Preferred Stock Is a Hybrid⎯a Sort of Cross Between a Common

question 22

True/False

Preferred stock is a hybrid⎯a sort of cross between a common stock and a bond⎯in the sense that it pays dividends that normally increase annually like a stock but its payments are contractually guaranteed like interest on a bond.

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Definitions:

Child Tax Credit

A tax benefit that allows taxpayers to reduce their tax liability on a dollar-for-dollar basis for each qualifying child under a certain age.

AGI

Adjusted Gross Income, which is total income minus specific deductions, used to determine tax liability.

Adoption Credit

A tax credit offered by the IRS to offset some expenses involved in the legal adoption of a child.

Modified AGI

Modified Adjusted Gross Income, an income measure used for tax purposes, adjusting the AGI for specific deductions or exclusions.