Which Is a Characteristic of the Cost of Preferred Stock

question 81

Multiple Choice

Which is a characteristic of the cost of preferred stock?

• A) since preferred stock dividends are fixed, they are tax deductible
• B) because preferred stock has no maturity, the cost analysis is similar to that of debt
• C) preferred stock is valued as a perpetuity
• D) none of the other answers are correct

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Definitions:

Capitalized

Expenditures or costs that are added to the cost basis of a fixed asset on a company's balance sheet, rather than being expensed immediately.

Goodwill

An intangible asset that arises when a company acquires another company for a price higher than the fair value of its net identifiable assets.

Acquisition

An acquisition involves one company purchasing another company or its assets, often to expand its operations or enter new markets.

Trade Name

A commercial name under which a business operates and is known to its customers.