truck. D. Machinery and equipment should be increased $50,000.