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

$10
$5
$1
$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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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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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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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. 

 
Do You Know the Ins and Outs of Corporate Actions?
 

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