Preferred Stock Dividends ________ Earnings Available to Common Stockholders

question 5

Multiple Choice

Preferred stock dividends ________ earnings available to common stockholders.

• A) increase
• B) decrease
• C) do not effect
• D) There is not enough information to determine.

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Definitions:

Face Value

The nominal value printed on a financial instrument like a bond or stock certificate, not necessarily its market value.

Interest Rate

The interest rate is the proportion, typically expressed as a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender.

Present Discounted Value

The immediate value of a forthcoming sum of money or cash flow streams, discounted at a specific rate of return.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, or the return on invested capital.