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:

Price Improvement

The potential for a trade to be executed at a better price than what is currently quoted publicly, offering a benefit to the buyer or seller.

Private Equity

Investments in companies whose shares are not publicly traded in a stock market.

Investment Banking

A sector of the banking industry that helps individuals and organizations raise capital and provides financial consultancy services.

Securities Act of 1933

A U.S. law enacted to ensure greater transparency in financial statements and to reduce fraud and manipulation in the securities markets.