The Cost of Perpetual Preferred Stock Is Found as the Preferred's

question 9

True/False

The cost of perpetual preferred stock is found as the preferred's annual dividend divided by the market price of the preferred stock. No adjustment is needed for taxes because preferred dividends, unlike interest on debt, are not deductable by the issuing firm.

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Definitions:

Designated Leader

An individual who has been officially chosen or appointed to guide or direct a group, team, or organization.

Bystander Effect

A social psychological phenomenon where individuals are less likely to offer help to a person in need when other people are present.

Ambiguous

Something that is open to more than one interpretation, explanation, or meaning and is not explicitly defined or clear.

Groupthink

A phenomenon where a group's desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.