Which of the Following Is NOT a Legitimate Reason Why

question 3

Multiple Choice

Which of the following is NOT a legitimate reason why it is generally considered easier to estimate the cost of preferred stock than it is to estimate the cost of common stock?

• A) Preferred stock generally carries with it a fixed dividend payment.
• B) Preferred stock is often rated for default risk.
• C) The cost of preferred stock can be calculated as a perpetuity based on the fixed dividend payment and the present stock price.
• D) Calculation of the cost of preferred stock does not require any information about future preferred dividends.
• E) The cost of preferred stock is simply equal to its dividend yield.

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Definitions:

Depositor's Balance

The current amount of money held in a depositor's account at a financial institution, reflecting all transactions.

Suspected of Fraud

Being under suspicion for intentional deception to secure unfair or unlawful gain.

NSF

An abbreviation for "Non-Sufficient Funds," indicating that a bank account does not have enough money to cover a check or withdrawal.

Bank Statement

A bank statement is a summary of financial transactions that occurred at a banking institution over a specific period of time.