For Preferred Shares to Increase the Return Earned by Common

question 74

Multiple Choice

For preferred shares to increase the return earned by common shareholders,the preferred dividend rate as a percentage of the capital raised must be

• A)Equal to the rate of return on common and preferred equity combined
• B)Lower than the rate of return on common and preferred equity combined
• C)Higher than the rate of return on common and preferred equity combined
• D)Both equal to and lower than the rate of return on common and preferred equity combined
• E)None of these

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Definitions:

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