Preferred Stock Has All but Which of the Following Characteristics

question 66

Multiple Choice

Preferred stock has all but which of the following characteristics?

• A) No stated maturity.
• B) A fixed dividend payment that carries a higher precedence than common stock dividends.
• C) The same binding contractual obligation as debt.
• D) Preferred lacks the full ownership privilege of common stock.

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Definitions:

Simple Interest

A method of calculating the interest charge on a loan or financial product based on the original principal amount and the interest rate over a period of time.

Principal Amount

This is the original sum of money borrowed in a loan or put into an investment, not including any interest or dividends.

Invested

Describes the act of allocating resources, usually money, into something to earn income or gain profits.

Surplus Funds

Excess of income or assets remaining after all expenses and obligations have been met.