Preferred Stock May Be Desirable to Issue for Which of the Following

question 1

Multiple Choice

Preferred stock may be desirable to issue for which of the following reason(s) ?

• A) If there is no taxable income, preferred stock does not impose a tax penalty.
• B) The failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.
• C) Preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.
• D) Both the failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy; and preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.
• E) Both if there is no taxable income, preferred stock does not impose a tax penalty; and the failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.

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Definitions:

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without the need for learning or conditioning.

Conditioned Response

A learned reaction to a previously neutral stimulus due to repeated association with an unconditioned stimulus.

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without previous conditioning or learning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.