The Cost of Preferred Stock

question 260

Multiple Choice

The cost of preferred stock:

• A) Is equal to the dividend yield on the stock.
• B) Is equal to the yield to maturity.
• C) Is highly dependent on the growth rate.
• D) Varies directly with the stock's price.
• E) Is difficult to determine.

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Definitions:

Inventory Period

The average time it takes for a company to convert its inventory into sales.

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business.

Controller

A senior financial officer within a company responsible for overseeing accounting operations, financial reporting, and internal controls.

Operating Cycle

The duration of time from the purchase of inventory to the collection of receivables from the sale of that inventory, critical for managing cash flow.