Which of the Following Statements Is Most CORRECT

question 18

Multiple Choice

Which of the following statements is most CORRECT?

• A) By law in most states, all preferred stock must be cumulative, meaning that the compounded total of all unpaid preferred dividends must be paid before any dividends can be paid on the firm's common stock.
• B) From the issuer's point of view, preferred stock is less risky than bonds.
• C) Whereas common stock has an indefinite life, preferred stocks always have a specific maturity date, generally 25 years or less.
• D) Unlike bonds, preferred stock cannot have a convertible feature.
• E) Preferred stock generally has a higher component cost of capital to the firm than does common stock.

---

Definitions:

Median

The middle value in a list of numbers, which separates the higher half from the lower half.

Standard Deviation

A metric that quantifies the degree to which values in a collection vary from the average value of the group.

IQR

The interquartile range, a measure of statistical variability between the 25th and 75th percentiles.

Range

The difference between the highest and lowest values in a dataset, providing a measure of the data's dispersion.