Which of the Following Statements Concerning Preferred Stock Is Correct

question 65

Multiple Choice

Which of the following statements concerning preferred stock is correct?

• A) Preferred stock generally has a higher component cost to the firm than does common stock.
• B) By law in most states,all preferred stock issues must be cumulative,meaning that the cumulative,compounded total of all unpaid preferred dividends must be paid before dividends can be paid on the firm's common stock.
• C) From the issuer's point of view,preferred stock is less risky than bonds.
• D) Preferred stock,because of the current tax treatment of dividends,is bought mostly by individuals in high tax brackets.
• E) Unlike bonds,preferred stock cannot have a convertible feature.

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Definitions:

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The system through which citizens elect officials to enact and enforce laws on their behalf within a government.

Third Party

An entity involved in a situation or agreement (such as mediation or arbitration) that is neither of the two primary parties involved.

Employee Free Choice

Proposed legislation aimed at making it easier for workers to join or form a union through majority sign-up or card check rather than an election.

Anonymous Phone Calls

Telephone calls made without revealing the caller's identity, often used for confidential tips or harassment.