Preferred Shares That Pay a Fixed Dividend for as Long

question 46

Multiple Choice

Preferred shares that pay a fixed dividend for as long as the shares remain outstanding are called

• A)floating rate shares.
• B)rate reset shares.
• C)fixed dividend rate shares.
• D)perpetual shares.

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Definitions:

Risk-free Rate

The return on an investment with zero risk, typically represented by the yield on government securities.

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks, used in finance to price risky securities.

William Sharpe

An economist who created the Sharpe Ratio, a measure to calculate risk-adjusted return.

SML (Security Market Line)

A line in the Capital Asset Pricing Model that shows the relationship between the expected return of a security and its risk.