When the Owner of Preferred Stock Has the Option to Exchange

question 145

Multiple Choice

When the owner of preferred stock has the option to exchange preferred stock for a fixed number of shares of common stock, the stock is called ____ preferred stock.

• A) convertible
• B) callable
• C) redeemable
• D) cost-based
• E) natural

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Definitions:

Cash Flow From Operating Activities

A measure of the cash generated or used by a company in a given period for its core business activities.

Operating Activities

Activities that relate to the primary operations of the company, such as selling products or services.

Dividend Payments

Cash or stock distributions made by a corporation to its shareholders from its earnings.

Borrowed Money

Funds that an individual or organization takes from another party under the condition of returning it back in the future often with interest.