The Name Preferred Stock Is in Reference to the Fact

question 67

Multiple Choice

The name preferred stock is in reference to the fact that:

• A)it is a type of corporate debt.
• B)it is treated like debt for tax purposes.
• C)preferred dividends must be paid in full before any additional interest may be paid.
• D)preferred dividends must be paid in full before any common stock dividends can be paid.
• E)fixed income traders prefer it to bonds.

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Definitions:

Short-term

This term usually refers to a period of time less than one year, often used in the context of finance for investments or liabilities.

International Fisher Effect

An economic theory that suggests that the difference in nominal interest rates between two countries is directly proportional to the expected change in the exchange rate between their currencies.

Foreign Currency Approach

Relates to the strategy for evaluating investments by considering the impact of foreign exchange fluctuations on investment returns.

Swedish Krona

The official currency of Sweden, which is divided into 100 öre and is denoted by the symbol SEK.