Exam 20: Corporations: Formation and Capital Stock Transactions

The stockholders of a corporation:

A reduction in dividends distributed to shareholders from one year to the next can lead to loss of investor confidence and reduced market prices for the stock.

San Martin Corporation has 300,000 shares of $10 par value, common shares authorized through its charter. 250,000 shares were issued of which 225,000 shares are currently outstanding. The year-end market price of the stock was $70. Dividends paid at the end of the year were $2.50 per share. Calculate the total dividends paid.

The ability to convert preferred stock to common stock can make the preferred stock more attractive to investors.