Preferred Stock Is Compensated for Not Having Ownership Privileges with a Fixed

question 90

True/False

Preferred stock is compensated for not having ownership privileges with a fixed dividend stream supported by a binding contractual obligation (of interest on debt).

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Definitions:

Discount

A reduction in the price of goods or services, usually offered to encourage purchase or provided for early payment.

Sales Tax

A tax imposed by a government on the sale of goods and services.

Credit Period

Length of time allowed for payment of goods sold on account.

Discount Period

The time frame in which a payment can be made at a reduced rate.