A Share of Preferred Stock Currently Sells for $120

question 145

True/False

A share of preferred stock currently sells for $120. It offers the investor a dividend rate of 8%, with a par value of $100. If the company is able to pay dividends, preferred stockholders would receive a dividend of $9.60 per share.

---

Definitions:

Federal Income Tax

A tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Incoming Partner

A new member joining a partnership, bringing capital to the business in exchange for a share of the partnership's profits and losses.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business for the first time.

Withdraws Cash

The process of taking out money from an account, which decreases the account balance.