Despite the Costs Associated with a Forward Contract, Companies Often

question 11

True/False

Despite the costs associated with a forward contract, companies often prefer it to protect themselves against a potential larger downside loss.

---

Definitions:

Dividends Grow

The increase in the dividend amount paid out by a company to its shareholders over time.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with fixed dividends.

Rate of Return

The successful or unsuccessful financial change in an investment over a predetermined timeline, outlined as a percentage of the initial expenditure.

Annual Dividend

The complete sum of dividends a shareholder gets from a corporation over the course of a single fiscal year.