Preferred Stock Is Valued as If It Were

question 32

Multiple Choice

Preferred stock is valued as if it were

• A) a fixed-income obligation.
• B) a bond.
• C) a perpetuity.
• D) a common stock.

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Definitions:

Price Searchers

Firms or individuals who determine their selling price based on the demand and supply conditions of the market, rather than being price takers.

Downward-sloping Demand

Refers to the economic principle that, all else being equal, as the price of a good or service decreases, the quantity demanded increases.

Inelastic Demand

A condition in market dynamics where the demand for a product does not significantly change with a change in the product's price.

Competitive Price-searcher

An economic term for a seller that sets its product prices based on what competitors are charging, within a competitive market environment.