Preferred Shares That Give the Shareholders the Option of Exchanging

question 5

Multiple Choice

Preferred shares that give the shareholders the option of exchanging their preferred shares for common shares at a specified rate are known as:

• A) Callable preferred shares.
• B) Convertible preferred shares.
• C) Cumulative preferred shares.
• D) Participating preferred shares.
• E) Noncumulative preferred shares.

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Definitions:

Premium Bond

A bond sold at a price higher than its face value, typically occurring when it has a higher interest rate than the current market rate.

Face Value

The original value of a financial instrument as indicated on the certificate or instrument itself, equivalent to its par value.

Market

A venue or medium where buyers and sellers come together to exchange goods, services, or financial instruments.

Coupon Rate

The percentage annually paid as interest on a bond, relative to its face value.