CHAPTER 35—OWNERSHIP OF A CORPORATION Key
1. The _____ of a corporation is the declared money value of its outstanding stock.
2. Which of the following best describes a share?
3. Which of the following is true of stock?
4. _____ is preferred stock on which all dividends must be paid before the common stock receives any
dividend.
5. Which of the following best describes watered stock?
6. Which of the following is true of dividends paid to shareholders?
7. State laws which prevent the sale of worthless stock are known as _____.
8. Which of the following best describes a prospectus?
9. A certificate of stock is written evidence of ownership of stock.
10. A stock owner can use a blank form on the back of the certificate while making a transfer.
11. If a corporation’s broker holds the stock before issuance of certificates, the broker must transfer the stock
according to the written direction of the owner.
12. Common stockholders do not possess the right to a share of the assets of a corporation on dissolution.
13. Common stockholders receive their proportionate share of the corporation’s assets prior to any share going
to preferred shareholders.
14. Cumulative preferred stock is preferred stock on which dividends have to be paid only for the current year
before common stock dividends are paid.
15. A stock option is a contract entered between a corporation and an individual.
16. A cash dividend may be paid out of paid-in surplus.
17. Once the directors of a corporation declare a cash dividend, it cannot later be rescinded.
18. The federal Securities Act regulates the sale of securities in interstate commerce.
19. A corporation does not have the duty to furnish a prospectus to each purchaser of securities.
20. What is the purpose of blue-sky laws? Explain.