Which of the Following Statements Is FALSE

question 45

Multiple Choice

Which of the following statements is FALSE?

• A)Preferred stock usually has a stated or par value but unlike bonds,this par value is not repaid at maturity because preferred stocks do not have a maturity date.
• B)The only time the par value of preferred stock would be paid to the shareholder is if the company ceases operations or retires the preferred stock.
• C)Skipped preferred dividends become a liability of the company.
• D)Preferred stock cannot be converted into common stock.

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Definitions:

Public Good

A product that is non-excludable and non-rivalrous in consumption, meaning its use by one individual does not reduce its availability to others.

Excludability

A characteristic of a good or service that allows owners or producers to prevent others from using it without permission.

Marginal-cost-marginal-benefit Rule

A principle suggesting that optimal decision making involves continuing an activity until the additional benefits no longer exceed the additional costs.