Exercise

Answer true or false.

1. True or false. For equity investors, potential gains equal potential losses.

2. True or false. The right of limited liability does not apply to common stockholders of a corporation.

Choose the best answer.

3. Put the following dates in the correct chronological order:

I. Ex-date

II. Declaration date

III. Payment date

IV. Record date

A. I, II, III, IV

B. II, I IV, III

C. II, III, IV, I

D. IV, I, II, III

4. If an investor wants to be eligible for a dividend previously declared with a record date of Friday, June 13, by what date should she purchase the common stock, and what is the ex-dividend date?

A. Purchase by Monday, June 9; ex-date Tuesday, June 10

B. Purchase by Wednesday, June 11; ex-date Thursday, June 12

C. Purchase by Tuesday, June 10; ex-date Tuesday, June 10

D. Purchase by Tuesday, June 10; ex-date Wednesday, June 11

Answers

1. False. For equity investors, upside potent