1. When a company is “highly leveraged”, this means:
A) the company has excess cash balances
B) the only source of long-term funding that the company uses is common stock
C) the company has a high percentage of Long-Term Debt on its Balance Sheet
D) the company pays a high level of cash dividends to shareholders
2. Common Stock investors receive their return in two ways: the opportunity to participate in price appreciation and the potential to receive cash dividends.
A) True
B) False
3. Preferred stock is a hybrid security that has characteristics of both long-term debt and common stock.
A) True
B) False