Corporations That Invest Surplus Funds in Floating-Rate Preferred Stock Benefit

question 20

True/False

Corporations that invest surplus funds in floating-rate preferred stock benefit from getting a relatively stable price,which is desirable for liquidity portfolios,and they also benefit from the 70% tax exemption on preferred dividends received.

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Definitions:

Managed Mutual Funds

Programs invested in by shareholders that operate with a mix of different investments, all overseen by experienced investment professionals.

Rate of Return

The increase or decrease in the value of an investment during a particular time frame, presented as a percentage of the investment’s original price.

Private Saving

The portion of individuals' or households' income that is not used for consumption or paying taxes, typically used for investment or future spending.

Government Budget

A financial statement presenting the government's projected revenue and expenditure for a specific period.