Which of the Following Is NOT One of the Many

question 105

Multiple Choice

Which of the following is NOT one of the many differences between long-term debt and preferred stock?

• A)Long-term debt pays interest which is tax-deductible to the borrower.
• B)Preferred stockholders are paid before bondholders if the company bankrupts.
• C)Preferred stockholders are considered non-voting owners of the company.
• D)The firm is not legally required to pay preferred stock dividends, but must pay interest to bondholders.

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Definitions:

Throughput Time

The elapsed time from when production is started until finished goods are shipped.

Residual Income

The net operating income that an investment center earns above the minimum required return on its operating assets.

Investment Center

A business segment whose manager has control over cost, revenue, and investments in operating assets.

Cost Center

A business segment whose manager has control over cost but has no control over revenue or investments in operating assets.