Which of the Following Statements Is CORRECT

question 29

Multiple Choice

Which of the following statements is CORRECT?

• A) Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm's common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.
• B) The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.
• C) One of the disadvantages to a corporation of owning preferred stock instead of owning bonds is that 50% of the preferred dividends received represent taxable income to the corporate recipient, whereas none of the interest received from bonds is taxable income to the corporate recipient.
• D) One of the advantages for a firm financing with preferred stock is that 50% of the dividends the firm pays may be deducted from its taxable income.
• E) A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.

---

Definitions:

Drinking Coffee

The consumption of a beverage made by brewing ground coffee beans, often enjoyed for its stimulating effect due to caffeine.

Classical Conditioning

Classical conditioning is a learning process where a neutral stimulus becomes associated with a meaningful stimulus, eliciting a similar response.

Negative Reinforcement

A behavioral concept where the removal of an unpleasant stimulus following a desired behavior increases the likelihood of that behavior being repeated in the future.

Punishment

A process in which a response is followed by a stimulus that decreases the likelihood of that response being repeated.