Use the Following Statements to Answer This Question

question 51

Multiple Choice

Use the following statements to answer this question:
I.A retractable preferred share can be sold back to the issuer.
II.Preferred shares provide the investor an income tax benefit given that dividend income receives preferential tax treatment as compared to interest income.

• A)I and II are correct.
• B)I and II are incorrect.
• C)I is correct and II is incorrect.
• D)I is incorrect and II is correct.

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Definitions:

Long-Term Investments

Investments in securities or other assets intended to be held for a period exceeding one year for capital growth or income generation.

Trading Investment

An investment in securities with the intention of selling them in the short term to profit from price changes.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed, paid by the borrower to the lender.

Market Rate

The current price or interest rate at which a good, service, or security can be bought or sold in a competitive marketplace.