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    Stock Dividend

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    True or false questions.

    1. If interest rates rise after a bond is issued, the yield to maturity will exceed the current yield.
    2. Equipment trust certificates issued by a firm are safer than its debentures.
    3. Income bonds are the safest bonds issued by a firm.
    4. A period payment to retire a debit is illustrative of a sinking fund.
    5. An investor may anticipate that a bond will be called if interested rates have risen.
    6. Preferred stock dividends are not a tax deductible expense for the firm.
    7. One measure of the safety of a preferred stock's dividend is the ratio of dividends to earnings before interest and taxes.
    8. A constant payout ration implies dividends vary with earnings.
    9. A. Stock dividend has no impact on a firm's liabilities or the price of its stock.
    10. A stock dividend decreases retained earnings.

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    https://brainmass.com/business/bond-valuation/stock-dividend-329079

    Solution Preview

    1. If interest rates rise after a bond is issued, the yield to maturity will exceed the current yield.
    False, Price will go down
    http://www.investopedia.com/articles/03/110503.asp.

    2. Equipment trust certificates issued by a firm are safer than its debentures.
    True, As in US debentures are considered to be unsecured
    ...

    Solution Summary

    Response discusses the Stock dividend

    $2.19

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