Do You Know the Ins and Outs of Corporate Actions?

By Stash Team

Take this quiz to test yourself.

So you’ve brushed up on what corporate actions are, and what they mean for the companies in which you invest. Now, test your knowledge of corporate auctions with Stash’s quiz:

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Do You Know the Ins and Outs of Corporate Actions?

Which bankruptcy filing results in the complete liquidation of a business?

Chapter 7

Chapter 11

Chapter 7 bankruptcy results in the complete liquidation of a business. That means the business stops all operations, and its assets, or what it owns, are sold off.

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Do You Know the Ins and Outs of Corporate Actions?

Generally, a company is delisted from a stock exchange when shares of the company fall below ____.

$10

$0.50

Different exchanges have different rules, but generally speaking, when a company’s share price falls below a threshold of $1 for an extended period of time, the stock may get delisted.

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Do You Know the Ins and Outs of Corporate Actions?

What might a company do in order to increase its share value and avoid getting delisted?

A stock split

A reverse stock split

A reverse stock split is when a company reduces the number of shares it has for sale, which can drive up the price of those shares. It’s the opposite of a stock split, when a company increases the number of shares it has for sale.

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Do You Know the Ins and Outs of Corporate Actions?

When a stock gets delisted, it might be traded over-the-counter. OTC stocks are also known as _________.

Penny stocks

Bronze stocks

Dollar stocks

Paper stocks

An over-the-counter (OTC) stock is only traded by wholesale dealers and market makers who specialize in trading that stock. It’s sometimes called a penny stock, because it can trade for less than a dollar per share.

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Do You Know the Ins and Outs of Corporate Actions?

The merger between Sprint and T-Mobile was an example of a _____ deal.

All cash

All stock

Spin-off

Stock-cash

The T-Mobile and Sprint merger in early 2020 converted all Sprint (S) shares to shares of T-Mobile (TMUS).

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Do You Know the Ins and Outs of Corporate Actions?

Why might a company conduct a rights offering?

To buy back some of its shares.

To bring the price of shares down.

To raise money for company operations.

To allow investors to vote on a company action.

A rights offering occurs when a public company issues a contract to existing shareholders, giving them the right, but not the obligation, to purchase additional shares of the company at a predetermined price.