Which of the Following Statements Is Correct

question 89

Multiple Choice

Which of the following statements is correct?

• A) A floating rate bond has an advantage over a fixed rate bond because its price is more stable and this makes a floating rate preferred bond more suitable as a liquid asset.
• B) Convertible preferred stock would likely appeal more to income-oriented investors because they can convert their capital gains into bond income simply by converting their preferred stock into bonds.
• C) One advantage of preferred stock from an issuer's perspective is that it has a lower after-tax cost than that of debt.
• D) One principal advantage of preferred stock is that preferred stockholders have a legal enforceable right to their stock dividend,thus,preferred stock is generally less risky than unsecured debt.
• E) Because of the 70% dividend exclusion rule for preferred stock dividends,the higher a company's tax bracket,the more likely it is to issue preferred stock.

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Definitions:

Vomiting

The forceful expulsion of stomach contents through the mouth, often resulting from nausea or illness.

-Globin

A suffix referring to a group of proteins, such as hemoglobin, that contain heme and bind or transport oxygen.

Protein

Large biomolecules consisting of one or more long chains of amino acid residues, crucial for biological processes.

Hernia

A condition characterized by the protrusion of an organ through the wall of the cavity that normally contains it, often causing pain and swelling.