Which Is a Characteristic of the Cost of Preferred Stock

question 83

Multiple Choice

Which is a characteristic of the cost of preferred stock?

• A) Preferred stock dividends are fixed,they are tax deductible.
• B) Preferred stock has no maturity,the cost analysis is similar to that of debt.
• C) Preferred stock is valued as a perpetuity.
• D) The price earnings ratio stays the same.

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Definitions:

Exact Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a 365-day year without compounding.

Loan Period

The duration of time from when a loan is issued to when it is expected to be fully repaid, including its principal and interest.

365-day Year

A financial calculation basis using a calendar year of 365 days for computing interest rates and other financial metrics, ignoring leap year variations.

Exact Simple Interest

The precise amount of interest earned or paid on a principal amount over a specific period, without compounding.