Classified stock; Preferred stock;

Classified stock
Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?

a. All common stocks fall into one of three classes: A, B, and C.
b. All firms have several classes of common stock.
c. All common stocks, regardless of class, must have the same voting rights.
d. All common stock, regardless of class, must pay the same dividend.
e. Some class or classes of common stock may be entitled to more votes per share than other classes.

Preferred stock concepts
Which of the following statements is CORRECT?

a. Preferred stockholders have a priority to income but not to liquidation proceeds over bondholders in the event of bankruptcy.
b. A big advantage of preferred stock is that dividends on preferred stocks are tax deductible by the issuing corporation.
c. Corporations cannot buy the preferred stocks of other corporations.
d. Preferred dividends are not generally cumulative.
e. The preferred stock of a given firm is less risky to investors than the same firm's common stock.

Normal vs. Nonnormal Cash Flows
Which of the following statements is CORRECT?

a. If a project has "normal" cash flows, then its IRR must be positive.
b. If a project has "normal" cash flows, then its MIRR must be positive.
c. If a project has "normal" cash flows, then it will have exactly two real IRRs.
d. The definition of "normal" cash flows is that the cash flow stream has one or more negative cash flows followed by a stream of positive cash flows and then one negative cash flow at the end of the project's life.
e. If a project has "normal" cash flows, then it can have only one real IRR, whereas a project with "nonnormal" cash flows might have more than one real IRR.

Normal vs. Nonnormal Cash Flows
Which of the following statements is CORRECT?

a. Projects with "normal" cash flows can have only one real IRR.
b. Projects with "normal" cash flows can have two or more real IRRs.
c. Projects with "normal" cash flows must have two changes in the sign of the cash flows, e.g., from negative to positive to negative. If there are more sign changes, then the cash flow stream is "nonnormal."
d. The "multiple IRR problem" can arise if a project's cash flows are "normal."
e. Projects with "nonnormal" cash flows are almost never encountered in the real world.

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Solution Summary

This explains the difference between Classified stock and Preferred stock