The Cost of Preferred Stock to a Firm Must Be

question 50

True/False

The cost of preferred stock to a firm must be adjusted to an after-tax figure because dividends received by a corporation may be excluded from the receiving corporation's taxable income.

---

Definitions:

Treasury Bond

Debt obligation of the federal government with original maturity between 10 and 30 years.

Liquidate

To convert assets into cash or cash equivalents by selling them on the market.

Spot Price

The current market price at which a particular asset, such as a commodity, currency, or security, can be bought or sold for immediate delivery.

Silver Spot Price

The current market price at which silver can be bought or sold for immediate delivery.