Section 9.1 questions 1-4, 6

1. Companies issue common stock to raise money to start up their bussinesses and then to help pay for ongoing activities.

2. They purchase common stock to make money in three different ways. They profit when they receive dividendsm, when thethe dollar value of their stock appreciates, and when the stock splits and increases in dollar value.

3. Preferred stock is considered a safer investment than common stock. People who want a steady source of income often buy preferred stock.

4. The management belives that the stock should be trading within an ideal price range. If the market value is higher than this range, a stock split brings the market value back into line. The lower price also attracts more investors. The public also believes that when a stock splits the company is very good financialy.

6. He should recieve $67.50 each year.