Stockholders Prefer to Invest in Preferred Stock Because

question 131

Multiple Choice

Stockholders prefer to invest in preferred stock because

• A) preferred stock confers preferred voting rights.
• B) preferred stock can always be converted to common stock if they desire.
• C) the dividends are generally increased each year.
• D) the dividends are paid on preferred stock before they are paid on common stock.

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Definitions:

Marginal Social Benefit

The additional benefit to society from the consumption of an additional unit of a good or service.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that no one can be excluded from their use and one person's use does not reduce availability to others.

Private Benefit

The direct advantage or gain obtained by an individual or firm from their economic activities, without considering the impacts on third parties.

Mosquito Control

A management strategy to regulate or eliminate mosquito populations to reduce their damage to human health, economies, and enjoyment.