Stock in a Corporation

Multiple Choice

1. Ramon Sanchez is a loan officer at Washington Bank. He must decide whether or not to loan money to Medlock Corporation. Which of the following would Ramon most likely consider when making this decision?

a. Medlock had positive cash flows last year.

b. Medlock paid dividends last year.

c. Medlock’s stock price increased last year.

d. The number of stockholders in Medlock increased last year.

2. Which of the following is not a reason an investor would purchase stock in a corporation?

a. To receive dividend payments

b. To sell the stock for a gain if the share price increases

c. To earn a return on their investment

d. To participate in the day-to-day operations of the business

3. Which of the following would not be considered an example of a decision made using financial accounting information?

a. An investor decided to invest in the stock of Rayburn Corporation.

b. A credit analyst at Mayfield Corporation rejected a request for credit from Rayburn Corporation.

c. A Rayburn Corporation manager decided to increase production of widgets.

d. A loan officer at Fairburn Bank chose to grant a loan request made by Rayburn Corporation.

4. Which of the following is most likely to have a say in the policy decision of a large corporation?

a. A stockholder

b. A member of the board of directors

c. An employee

d. A creditor