Which of the Following Is NOT True About Preferred Stock

question 104

Multiple Choice

Which of the following is NOT true about preferred stock?

• A) 70% of dividends are nontaxable to other corporations that hold preferred stock.
• B) The after-tax cost is higher than debt with the same yield.
• C) Dividends are legal obligations of the firm.
• D) Preferred stocks are typically cumulative with respect to dividends.

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