Many Preferred Stocks Have a Feature That Requires a Firm

question 16

Multiple Choice

Many preferred stocks have a feature that requires a firm to periodically set aside an amount of money for the retirement of its preferred stock.What is the name of this feature?

• A) convertible
• B) callable
• C) cumulative
• D) sinking fund

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Definitions:

Open-Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates.

Federal Reserve

The primary banking authority in the United States, tasked with overseeing monetary policy, managing bank regulation, and maintaining financial system stability.

Money Multiplier

The amount of money the banking system generates with each dollar of reserves.

Reserve Ratio

The fraction of deposits that banks hold as reserves.