Which of the Following Is Not True About Preferred Stock

question 99

Multiple Choice

Which of the following is not true about preferred stock?

• A) 100% of dividends are nontaxable to other corporations which hold preferred stock.
• B) The aftertax cost is higher than debt with the same yield.
• C) Dividends are legal obligations of the firm.
• D) Preferred stocks are often cumulative in respect to dividends.

Understand the concept of strategic management and its critical elements.

Acknowledge that strategy formulation and execution involve all levels of management.

Comprehend the principles of strategic farsightedness and its impact on management.

Understand the concepts of synergy and its types within organizational strategy.

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Definitions:

Investment

The allocation of resources, usually money, in expectation of generating an income or profit.

Target Costing

A pricing method where the selling price is set first, and then the target cost for producing the product is determined by subtracting a desired profit margin.

Desired Return

The specific profit that an investor aims to achieve from an investment.

Investment

The allocation of resources, such as time, money, or effort, in something with the expectation of receiving a future return or profit.