Nick and Jamie Own Stock in Chronoz Industries, a Watch

question 58

Multiple Choice

Nick and Jamie own stock in Chronoz Industries, a watch manufacturer. In the year 2008, Nick received dividend at the rate of 2 percent, whereas Jamie received dividend at the rate of 0.5 percent. In this scenario, which type of stock did Nick own?

• A)cumulative preferred
• B)common
• C)convertible
• D)participating preferred

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Definitions:

Interest Rates

The cost of borrowing money expressed as a percentage of the loan amount, typically noted on an annual basis.

Business Investment

The allocation of resources by businesses into areas with the expectation of earning future returns, such as buying new equipment or expanding operations.

Consumer Durable Expenditures

Spending by consumers on long-lasting goods (durables) such as cars, appliances, and furniture that are expected to be used for several years.

Abnormal Returns

Returns on a security or portfolio that differ significantly from the expected rate of return, often resulting from specific events.