Which of the Following Statements Is Most CORRECT

question 15

Multiple Choice

Which of the following statements is most CORRECT?

• A) Preferred stock generally has a higher component cost of capital to the firm than does common stock.
• B) 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.
• C) From the issuer's point of view, preferred stock is less risky than bonds.
• D) Whereas common stock has an indefinite life, preferred stocks always have a specific maturity date, generally 25 years or less.

---

Definitions:

Mid-Level

Pertains to a position, status, or area that is in between the highest and the lowest levels, often implying a moderate degree of complexity or authority.

Grand

Large, magnificent, or impressive in size, appearance, or style.

Parsimonious

Describing an explanation or theory that is simple and lacks unnecessary elements, often preferred for its efficiency and effectiveness in problem-solving.

Mini Theories

Specific, narrow theories that address particular aspects of behavior rather than broad, overarching models.