Common stock
When would a stockholder be willing to purchase a class of common stock that did not have full shareholders’ rights? Not all shareholders’ rights are…
Financial Management
Preferred stock
Why is preferred stock often called a hybrid between bonds and common stock? Preferred stock is often considered a hybrid between bonds and common stock…
Cumulative and non-cumulative preferred stock
Is there any difference in value between cumulative and non-cumulative preferred stock? Why, or why not? While the difference is minimal in financially healthy companies,…
Why do companies issue warrants?
Companies issue warrants for at least three reasons: (1) as the mechanism for conveying preemptive rights to their shareholders (“stock subscription warrants”),(2) as incentive compensation…
Why do companies issue convertible bonds?
Companies issue convertible bonds for at least four reasons:(1) to minimize the interest rate on their debt since the conversion feature forms part of the…
Warrant and a convertible bond
What is the relationship of a warrant and a convertible bond to a call option? Both a warrant and a convertible bond contain a call…
Conversion of a convertible bond
Under what circumstances can a company successfully force conversion of a convertible bond? Under what circumstances will the company fail? Since holders of convertible bonds…
Utilitarianism Consequentialism
Introduction — Kotchian values consequences (protection of jobs and investment in company) over potential violation of duty (responsibilities of government officials to uphold…
Activity Based Costing
Goal of ABC: to establish a better cause-effect relationship between products and overhead costs Traditional Costing: § Costs are divvied up based on the allocation…
Standard Costing – Alternative Costing Systems
Standard costing: Based on standard (budgeted) values rather than on actual results. Static budget: Used for standard costing. Created in an income statement format that…